A Delaware kitchenware retailer has completed a $3.5 million acquisition of Southern Season and plans to take the iconic Chapel Hill gourmet food emporium out of bankruptcy.
Calvert Retail, the owner of six Kitchen & Company stores, took over Southern Season on Tuesday, becoming its third owner since the company was started in 1975. The expedited sale was approved by a federal bankruptcy judge on Friday after Southern Season executives told the court they had run out of money.
A half-dozen Calvert executives spent Monday in Chapel Hill, familiarizing themselves with their new acquisition.
“We’re going to be observing and learning as much as we can,” said Calvert marketing director Kaela Mast. “We haven’t even had a chance to see any reports on what items do really well here.”
Southern Season filed for bankruptcy protection two months ago, listing $18.3 million in liabilities. The company was put up for sale to raise the cash needed to fund operations and keep the business afloat.
Calvert acquired Southern Season’s flagship store in Chapel Hill, its website, trade names and intellectual property. The company plans to close three smaller outlets, called A Taste of Southern Season, in Raleigh, Asheville and Charleston, S.C.
Calvert specializes in turning around bankrupt specialty food companies. Kitchen & Company arose out of a bankruptcy proceeding, and was acquired by Calvert in 1999 for $3.3 million. At the time, Calvert CEO Eric Brinsfield said the company’s bankruptcy resulted from expanding too rapidly.
Mast said the 1999 acquisition of Kitchen & Company and the recently completed acquisition of Southern Season are “very similar situations.”
After the 1999 acquisition, Calvert did not honor gift certificates customers had purchased before the bankruptcy. Calvert officials said in court Friday they would likewise not honor Southern Season gift certificates.
Mast, Calvert’s spokeswoman, said company officials can’t discuss their business strategy for Southern Season because they don’t have the answers at this time.
Southern Season’s creditors are artisanal food vendors that supplied the store with cheeses, chocolates, coffee and the like. These businesses are likely to collect pennies on the dollar for the amounts they are owed.
“Once things are stabilized we’ll reach out to the buyers – they have a chocolate and candy buyer – and see if they want to do business or not,” said Hallot Parson, a co-owner of Escazu Artisan Chocolates in Raleigh, which is owed about $1,100. “I wish them well and hope we can work together.”
Still smarting from the sting of Southern Season’s business failure, some vendors are wary.
“The new owners have a lot of work to do in terms of rebuilding a once-strong retail brand and reconfiguring a business model that was clearly broken,” said Mark Overbay, founder and president of Big Spoon Roasters in Durham, which is owed $2,163.
“Should Calvert Retail contact us about a wholesale relationship, we will evaluate their values and business practices,” he said.
Overbay said Southern Season, or any retailer, would not be a good fit for Big Spoon Roasters if it pays its full-time employees less than a living wage, if it sells products that have been tested on animals, and if it “does not foster a safe environment where all people feel welcome.”