A discussion with Bob Smiland, head of sales and marketing for Monrovia Nurseries
I meet with Bob Smiland, who is the Chief Sales & Marketing Officer for Monrovia Nurseries. Bob was nice enough to sit down with me today, and chat about some of the rumors flying around Monrovia. If you remember, Monrovia sent a letter to all of their retail customers asking them to book and additional $20 million dollars in spring bookings. This was on top of the spring bookings the retailers had already placed. If the retail customers could not come up with the additional money the bank asked for, then the bank wanted Monrovia to move more plants through the box store chain. Bob say’s that they did not meet their goal of raising an additional $20 million dollars. You will see Monrovia plants in the box stores. They will be in plain black containers, delivered by independent trucking companies. They will not use their own branded Monrovia trucks. Bob tell’s me that the box stores will not receive any discounts above what any independent garden center would receive. Naturally, with the volume the box stores do they will likely receive the maximum discount, but no more than what would be offered to their best independent customers. Bob also say’s that none of the exclusive varieties that Monrovia grows will be sold at the box stores.
It’s clear that Monrovia never thought they would find themselves in this situation, and it does pain them. They grew just too many plants a few years ago when the world was their oyster. With the downturn in the economy, they found themselves with too many plants. By opening up the distribution channels to the box stores, they hope to reduce the amount of stock on the ground. Bob also mentioned they have reduced their production substantially this past and current year.
We had been doing business with Monrovia for well over 20 years, and always felt they we’re a top notch nursery supplier. I think, and Bob agrees that Monrovia was a company that had a lot of pride, bordering on invincibility when it came to what was possible in years past. No one is immune to the giddy feeling that enveloped the nursery trades a few years ago. An attitude of anything is possible, and no one is going to tell us how to run our company prevailed. It must be painful to be told what to do by the bank, but these are the days we live in. Situations none of us would have ever thought possible a few years ago have now come to fruition.
One area Bob say’s he would like to address was the poor outreach Monrovia has had over this event. We talked here at this blog on how Monrovia had already hired Mike Trebbing, who is their box store specialist, before they sent out the letter. It left a sour taste in many of their customers mouths, and he said the company should have done things differently. My guess is Monrovia is an old school company. They assumed when they sent the letter to their customers the confidentiality they requested in the letter would be honored. The nature of the new world is there are no secrets anymore, and once the letter was leaked by a industry blog, the cat was out of the bag.
Bob reads this blog, and mentioned he is also given updates by staff. So comment’s made at this blog are noticed and read at Monrovia, which is a good thing. I invited Bob to comment here next time. Perhaps in the past they should have addressed the comments or post’s that have appeared here before. Like a lot of companies that are here at the ANLA Clinic, they are use to doing things they way they had always been done in the past. Press release goes out, give interview to trade publications, stir, and wait. Like we have said before, that doesn’t fly in this new world. One person banging away at their computer in their pajama’s at home, can potentially have as much impact as traditional media had in the past. Perhaps we will see a new interactive Monrovia in the future.
Here is the latest info about the rumors swirling around Monrovia Nursery, straight from the Chief of Sales & Marketing http://ow.ly/3LICu
Glad you got the scoop directly from Monrovia. I hope this puts the rumors to rest. I didn’t believe they would raise the 20 million and then turn their backs on the independents. Not their style. Monrovia has been a standout in the horticultural business and I wish them all the best.
With this interview you have propelled yourself to the ranks of the trade press. I wonder if you can now get a “Press” badge to all the industry conferences and events?
Now just about anyone at the highest levels in the industry will take you seriously and respond to your emails and phone calls to confirm or dispel rumors about them. You can be a completely unbiased reporter since you have no advertising revenue and can’t be accused of slanted writing because of it.
Congratulations “Scoop” Trey!
Like many of its customers, we received the infamous letter. It immediately left a funny taste in my mouth, namely because I initially found it rather bizarre, but on the second read it sounded more like mild blackmail. The letter did not make me want to increase my spring order. However, the list of sale prices I was given at MANTS (35-50% off) did make me add more. In my mind I normally associate Monrovia with several things including premium material and selection, but with premium pricing, so I was delighted with the lower prices. Perhaps they should have done this a couple of years ago. I also associate Monrovia with developing, breeding and promoting exciting new plants. I was reminded by this on Wednesday when I had the opportunity to hear Nicolas Staddon, Monrovia’s Director of New Plant Introductions as he spoke at the Mid Atlantic Horticultural Short Course. He mentioned nothing about the letter, or the company’s financial state – it was all about the plants and the people who work with them. I wish we could all return to those days where selling cool plants to interested people was a decent and uncomplicated way to earn a living.
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Trey, Victor, Sid and Les,
Thank you for accurate commentary on our discussion last night and it was very good to meet you. Thanks also for the three follow up blogs. Trey, let’s keep in touch. Bob Smiland
Thank you, Trey, this was very informative and an interesting look at how different players view the business. After all, if Monrovia feels like they must sell to the boxes, they must have done a cost-benefit analysis. I’m sure they anticipate some lost sales from some independents. I got the letter too and I thought it was very well phrased. But it did not jibe with the hiring of Mike Trebbing — two very different messages. And really, I can’t imagine anyone sending an emailed letter to all their customers and expecting it to remain completely confidential. It’s just too easy to forward an email.
I watched the video with Elin today, and I found it interesting. I have a very hard time believing that Home Depot will not receive discounts greater than the independent customers, also that they will not do pay by scan. I know of a garden center live goods vendor who worked with Depot as a PO based transaction (as a majority and a certain percentage pay by scan) and then the following year- that changed to an entirely pay by scan basis. If they are PO based, do you really think that Home Depot will take care of the product- it sounds like a nightmare for plant credits already. Or, if they would do pay by scan, do you think that Monrovia has the money for merchandisers, caretakers etc. if it seemed like they were hanging on by their fingernails as it was. Also, not sure about dabbling into other avenues such as plant nutrition products available at IGCs and farm and ranch stores etc.- or what about the Proven Winner partnership, that was aimed at keeping the newest cutting edged plants in the hands of independent garden center focused suppliers… they are all over the map and its probably not going to be too much longer before we all get another letter saying they are in trouble.
I was wondering if Bob Smiland mentioned anything about their long term plan with the box stores? In Monrovia’s original letter they said they would be forced to liquidate if they did not reach their $20 million goal. I am a little confused though? To me liquidate means to sell plants at deeply discounted prices and possibly close down. It doesn’t sound like Monrovia is going to close down and they also claim that they won’t be selling their plants any cheaper than their discounts to their best independent customers. So where does the word liquidate come from? Are they just going to sell to the box stores for a short time until they get rid of excess inventory and get a little cash infusion through the box stores. Most likely it seems to me they threw out some ridiculous number of $20 million that they knew couldn’t be reached and in the mean time hired away a box store specialist (just to be sure they didn’t waste any time) before the numbers even came in. Maybe I am being too cynical, but this all just seems like a load of crap to me. They had planned from the beginning to go to the box stores and were just trying to squeeze any sales out of independents they could in a very tough economy. It seems they realized at the size they are at they can’t move enough material through independents so they were looking for a way to get into the box stores. For some reason independents feel a strong sense of loyalty to Monrovia that is just not being reciprocated. Was anything mentioned in your talk with Bob about the 100 acres they just sold of their remaining property in Azusa at the end of last month? The property was actually in Glendora a much higher end city than Azusa, even though the economy is down this land brought in a substantial amount of money. So with an infusion of $20 or so million from the land why not wait out three or four months (surely that 20 million can get them through three or four months even with no sales) see how spring goes and if things did not go well again then look at the box store channel. But to start with the chain stores now is very odd timing to me considering Monrovia has made it through the slowest part of their year (winter). I understand a lot of this is bank pressure and they may not be totally in control now but they are the ones that crawled into that bed and must now live the consequences. Plus the bank insisting they sell to the box stores after they sold the land tells me one of two things: 1) the money went into the shareholders pockets again like it did with the original sale of the 500 acres, or 2) Monrovia is really, really in a bad spot and even a $20 or so million dollar cash infusion through the sale of the land did not help. In talking to their employees and sales reps I have sensed some frustration in how this was handled and in general how things are being handled by management. I feel most sorry for the employees of Monrovia as they will be the most affected by decisions made by management in the months and years to come.
Congratulations to you on a wonderful interview and to Monrovia’s management team, employees, and customers for working together to make Monrovia Nursery a survivor in this very difficult time in our industry. The sale of the property in California that netted them around $16,000,000, the agreement with the Fertilome group netted them around $5.000.000 so they came up with $4,000,000 cash from somewhere else so Bank of America is out and the GE Capital and the other bank pick up what is left. Nobody thanked the CFO but someone should and hopefully he negotiated appropriate loan convenants that they can meet.
There are many growers in this industry who have suffered during the last 24 months. But it is suprising that this is the only situation where I have heard that the “Bank” forced anyone to sell to another customer class. Their statement on producing too many plants years ago just don’t add up. There are not many small plants (#1, #2, #3, or #5) that take 24 months to bring to a finished state and I can tell you that all of their nurseries are not full. This tells me that they not only produced more plants years ago but have continued to do so while the rest of us have managed our inventory levels to remain in business. My point is that as much as I respect Monrovia’s contribution to the value of plants in the market place I have a real hard time believing all of the information that has come out of the company, expecially since they now admit that they did not tell the truth about Treibing. I think that their actions have spoke more loudly than their words and I for one as a past customer will have a difficult time believeing anything that comes from them.
Their financial difficulties are real but their “requirement” to sell chain stores seems contrived. If every chain store wanted to but from them they could have easily hit the $20 million number but yet they are still $8 million shy. I assume that their sales efforts to the chains have not turned out s they had hoped. That should be a pretty strong scrap number to have to eat on this years income statement.
I also find it interesting that after the first letter was sent out that within a week or so Mr. Smiland stated in an interview that they were “half way” to their goal. Amazing that a month later they are only $2 million more towards their goal than they were a week after their initial announcement where they said that their IGC customers had to buy $20 million or they would then have to go to the chains. In their last letter they said that they had not met their goal but that they had sold $12 million so I suppose that they sold Home Depot $2 million. But that does not line up with their statement in the last letter that said that Home Depot bought a significant part of the $12 million.
I remember that my Grandfather told me that telling the truth is like being pregnant. You can’t be part pregnant and you can’t tell part of the truth and be truthful. Based on their printed communications and their own words Monrovia’s management has found a way to be partially pregnant. At this point I would be advising them to not write any more letters or do anymore interviews. Just keep growing great plants and manage the business effectively like the rest of us have to.
Trey, as a landscape contractor in Auburn, my phone has not rang since October 2010. Normally over the last 26 years, someone needed something such as drain work or a few trees planted. I was fortunate to have remained busy until then. I remember calling to order a large plant list over $7000.00 for a job a few years back and the rep never would return a call. Even when we had the Sacramento Street Nursery, they never came around except once. I was small potatoes back during the hayday. I try to do business with Laura at Sierra View Nursery when I can. I prefer using her and paying retail minus 20 percent because she has so many sources. I pass the cost on to my clients and they seem happy as I never mark up material. I have been happy with a fair labor rate. I have looked at Home Depot here in Auburn and I have never been impressed with the plants. I shop Eisley’s for a few dollars more as they have a greater quality selection and Monrovia. Believe me, if they sell to Home Depot, I will be able to tell the difference. Not naming the brand will not keep me from seeing what is going on and everyone talks. Not very healthy idea as it will hurt the Mom and Pop stores. Monrovia needs to tighten their belts and give you guys a better deal so I can afford to come to you. I consider their plants some of the best but also the most expensive.
The good times are over. I saw it ending a few years back and quit making large purchases and reducing overhead and debt. The economy will not pick up this Spring and put everyone back to work otherwise I would be seeing some calls as the ripple starts with me. Homeowners are not landscaping themselves, it is just on hold.
Shawn, I am with you on the outlook for our area. We have at least another year of poor economics. Can’t wait, just have to figure our how to build and thrive in the new world. No where to go but up. Love your outdoor pizza oven by the way!
Congratulations on a great interview Trey.
I don’t think you/we are getting the entire story from the folks at Monrovia, however. The facts don’t line up in my mind. Here’s what i have been told by my sales rep from the company:
-Monrovia sold their Glendora property for $21 million. Most of the money was used to pay down bank debt and to get a shareholder out of the company.
-Monrovia was paid $225 million for their property in Azusa in the last decade. Most of that money went to their shareholders, not into the company.
-Monrovia said their banks were going to foreclose on them if they didn’t meet certain numbers by the end of January. On its face that doesn’t make any sense to me. While I understand that banks are nervous about the inventory values at the wholesale nurseries, why would they threaten them when they are days or perhaps weeks from turning their inventory into receivables which they are must more comfortable with? This doesn’t ring true. If you couple it with the hiring of the sales VP from Hines and the tour that the Depot buyers made in November well before the letter went out, it seems to me and others that Monrovia was setting a target that they knew they couldn’t reach as a justification for going to the chains. Had they just told us up front what they were doing and were honest about it, I’d be Ok with it. As it stands now, I will be canceling all of my orders with them.
-They have mismanaged the company and they want us to help bail them out. To the best of my knowledge, the CEO, the President, and the VP of Sales still in their same jobs. How is this possible? If they want to change the way they do business, shouldn’t they get rid of at least some of the folks that got them into this mess?