Blyth spins off CBK, Midwest, others to form new company

Blyth Inc. is spinning off its wholesale business group to shareholders in order to devote more time and resources to direct marketing and growing its Internet channel, according to a company release.

The wholesale group includes CBK, Midwest and Colonial Candle in North America, and Kaemingk, Edelman, and Euro Decor in Europe. Bruce Crain, president of the wholesale group, was named CEO of the new company; other officers are Stephen Kosmalski, group president of the North American division, and Jeff Carr, group president of Europe.

Greenwich, Conn.-based Blyth bought Midwest of Cannon Falls in 2001 and CBK in 2002.

"As the leader in a fragmented market, the wholesale group has distinct opportunities for growth as a stand-alone company," said Crain, an eight-year Blyth veteran. "We are focused on product and merchandising innovation, global supply chain management and partnering with our retailers and suppliers, believing that solid execution in these areas is key to our joint success in today's competitive marketplace."

The new entity will have approximately 3,200 employees and estimated 2006 revenues of $700 million. In fiscal year 2005, the wholesale division contributed operating income of $30.7 million on sales of $657 million. The division reported assets of $614 million and depreciation of $17.9 million in fiscal year 2005.

CBK President Terry Stewart answered questions about what its parent company's spin off of the wholesale division will mean by saying CBK will continue to focus on independent retailers, offering fresh product, high order fill rates and quick deliveries.

"The CBK business model will continue to service the independent retailers through our own company employed direct sales organization," Stewart said. "It is especially exciting because CBK will play an even larger role in the new company's growth and success. We are also pleased that Bruce Crain, the current president of the wholesale division, will be the CEO of the new company so this will play an important role in what we are planning to be." He foresees "a seamless transition for our customers as CBK helps form the world's largest publicly traded 'home expressions' wholesale company."

Glenda Ray, CBK vice president of marketing, said this is one of many positive changes that have occurred within CBK since it was purchased by Blyth.

"We'll be a larger player in our marketplace than we have been because of the spin off," she said. "Our business model has always been that we work with our retailers; with everything we do, we're loyal to our independent retailers. That's how we've built our business. It's a very positive thing that we can stay where we've always been successful."

The spin-off, expected to be complete in the second quarter of fiscal 2006, will provide one share of the new company for every three shares of Blyth Inc. common stock.

By establishing its wholesale business as a publicly traded decorative home expressions retailing company, Blyth can concentrate on its catalog and e-commerce operations.

A relative newcomer to e-commerce, Blyth acquired Walter Drake, a leading direct marketer of value-priced household products, in January 2004 through a deal valued at $53 million. In April 2003, Blyth also acquired Miles Kimball Co., a cataloger and web retailer for about $65 million.