Frank’s Nursery & Crafts, Inc.

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Frank’s Nursery & Crafts, Inc.

6501 E. Nevada Street
Detroit, Michigan 48234
U.S.A.
(313) 366-8400
Fax: (313) 366-8425

Wholly Owned Subsidiary of General Host Corporation
Incorporated: 1957 as Frank’s Nursery Sales, Inc.
Employees:
Sales: $557.8 million
SICs: 5261 Retail Nurseries and Garden Goods

Frank’s Nursery & Crafts, Inc. is one of the nation’s largest retailers of lawn-and-garden, craft, and Christmas merchandise. With over 250 retail locations in 16 states, in such metropolitan markets as Detroit, Chicago, St. Louis, Philadelphia, New York, and Boston, Frank’s has also launched the Frank’s SuperCrafts store, a crafts store concept that it hoped to expand in new and existing markets. In fact, in the mid-1990s, as a subsidiary of the General Host Corporation, Frank’s was seeking to become a truly national retailer with over 400 stores nationwide by the end of the century.

Frank’s history may be traced to 1942, when Frank Sherr and his nephew Max Weinberg opened a food market, known as Frank’s Market, on the northeast side of Detroit. Billing itself as “never closed and never undersold,” the business thrived. Frank’s Market began carrying seasonal plants, including Christmas trees, Easter plants, and flats of springtime annuals, in addition to their staples of fresh produce and other grocery items. In 1949 Sherr and Weinberg opened a greenhouse on a vacant lot across the street from the market to accommodate the growing number of annuals and perennials the market offered. According to Frank’s lore, the inspiration for this focus on plants was a difficult customer who complained about the price of coffee beans but who then obligingly paid 79 cents for a potted geranium. The price—and the profit—on the geranium were much higher than those on the coffee, and Sherr and Weinberg realized that there was apparently money to be made selling flowers. Soon Frank’s was selling fertilizer, trees, and other landscaping supplies.

The business thrived, and in 1957 the company—by then four stores strong—incorporated, becoming Frank’s Nursery Sales, Inc. By 1965 Frank’s owned 18 stores throughout Michigan, and its sales were $11.35 million, with a net income of $509,000.

Since the lawn-and-garden business was highly cyclical in nature, with highest revenues during the growing season, the company sought to offset the regular drop in revenues during the winter months. Toward that end, Frank’s diversified and began to sell craft and hobby supplies, a line that Frank’s management believed would complement its gardening merchandise, since both appealed to customers interested in “do-it-yourself projects. The first Frank’s Trims, a store which sold only craft goods, was opened in 1966.

That year, Frank’s Nursery Sales went public, gaining a listing on the American and Detroit stock exchanges. Frank’s used the funds to expand and build new stores, particularly in the neighboring states of Indiana and Ohio. In 1973 Frank’s opened its first four Illinois stores in suburban Chicago. The following year, Frank’s moved into Minnesota when it purchased five garden centers in suburban Minneapolis from the Green Giant Company.

By the time of the company’s 25th anniversary in 1974, 51 Frank’s stores were in operation in five states, employing some 1,200 workers in high season. The company’s sales had reached $37.2 million with a net profit of $ 1.13 million. Also during this time, Frank Sherr was succeeded by his son, I. William Sherr, who had previously served the company as executive vice-president and treasurer. Max Weinberg continued to serve as company president.

In 1980 the company’s name was changed from Frank’s Nursery Sales, Inc. to Frank’s Nursery & Crafts, Inc., to emphasize the dual nature of the retail chain. Sales in 1980 reached $119.3 million on revenues rung up at 80 stores. Frank’s continued to grow. In the 1980s Frank’s stores were opened in Maryland, Pennsylvania, Delaware, Florida, Virginia, Missouri, New Jersey, Kentucky, and New York. During this time, much of Frank’s expansion came by acquiring small regional chains such as Gaudio’s in Philadelphia and Scott’s Seaboard in Baltimore.

In 1983 Frank’s Nursery & Crafts was purchased by General Host Corporation. General Host bought 96 percent of Frank’s shares in a $19-a-share tender offer in March 1983; the value of the sale was thus approximately $42.4 million. Frank’s at that time spanned 95 stores.

General Host was a large conglomerate comprised of an array of holdings. Since the 1970s, the company had actively acquired and divested companies as it continuously redefined itself. At the time it purchased Frank’s, General Host’s interests included meat packing, food service, and convenience stores; Frank’s was the first lawn-and-garden company in its holdings. Upon its purchase of Frank’s, however, General Host chairman and chief executive Harris J. Ashton began to see the potential profit in a national chain of garden supply/craft supply stores. Ashton’s model was the Toys R Us retail chain, which through large volume purchases, low overhead, and low retail prices became one of the biggest success stories of the 1980s. Ashton felt that baby boomers would take an interest in gardening as they got older. He started to sell off his assets—including Hickory Farms of Ohio, Inc., All American Gourmet Co. frozen foods (maker of Budget Gourmet frozen entrees), and Hot Sam pretzel shops—to fund other acquisitions focusing on lawn-and-gar-den, craft, and Christmas merchandising.

At the time, Frank’s stores were expensive to build, with each store costing over $1 million. A typical Frank’s store was located on a three-acre site near a highly visible retail strip or shopping center. It covered 35,000 square feet, including an outside sales area. Ashton incorporated the wide aisles, shopping carts, and vast selection that had been component’s of Toys R Us’s success. Frank’s also began to enclose their outdoor garden supply areas so that they could be used throughout the year.

In 1984 General Host sold off the profitable Van de Camp’s Frozen Foods unit and Little General convenience stores, while bolstering its gardening centers through the acquisition of the East Coast-based merchandiser Flower Time, Inc. Flower Time was eventually merged into Frank’s in 1989, and Frank’s had become General Host’s core business by the early 1990s.

In 1991 the first of Frank’s stand-alone Christmas stores, Christmas by Frank’s, opened. These stores were temporary installations placed in high-volume regional malls, allowing shoppers to purchase holiday decorations and gift wrap while they shopped for gifts. Indeed, Christmas decorations and crafts became increasingly important lines to Frank’s, helping to compensate for the seasonal sales declines in gardening supplies.

In 1993 the company launched Frank’s SuperCrafts, opening two stores in the Detroit area. Designed as “superstores,” the SuperCrafts stores encompassed 20,000 square feet of retail space, allowing for a wider selection of craft supplies and home and holiday decorations, while incorporating in-store framing shops and floral arrangement services. Moreover, the stores featured hundreds of craft project displays, giving customers creative ideas and allowing them to see firsthand completed projects. In 1993, the company planned to open three more Frank’s SuperCrafts stores.

During this time, Ashton took note of a major rival in the lawn and garden center business: the Sunbelt Nursery Group. In April 1993 General Host purchased Pier 1 Imports’ 49.5 percent interest in Sunbelt, which consisted of over 100 lawn-and-garden centers under various names, including Wolfe Nursery in Texas and Oklahoma, Tip Top Nursery in Arizona, and Nurseryland in California. Ashton stated that he wanted to open 25 more stores that year, perhaps in some areas where Sunbelt had outlets, hinting at a possible future merger.

Sales in 1992 grew to $558 million, a seven percent increase over the previous year, yet higher costs and interest on General Host’s debt caused its profits to decline, from $8.7 million in 1991 to $2.9 million in 1992. By 1994, in fact, General Host’s headlong expansion had come to an end, as a series of new stores proved unprofitable. In January, Frank’s announced the closure of 26 stores, most of which were in the Nashville, Tennessee, area and in Florida. By September 1994, General Host had sold its interests in Sunbelt to another lawn and garden chain. Company officials announced that such sales and closings would save General Host $3.8 million annually; other cuts were to come in $25 million worth of inventory, all of which would help service General Host’s $238 million in debt.

During this time, however, Frank’s Christmas stores and SuperCrafts centers were thriving, exceeding sales expectations. Moreover, General Host implemented a line of proprietary lawn and garden products at its Frank’s Nursery stores, which the company hoped would compete effectively with national brands. In a letter to shareholders, Ashton remained optimistic about the future of Frank’s stores, expressing his conviction “that Frank’s will retain its position as the best and largest lawn and garden chain in the United States and that this position is unassailable.”