GARDEN BOTANIKA INC. intends to close almost a third of its retail stores and lay off more than 1,000 workers in the wake of an April Chapter 11 bankruptcy filing.
But it will stay in business. The Redmond, WA marketer of botantically based skin care products and cosmetics has negotiated $7 million in debtor-in-possession financing from BankBoston Retail Finance Inc., which it will use to fund operations during the reorganization.
The filing came on the heels of more than a year of declining fortunes for the cataloger/retailer. Early last year, the firm reported that annual mail order sales had dropped 41% due to a planned reduction in catalog circulation.
Sales remained flat throughout 1998, below those of 1997 by double-digit percentages.
The bankruptcy filing lists $17.9 million in assets and $8.1 million in debts, including $421,409 owed to Miami printer Avanti Case Hoyt; $280,788 to Banta Catalog Group, Maple Grove, MN; and $113,678 to Experian Direct Marketing Technology, Chicago. Also listed as a creditor was direct marketing consultancy O’Keefe Henry Direct, Highland Park, IL.
The firm will close 95 stores out of a total of 295 nationwide, most in the Midwest and Southeast. Both the closings and the new financing are subject to approval by the U.S. Bankruptcy Court for the Western District of Washington in Seattle.
Roughly 200 full-time staffers and 1,000 part-timers will lose their jobs. In a statement, CEO Arlee Jensen called the layoffs “a regrettable outcome of the bankruptcy filing, but they are the right thing to do for the sake of the business, our creditors and our shareholders.”
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