Lillian Vernon sets sights on second half-century

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Even a half-century-old brand can't escape today's economic woes. Just months before Lillian Vernon Corp. celebrates its 50th birthday and the release of its 73-year-old founder's second autobiography, low earnings forced the specialty catalog publisher to lay off 12% of its work force and close a call center in Las Vegas.

The Rye, N.Y.-based company expects to break even or report a loss on earnings for fiscal 2001, ended Feb. 24, and a revenue shortfall would mark the third consecutive year of decline. Lillian Vernon Corp. said low consumer spending and the uncertain economic future led to its cost-cutting measures.

Yet the catalog industry as a whole does not seem to be suffering. "Some companies are doing fairly well right now, and our industry has weathered recession pretty good-direct marketing in total but cataloging specifically," particularly lower-end catalogs, said Direct Marketing Association President H. Robert Wientzen.

"We have seen a fairly steady decline in Lillian Vernon's revenue," Mr. Wientzen said. "I suggest that's probably a function of their inability to get unique merchandise and the fact that there's more competition out there," namely from the Internet.

Lillian Vernon Corp.'s low-price line includes household, gardening and children's products sold via nine different catalogs and a Web site (lillianvernon.com). The company reduced circulation by 12% in 1999, and cut $3 million, or 3%, of its inventory in fiscal 2001.

Most industry watchers believe Lillian Vernon-the company-will ride through this storm on the same shoulders it rode in on, those of Lillian Vernon-the woman-a savvy, tenacious and realistic CEO.

REPOSITION FOR 21ST CENTURY

"We're going to reposition the company into the 21st century. Maybe our books shouldn't be as big or have as many pages," she said. "My goal is to increase circulation, and in doing that I have to see what needs to give."

"It is hard to separate Lillian Vernon the person and Lillian Vernon the company," said Sherry Chiger, editorial director of Catalog Age. "That's what makes this catalog so distinctive and why it has survived, because it's her vision, and she really does know what the average consumer wants and needs."

Ms. Vernon sees herself in her audience-primarily middle-age mothers who are employed outside the home. "I'm a woman who shops," Ms. Vernon said. "I'm a woman who raised children. I'm a woman who gets in the car and goes to work every day. I'm a woman who knows what women need."

Out of the need for a little extra cash, her business was born. A 22-year-old, newly married and pregnant Ms. Vernon sat at her kitchen table in 1951 flipping through ads in women's magazines and realizing she could sell handbags and belts through the mail from her home. Ms. Vernon gambled $495 of their $2,000 wedding gift money on a small ad in Seventeen promoting her mail service, and in six weeks she had $16,000 in orders.

Today, Ms. Vernon runs a $242 million company that mailed 166 million catalogs and 5 million packages in fiscal 2000, and operates a distribution center, call center and 14 outlet stores. "The most impressive thing for me is that I've carried through," she said. "It wasn't just a lark."

"She's a dynamo and a merchant at heart," said Lillian Vernon Corp. President Kevin Green. "She looks at every catalog. She loves this business."

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