Where Does Your Garden Go?

Garden Ridge Corp. (Houston), proprietor of more than 40 home decorating accessories megastores, announced that it and its subsidiaries have filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code, with the primary goal of renegotiating certain of its store lease agreements and certain other arrangements.

The retailer, which has been implementing initiatives designed to improve profitability ever since Jack Lewis, part of the company's leadership for much of the 1990s, returned to Garden Ridge as president and cmo in April 2003. Lewis' initiatives have involved returning to the retailer a merchant-driven strategy that emphasizes a wide variety of home decor and crafts, a breadth of selection within each category and savings.

And while the company said that it has been achieving improving results, including same-store sales increases of 5.4 percent in December 2003 and 2.6 percent in January 2004, it says it is paying significantly over-market rates at several stores, which has affected the profitability of those stores and the overall liquidity of the company. Chapter 11 provides Garden Ridge with the vehicle to improve liquidity and reject uneconomic leases.

“Since returning to Garden Ridge in April,” said Lewis, “we have been refocusing the stores on what they do best: providing our customers with a unique shopping experience, an extensive and distinctive assortment of home decor and crafts and great savings. Recently, we have seen the positive results of our efforts through an overall improvement in same-store sales. However, these results are offset by the fact that many of our store lease agreements simply are not economical. They are above market rate or extremely lengthy in duration, or do not match our traditional and historically successful profile. In order to continue our growth, we must address this issue.”

Garden Ridge said that it would seek to close four stores that do not fit its strategy in the next 45 days: Kirby, Federal and Humble in the Houston metro area and the store in Cincinnati. The retailer said that it could close select additional stores during the course of its reorganization proceedings. However, it is committed to reopening stores in every market it is in today, and enter new markets as well, providing it can find stores that fit its profile and negotiate fair market lease terms. Garden Ridge is now actively soliciting new landlords to find prospective sites to open new locations and continue to serve its customers.

Each of the 40 Garden Ridge stores covers almost three acres and is located off major highways in 13 states (Texas has 18 stores). Its stores sell baskets, candles, crafts, home accents, housewares, party supplies, pictures and frames, pottery, seasonal items, and silk and dried flowers.