Frank's Nursery & Crafts files for Chapter 11

Home Channel News, March 5, 2001

Chain to close 24 more stores and suspend remodeling effort

TROY, MICH. -- The nation's largest lawn and garden specialty retailer filed for bankruptcy protection from its creditors on Feb. 19, after several years of losses and a series of store closings. Frank's Nursery & Crafts, which has 215 stores in 15 states, will reorganize under a Chapter 11 plan filed with a Baltimore federal court. The chain plans to close 24 underperforming stores, on top of the 42 outlets it has shut since the beginning of the year.

Frank's has secured debtor-in-possession financing of $100 million from a lending group led by Wells Fargo Retail Finance. In a prepared statement, Joseph Baczko, chairman and CEO of Frank's parent company FNC Holdings, blamed the chain's financial woes on a disappointing holiday season and poor sales throughout 2000. Adverse weather conditions in the Northeast and Midwest, where Frank's has the bulk of its stores, suppressed sales and left Frank's with unsold inventory. The ongoing liquidation of its crafts inventory also added to the retailer's problems.

A privately-held company with publicly-traded bonds, Frank's Nursery has posted negative earnings during four of the past five years. During the first nine months of its 2000 fiscal year. Frank's Nursery lost $27.2 million on $328.4 million in revenues. Annual earnings information is scheduled to be released in April.

In an interview with NHCN last November, company president Adam Szopinski floated the idea of Frank's becoming a public company. A key component of those plans was an aggressive remodeling effort through the rollout of a stylish 23,000-square-foot prototype. The company currently has 12 of the larger-format stores in operation, but its plans to add six more this year have been halted. Retrofitting older, smaller locations is also on hold, according to Szopinski.

"We totally remodeled 24 locations and spruced up 107 [stores]," he told NHCN Feb. 22, three days after the Chapter 11 filing. "I hope we can continue the program, but it depends on how much capital we're going to have. That has not been finalized yet."