Monrovia Pressured to Raise $20 Million by January 31

Ellen C. Wells

As fallout from a down economy continues, in early December Monrovia customers weree-mailed two letters regarding their financial position with their lenders. The first letter, signed by the Monrovia leadership, read (in part):

• “Our banks have expressed their concern by giving us until January 31 to show significant improvement [$20 million] to our 2011 bookings or face a distressed sale of our inventories;”
• “Accordingly, we are offering you the opportunity to add to your spring bookings now and until January 31;” [reductions of 35%-50% on products] and
• “Candidly, we are being advised by our lenders and their advisors to sell to the big box channel if we are unable to significantly increase our booked orders. We will not sell our brand into the big box channel but the quality of our plants even in a black pot speaks for itself. We are aware that this affects your competitive advantage.”

A possible move into the mass markets by Monrovia, which has provided premium nursery material exclusively to the independent garden center channel, prompted a group of 75 garden retailers to pen a letter of support also included in the e-mail. “We, as Independent Nurseries, cannot afford this to happen,” the letter of support reads. “We agree that we shall increase our spring bookings by a significant amount to help Monrovia Growers reach their goal.”

Green Profit spoke with Monrovia CEO Miles Roseland to learn more about the company’s situation. Sales, Miles said, had been “fine” for a six- to eight-year period—then for the last two years they’ve “slowed,” citing the recession as a major factor.

One of Monrovia’s three banks is no longer willing to back enterprises that have inventory on the books for longer than 12 months, such as the nursery industry. To that end, Monrovia is faced with the need to replace that bank, and that prompted their outreach to raise funds in the form of increased bookings.

As for the two banks that are still showing support, “They are encouraging us to sell our plants into all channels and to find ways to increase our profitability as a company,” said Miles. The one channel Monrovia currently isn’t in is the mass market.

Asked if there would be a reluctance to enter the mass-market channel, Miles assured Monrovia “wouldn’t go into that channel with our brand, and we haven’t been in business there [for 15 years] so we don’t know exactly how to do it, but we’re going to look into it.”

“Humbling and quite remarkable” are how Miles described the letter of support from the 75 independent garden retailers. Said Miles: “When our garden centers became aware of our need to go into all channels, they said ‘Let us help you sell more plants. If you can pass savings on to us, we can try to pass savings on to our customers. Maybe we can order a little more.’”

When asked if Monrovia felt they’d lose support from customers if they were to send their material into that channel even if in a non-branded form, Miles replied, “We’re hopeful that our customers will understand the need for us to survive and appreciate that we’re offering a differentiated product with a brand to them.” Above all, Monrovia wishes their customers to know they are in full production and have plenty of material available; they are prepared to offer good pricing so they can pass savings along to consumers; they’re not asking customers to cancel orders from other growers; and they’ll continue to offer high-value, high-quality plants.

“Response has been very favorable,” said Miles. “If they [garden centers] are willing to increase their business, that should give us the basis to find bank support.” GP