Crabtree & Evelyn, Ltd.

The Company

Founded in 1972, Crabtree & Evelyn provides fragrances and toiletries including bath and beauty gifts, hand and foot care products, body cleansers, soaps, body creams, and lotions in the United States and internationally. Prior to filing for Chapter 11 bankruptcy protection in July 2009, the Company operated 126 retail stores throughout the United States.

The Situation

While the Company continued to experience solid growth and expand The economic downturn led to a dramatic decrease in the Company’s customer
traffic and revenue, severely impacting Crabtree & Evelyn’s cash flow. As a result, the Company filed for Chapter 11 bankruptcy protection on July 1, 2009, seeking to reorganize and shed unprofitable retail locations. Upon filing for bankruptcy, it was anticipated that the Company would be forced to close as many as 75 stores, representing 60 percent of its portfolio.

The transaction

KPMG Corporate Finance was hired by Crabtree & Evelyn to negotiate rent reductions with Crabtree & Evelyn’s landlords. With this strategy, it was expected that significant savings could be achieved that would allow for a reduction in the number of retail locations that the Company would be required to close. KPMG Corporate Finance aggressively negotiated rent reductions with Crabtree & Evelyn’s landlords, resulting in a 39 percent reduction in occupancy costs at 55 retail locations, resulting in over
US$12 million in savings to the Company.

On January 14, 2010, the U.S. Bankruptcy Court for the Southern District of New Yorkapproved Crabtree & Evelyn’s Plan of Reorganization, thus allowing the Company to emerge from bankruptcy with 90 stores intact, having to close only 29 percent of their locations rather than 60 percent as initially expected. Crabtree & Evelyn’s emergence from bankruptcy marks a rare occurrence in a challenging economic environment, where it has become increasingly infrequent and difficult for a retailer to successfully reorganize.