Orchard Supply Hardware

Orchard Supply Hardware (OSH) is an American retailer of home improvement and gardening products. Headquartered in San Jose, California, Orchard Supply Hardware has dozens of locations throughout California, with expansions into Oregon.

The company, which started as a non-profit cooperative in 1931 and later as a for-profit corporation, was acquired by Sears in 1996. After a brief period as a public company in 2012–13, the company filed for a chapter 11 reorganization. As of June 2013, the bulk of OSH's assets and locations have been sold to Lowe's, and are expected to be operated as a subsidiary.

History

Co-op member certificate from 1942 signed by founder Stanley B. Smith

Original neon sign for Orchard Supply Hardware, store #3, at 720 W San Carlos Street, San Jose, CA

Origins

Orchard Supply was formed in 1931 as the Orchard Supply Farmers Co-op by 30 farmers, consisting mostly of orchardists and fruit tree ranchers who banded together to form a cooperative to buy essential farm supplies.^[2] Each farmer put up $30 and in the midst of the Great Depression a new company was formed.^[3] Stanley B. Smith served as the company's first general manager and president.

Operations started in a rented warehouse at 230 Bassett St. in San Jose, CA. In spite of the Great Depression, the cooperative was successful. In 1933 the co-op moved to a larger location at 44 Vine St. in San Jose. The new location featured a large retail display area, off-street parking, and an adjoining warehouse.^{[citation needed]}

In 1946 the company moved to a site at 720 West San Carlos St. in San Jose, a location still in operation. By then, there were almost 2000 members. In 1962, Albert B. Smith (Stanley's son) became president, expanding the business into a chain of stores which at 25,000 square feet (2,300 m²) were considered large at the time.^[4]

By 1950 the electronics industry began booming in the Santa Clara Valley, and with it came an abundance of new home owners in the San Francisco Bay Area. The orchards gradually became residential neighborhoods and the "Orchard Supply Farmers Co-op" became "Orchard Supply Hardware" retail stores.^[3][5]

In 1977, the company purchased a 19-acre warehouse and office complex from Sunsweet Growers to serve as a distribution center. In the 1980s, Loren S. Smith (another son of Stanley) became President and continued the expansion. In 1992 the distribution center was moved to Tracy, CA.

Mergers and acquisitions

OSH was purchased by Sears in 1996, and in 2005 sold a 19.9% interest to Ares Management of Los Angeles for US$58.7 million, announcing expansion plans at the time.^[6][7] Ares had the option to later purchase another 30.2% stake in the company for US$126.8 million, but did not exercise this right. OSH had eighty-four stores at the time.

At roughly the same time, Sears Holdings announced that its Sears, Roebuck & Co. subsidiary expected to receive a dividend from OSH of about US$450 million. In connection with the initial investment, OSH was expected to issue US$405 million in debt.^[7] This debt was later cited as one of the primary reasons for its 2013 Chapter 11 filing.

Later several of the Southern California locations of the bankrupt Builders Emporium chain of hardware stores were purchased in preparation of expansion into that region. OSH was spun out of Sears Holdings in 2012 and became a public company.^[8] In January 2012 shares began trading on the Nasdaq stock market (NASDAQ: OSH).

Expansion

In April 2013, OSH expanded beyond California, opening stores in the suburban Portland metropolitan area of Oregon.^[1]

Reorganization

On 17 June 2013, Orchard Supply and Hardware announced it filed for Chapter 11 under the U.S. bankruptcy code and that most of its assets would be sold to the Lowe's Home Improvement chain for $205M in cash. Lowe's will acquire no less than sixty of the (at the time) ninety-one Orchard Supply stores,^[1] operating them separately from Lowe's.^[9] At the close of the process, Orchard Supply expects to remain a separate brand and operating entity from the Lowe's chain.

In August 2013, preparations were made to close seventeen of the ninety-nine stores.^[10] Two of the stores were closed in June as a part of normal operations.^[11][12] This left seventy of the pre-Chapter 11 announcement stores still in operation. According to a company spokesperson, workers at the stores that closed were not eligible for severance pay due to the bankruptcy proceeding, but Orchard Supply is "providing incentive bonuses to key employees."^[10]

Calendars

Originally conceived as a marketing program, OSH calendars were created and given out to customers at Christmas time. One aspect that initially made these calendars unique was that all original paintings were commissioned as artwork for each month. The theme of these calendars has primarily been trains and railroad history, with only a few diversions, including the 1981 calendar which celebrated the Santa Clara Valley.

From 1975 until 1992,^[13] railroad artist and Michael Kotowski created each painting with the exception of the 1977 and 1979 calendars. The 1977 edition was a selection of “Still Live” paintings by the Santa Cruz Art League and the 1979 edition was a series of Southwestern style paintings by Northern California artist Anthony Quartuccio, Sr. The 1982 calendar had a flight and aviation theme called “Up, Up and Away” for which Kotowski created the original artwork even though it was not train related. Kotowski did the layout design and production on the entire series under his tenure as artist.

Most recently, OSH's calendars featured the works of railroad artist John Winfield.^[14][15]

References

External links

• Official website
• Website for 2013 Restructuring of Orchard Supply