The owner of Lillian Vernon, the catalog and Internet retailer that has called the city home for 22 years, plans to shutter its headquarters off International Parkway, citing a drop in sales.
Current USA Inc., a stationery and gifts company based in Colorado Springs, Colo., bought Lillian Vernon two years ago and employs about 200 warehouse and call center employees in Hampton Roads. It plans to wind down the Beach operation and terminate all positions there by August 2011.
The closure is "due to current and projected levels of business," the company wrote in a news release.
The Lillian Vernon brand name will remain. Current USA, a division of Taylor Corp., had shifted call centers for some of its other brands to Virginia Beach and will move all operations to other Taylor locations.
"Current USA Inc. is committed to growing the Lillian Vernon brand in the marketplace and serving its customers," the release read.
Two Lillian Vernon workers leaving the call center Friday evening said they had heard nothing about the closing. The man and woman, who declined to give their names, said the company had made no announcements to the staff.
Sue Hesse, Current USA's director of human resources, provided the news release but declined to give other information. The release quoted Colleen Willhite, Taylor's executive vice president, who was unavailable for comment Friday evening.
"This was a difficult decision for us as we realize the contributions of the Lillian Vernon employees to the organization and the commitment of the organization to the community for the past 22 years," Willhite said in the release.
Virginia Beach Mayor Will Sessoms said he had no knowledge of Lillian Vernon's closure.
"I knew it had been declining over the years," he said of employment at the headquarters.
Sessoms said he would need to speak with the city's economic development officials to assess the impact of the shutdown and how to market the 900,000-square-foot facility.
"You hate to see any jobs lost, period," he said. "Lillian Vernon, over the years, has really been a major part of growth in the city."
Lillian Hochberg founded the company at her kitchen table in Mount Vernon, N.Y., in 1951, selling a personalized handbag and belt through a magazine ad. She named the company for herself and her hometown, changing her own name to match it, and took it public in 1987.
A year later, Lillian Vernon bought 61 acres in Virginia Beach to build its distribution center and spent nearly $37 million on an expansion to double its size in 1995. The retailer, which specializes in low-cost personalized gifts and home goods, held warehouse clearance sales that attracted diehard crowds through at least 2002.
Employment at its Virginia Beach center reached almost 800 year-round and swelled to as many as 5,000 in the fall for the holiday shopping season.
The founder remained Lillian Vernon's chief executive and chairman until July 2003, when she sold it for $60.5 million to a private equity fund managed by Ripplewood Holdings LLC in New York. That owner sold the company almost three years later to Sun Capital Partners Inc., an investment firm based in Boca Raton, Fla., for a reported $12 million, though terms weren't disclosed.
In 2006, Lillian Vernon moved its corporate headquarters from New York to Virginia Beach. It had annual revenue of $175 million that year and mailed 80 million catalogs. But the company hadn't posted a profit since 2000.
Under Sun Capital, Lillian Vernon sold its distribution center and leased it back. It shed hundreds of jobs. Sales faltered as the recession set in.
Lillian Vernon filed for Chapter 11 bankruptcy protection from creditors in February 2008. It stopped mailing catalogs and paying vendors, and halted deliveries of new merchandise.
Current USA acquired the company in a bankruptcy auction in April that year and paid a base price of $15.8 million before adjusting for inventory. Parent company Taylor Corp., a privately held firm based in North Mankato, Minn., owns more than 100 companies and has annual sales of $1.7 billion, according to Hoover's, the business information service.
Tim Arland, Current USA's president, took the helm of Lillian Vernon and said he would make it smaller and more profitable. At that time, he projected that the company would distribute 30 percent fewer catalogs as it rebuilt its business.
