Scotts enters lawn care retail game

DSN Retailing Today, Sept 6, 2004 by Debbie Howell

MARYSVILLE, OHIO -- The Scotts Company, the world's largest supplier of lawn care products, will tackle retailing for the first time with its pending acquisition of outdoor living goods retailer Smith & Hawken and its exclusive brands.

Smith & Hawken, an upscale lawn & garden chain that operates 56 stores, a catalog and e-commerce site, had been for sale by DDJ Capital Management, which acquired the company in 1999. Smith & Hawken expects to report 2004 revenue of $145 million, of which about one-third comes from catalog and Internet sales. Scotts will pay about $72 million for Smith & Hawken, including the assumption of $14 million in existing debt. The deal is expected to close Oct. 1.

Far Scotts, the main attraction is acquisition of Smith & Hawken's upscale brands in such categories as patio furniture, garden tools and pottery. The company plans eventually to extend these brands to other retail channels, including home centers. One of the priorities at Scotts this past year has been to expand into adjacent gardening categories, including its most recent launch of pottery.

"The Smith & Hawken brand is the gold standard in outdoor living and is an outstanding fit with our strategy to extend our reach into adjacent lawn and garden categories and to own industry-leading brands in every category in which we compete," said Jim Hagedorn, chairman and ceo of Scotts, in announcing the deal.

Among Smith & Hawken's private labels are Premium Teak and Avignon furniture, Heirloom tools, and Eden Park and Hamilton Landing garden structures and containers.

At least initially, Scotts won't make any changes to the Smith & Hawken retail enterprise, and intends to keep the same management team in place, including retaining Barry Gilbert as ceo of Smith & Hawken. Plans to open six stores in 2005 remain on track.

As for expanding Smith & Hawken brands to new retail channels, that probably won't occur until 2006, said Dick King, director of communications at Scotts. The details have yet to be worked out regarding what brands will expand to what channels.

"In areas like pottery, garden tools, watering equipment and furniture, all of which are sold under the Smith & Hawken brand, these are natural extensions within the lawn and garden space, and we can now participate in those categories with a brand that means something," explained King.