Daily News

From Home Furnishing Business

LaJobi Suspends Operations

May 27, 2014  by in Product, Youth, Juvenile Furniture   

Kid Brands, East Rutherford, N.J., and Graco Children's Products Inc. have mutually agreed to discontinue their license agreement for the design, manufacture and production of cribs, changing tables, dressers and other infant and juvenile furniture, including an immediate waiver of LaJobi's obligation to pay additional guaranteed royalties. The company and Graco will work together to facilitate a seamless transition of the production of Graco-branded furniture to a new licensee. As part of the suspension of LaJobi's wood furniture operations, Kid Brands plans to sell its remaining inventory of Graco, Bonavita and other wood furniture brands.

"In working to improve Kid Brands' overall financial performance, our management team and Board of Directors are continuing to conduct a comprehensive evaluation of the Company's businesses," said Kerry Carr, executive vice president, COO and CFO of Kid Brands. "After a thorough review of our LaJobi business unit, we have determined that the wood furniture operations are unable to meet satisfactory financial objectives within the current business structure. Accordingly, we have made the decision to suspend these operations, which will allow us to focus our resources on other areas of our business, further right-size our expense structure and continue our efforts to improve Kid Brands' overall profitability.

"Graco has been a wonderful business partner throughout the years of our license agreement. We recognize the strong value that our customers and consumers attribute to the Graco brand. As our partnership concludes, we are working diligently with Graco's team to preserve the brand's strong reputation in the marketplace, as well as to ensure a smooth servicing of customer orders."

The Company anticipates that the suspension of the wood furniture operations of LaJobi will generate annualized savings of approximately $4 million to $6 million. Kid Brands expects a reduction in the work force associated with the cessation of LaJobi's wood furniture operations. Certain positions, however, are expected to be retained to help maximize value from LaJobi's assets. The company also intends to keep its consumer services function active to receive and address consumer inquiries.