Dominique Schurman has taken over as CEO of Clinton Cards and announced her intention to revive and rebrand the retail chain, a week after it was confirmed that US card publisher American Greetings (AG) had completed its acquisition of the company via subsidiary Lakeshore Lending.
Schurman, who also heads up the 180-store American stationery business Schurman Retail Group – trading under the Papyrus name – has a solid history of working with AG, which owns 15% of the Group. Her plan to resurrect Clinton’s will involve changing the colour of Clinton’s distinctive orange branding and an investment in the look and feel of Britain’s most famous greetings card retailer.
Having already met with Clinton Cards’ other main suppliers – the biggest one being new owner American Greetings – Schurman must now tackle one of the biggest problems that best the company by taking a look at the enormous store portfolio and renegotiating rents and leases.
A favourable outcome to these negotiations will be crucial given that Clinton’s posted a pre-tax loss of £3.7 million in its last interim update, compared to a profit of £11.7 million in the year before.
Clinton’s original portfolio of 750 stores has already been drastically pruned by administrator Zolfo Cooper, which in mid-May announced its intention to close around half of those outlets.
Schurman can be expected to bring a touch of the quality and class that Papyrus is famous for in the states to her new UK venture. It is essential for the future success of Clinton’s that it is clearly differentiated from its major British rival Card Factory, which operate with great success at the lower end of the greetings market and has stolen Clinton’s thunder in recent years.
This differentiation may also involve a stronger focus on gifting, to further distinguish Clinton’s from supermarket sellers as well as Card Factory, and help realise its potential for online sales.
The takeover of Clinton’s has put AG – a major supplier to several UK supermarkets – in the odd position of being in direct competition with some of its major customers. If, however, the publisher loses this wholesale custom, it clearly expects to more than make up the shortfall with its new retail business.
The dire straits Clinton’s found itself in at the start of 2011 meant that AG was able to acquire the business for a relatively cheap price that amounts to around £100,000 per store, with many of those stores standing on prime retail locations. The opportunity for such a move will have presented itself to AG at least 18 months to two years ago, as Clinton’s struggled to keep head above water and saw its shares plummeting around Christmas 2010.
The purchase by AG last year of Watermark Publishing (for £26 million), which concentrated almost solely on producing greetings products for Clinton’s, was an early indicator that the American giant had more than an eye on Britain’s high street.
AG was always front-runner of the race to pick up the spoils from Clinton’s, after purchasing the retailer’s debt for £35 million at the start of May. It immediately sent what was once one of the UK’s most iconic retailers into administration. As Clinton’s main supplier AG was already owed £16 million by the company – valued at no more than £20 million at the time Zolfo Cooper took over as administrator.
The American firm, which operates in the UK via UK Greetings, is now in receipt of 397 prime retail outlets that have contributed some £212 million in annual revenues, preserving around 4,500 jobs around the UK. With the hugely experienced Schurman at the helm and AG’s huge resources behind it, the retailer is now in a good position to achieve a turnaround. The test will come at Christmas.
