Contact Information: Contact: John Thompson AeroGrow International, Inc. 303-444-7755
AeroGrow Re-Directs Business Focus; Announces New CEO, COO
Company Turns Around Bottom-Line, Anticipates Near-Breakeven December Quarter; Increases Focus on High Margin Direct-to-Consumer Business; Jack J. Walker Named Chief Executive Officer; J. Michael Wolfe Named Chief Operating Officer
| Source: AeroGrow International, Inc.
BOULDER, CO--(Marketwire - January 15, 2010) - AeroGrow International, Inc. (OTCBB : AERO )
("AeroGrow" or the "Company"), makers of the AeroGarden® line of indoor
gardening products, announced a strategic shift to increase the Company's
focus on its high margin direct-to-consumer business channels, including
key personnel changes.
Jack J. Walker was named Chief Executive Officer, replacing Jervis (Jerry)
Perkins, AeroGrow's CEO since March 2008. Mr. Perkins will continue to
serve on the Company's Board of Directors.
Mr. Walker has been a Director of AeroGrow since February 2006, Chairman of
the Board since July 2008, and is AeroGrow's largest beneficial
shareholder. Mr. Walker is stepping into the CEO role to lead the changes
needed to re-focus the Company's strategy on its direct-to-consumer
business. In addition, he will take an active role in efforts to raise the
new investment capital necessary to fuel the Company's future growth and to
meet short-term liquidity requirements.
Other management changes include the promotion of J. Michael Wolfe,
AeroGrow's Vice President of Operations since April 2006, to Chief
Operating Officer. Mr. Wolfe has also served as the General Manager of
AeroGrow's direct response division since August 2008. While at AeroGrow,
Mr. Wolfe launched the Company's first direct response catalog, now mailed
to millions of households annually, and took over the struggling web and
internet division in December 2008. These channels, along with other
direct-to-consumer marketing programs, drive the company's direct response
division, a business that was largely responsible for the significant
improvement in the Company's bottom line. During the past year, return on
media dollars spent in the company's direct response business more than
doubled and the Company's database of active buyers surpassed 100,000 names
(a growth rate of over 15%). In addition, the average annual amount spent
by existing AeroGrow customers in repeat purchases increased by over 20% to
nearly $50.
Prior to AeroGrow, Mr. Wolfe served as President and COO of Concepts
Direct, where he oversaw the development, launch and operations of seven
independent catalogs, including the highly successful Colorful Images,
Snoopy, Etc. and Linda Anderson brands. Revenue grew to more than $80
million prior to the sale of the company to the Taylor Corporation. Prior
to that, Mr. Wolfe served as Vice President of database management company
Wiland Services, Inc. (later sold to NeoData Corp).
Jack Walker, AeroGrow's new CEO, said, "The increased focus on our direct
response channels comes as a result of the success we've had in that area,
combined with the significant changes we've seen in the retail industry in
the U.S. As retailers have struggled to respond to the global economic
crisis, they have shifted inventory and sales risks to their suppliers.
For smaller companies like AeroGrow, this means the capital base required
to do business with large retailers has increased dramatically, as has the
overall risk of being a supplier to the retail trade. Conversely, in our
direct response business, where we have more control over all aspects of
our business model, we enjoy higher margins, a growing core of dedicated
customers and recurring revenue streams, with significant growth
opportunities for the future. Of course we'll continue to work with and
support our existing retail customers.
"Combined with our cost-cutting efforts of the last year, the increased
focus on our direct response business has resulted in the achievement of a
significant turnaround in AeroGrow's bottom line," continued Mr. Walker.
"We're forecasting a near-breakeven EBITDA for the quarter ended December
31, 2009, a dramatic improvement from last year's $3.7 million EBITDA loss
in the same period. More details will follow in our upcoming Form 10-Q, to
be filed next month. In addition, earnings calls will be reinstated at
that time.
"Finally, I'd like to thank Jerry Perkins for his service as CEO at
AeroGrow," said Mr. Walker. "Jerry is leaving the CEO role having
restructured the business and navigated the Company through some extremely
difficult economic times. Jerry recognized the benefits of a strategic
shift in the organization and fully endorses the changes, including his
departure, being announced today."
Concurrent with the announcement of the new CEO and shift in strategic
focus, AeroGrow announced a reorganization expected to result in annualized
savings, principally from headcount reductions, in excess of $1.6 million.
Among the positions eliminated is the Vice President of Sales position
formerly held by Jeffrey M. Brainard. Mr. Brainard joined AeroGrow in
March 2006, and quickly built retail distribution to more than 10,000
storefronts by December 2008. AeroGrow sincerely thanks Mr. Brainard and
Mr. Perkins, as well as other impacted employees, for their significant
contributions to the Company.
Greg Clarke will continue to serve as AeroGrow's Chief Financial Officer
and as a Company Director. John Thompson, a long-term contributor to
AeroGrow's product development, marketing, sales and fundraising, has been
promoted to Senior Vice President, Sales and Marketing.
"Our number one focus in the coming year is turning around AeroGrow's
bottom line and building a company that will post consistent revenue growth
and profitability," said Mike Wolfe, AeroGrow's new COO. "In addition,
we'll be focusing on our product and pricing models, our promotional
efforts and overall operational efficiencies. If we grow our database,
take great care of our customers, and sell reasonably priced products at
attractive margins, the profits will come. I believe we now have the right
tools and the right team in place to make that happen."
About AeroGrow International, Inc.
Founded in 2002 in Boulder, Colorado, AeroGrow International, Inc. is
dedicated to the research, development and marketing of the AeroGarden line
of foolproof, dirt-free indoor gardens. AeroGardens allow anyone to grow
farmer's market fresh herbs, salad greens, tomatoes, chili peppers, flowers
and more, indoors, year-round, so simply and easily that no green thumb is
required. See www.aerogrow.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements by Jack Walker, Mike Wolfe, and/or the Company,
statements regarding growth of the AeroGarden product line, optimism
related to the business, expanding sales, and other statements in this
press release are forward-looking statements within the meaning of the
Securities Litigation Reform Act of 1995. Such statements are based on
current expectations, estimates and projections about the Company's
business. Words such as expects, anticipates, intends, plans, believes,
sees, estimates and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are
not guarantees of future performance and involve certain risks and
uncertainties that are difficult to predict. Actual results could vary
materially from the description contained herein due to many factors
including continued market acceptance of the Company's products or the need
to raise additional capital. In addition, actual results could vary
materially based on changes or slower growth in the indoor garden market;
the potential inability to realize expected benefits and synergies;
domestic and international business and economic conditions; changes in
customer demand or ordering patterns; changes in the competitive
environment including pricing pressures or technological changes;
technological advances; shortages of manufacturing capacity; future
production variables impacting excess inventory and other risk factors
listed from time to time in the Company's Securities and Exchange
Commission (SEC) filings under "risk factors" and elsewhere. The
forward-looking statements contained in this press release speak only as of
the date on which they are made, and the Company does not undertake any
obligation to update any
forward-looking statement to reflect events or circumstances after the date
of this press release.