Party planners don't have to travel to stock up at Oriental Trading Company. The company sells more than 40,000 products, including party supplies, toys and novelties, arts and crafts, and home decor through its websites and catalogs. It mails some 300 million copies of its seasonal catalogs, which include such titles as Oriental Trading Company, Terry's Village, Crafts, Hands on Fun, and Inspirations. Oriental Trading supplies carnivals, schools, churches, nonprofits, and businesses. Founded in 1932 in Omaha by Harry Watanabe, privately-held Oriental Trading in 2012 agreed to be acquired by Berkshire Hathaway.
Change in Company Type
The sale of Oriental Trading Company (OTC) to investment firm Berkshire Hathaway is slated to close in late 2012. The sale marks the end to a series of ownership changes for OTC and distances the company from a seven-month stint in Chapter 11, from which it emerged in early 2011.
OTC, which filed for bankruptcy in mid-2010, slashed its debt load by about 70% (down to roughly $200 million) and boasted an improved capital structure. It added that both revenues and operating margins have grown over the past year, indicating a more stable business environment. Oriental Trading also came under new ownership amid the restructuring; about 15 financial institutions that previously held the company's senior debt gained control, with no one holding a majority stake. (The firm was previously majority owned by private equity firm The Carlyle Group, and Brentwood Associates owned a 25% stake.) Oriental Trading fell into bankruptcy because it was unable to pay toward some overdue debt and failed to find restructuring alternatives with its creditors. Fortunately, the firm continued to operate during its reorganization, thanks to about $40 million in debtor-in-possession financing from existing lenders.
With a substantially lighter debt burden, Oriental Trading is reinvesting in itself -- expanding product lines and utilizing database technology -- to increase revenues. The company rolled out 6,000 new products in 2010, and it aims to boost that figure in 2011. Also, Oriental Trading invested in database technology to target its e-mail marketing efforts and assist with management of website content and catalog titles.
Oriental Trading had high hopes of lifting sales before it entered Chapter 11. In early 2010 the firm signed figure skating champ Nancy Kerrigan as its first celebrity endorser. Kerrigan, a mother of three, said she is a loyal Oriental Trading customer because its online store offers a fun shopping experience, in addition to saving her time and money. Additionally, Oriental Trading said Kerrigan represents its target demographic: busy, hands-on mothers who rely on the company for value-priced party supplies and decorative accessories. Oriental Trading is recognized as a top catalog retailer and has been shifting its focus to its growing e-commerce activities, which generate about half of sales.
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