VIRGINIA BEACH – February 16 -- Stihl Inc., one of the city's largest employers, purchased the former site of Lillian Vernon on Wednesday, nearly doubling its space and opening the way for further expansion.
Stihl, a power-tool manufacturer, occupies more than 1 million square feet near Lynnhaven Parkway, said Peter Mueller, its executive vice president of operations. The old Lillian Vernon headquarters, which is nearby off International Parkway, will give Stihl an extra 850,000 square feet.
The German-owned Stihl employs about 2,100 people in Virginia Beach, Mueller said Wednesday. They produce more equipment than any other Stihl plant in the world.
Stihl will use the former Lillian Vernon building for manufacturing, warehousing or both, Mueller said. He said he didn't know when Stihl would begin occupying the site or how many people would eventually work there.
In a separate project, Stihl is building a 53,000-square-foot addition to its accessories building. That should be completed by the fall and will add 52 people to the plant's staff, Mueller said.
"By doing that expansion, we have basically used up all of our land," he said. "So I'm pretty much landlocked. Looking at the development of the last three to five years, we have record sales, record production and record market share, so I have to be prepared for the future."
The company also might lease "parts of the building," according to a news release.
Mayor Will Sessoms said, "Any time Stihl grows in Virginia Beach, it's good for Virginia Beach."
Stihl officials said they would announce the purchase today. Mueller said they bought the property for "slightly above $18 million" from Gift VA LLC, an affiliate of W.P. Carey & Co. LLC, a real estate investment firm based in New York.
Stihl, which has more than 90 acres in Virginia Beach, will add 62 acres with the transaction, Mueller said. The Lillian Vernon site is adjacent to or within a quarter-mile of Stihl's existing property, he said.
Yet the companies' strategies and fortunes have wound up miles apart.
Lillian Hochberg founded Lillian Vernon - named for herself and her hometown, Mount Vernon, N.Y. - in 1951. The catalog, and later online, retailer specializes in low-cost personalized gifts and home decor.
In 1988, the company bought 61 acres to build a distribution center in Virginia Beach and doubled its size in 1995. It moved its headquarters from New York in 2006. Yet at the time, Lillian Vernon had not recorded a profit since 2000.
Gift VA LLC bought the building in 2003 for $37 million. The deal was part of the financing used in Ripplewood Holdings LLC's $60.5 million buyout of Lillian Vernon that year, according to a W.P. Carey news release.
Lillian Vernon has changed hands at least twice since then. When the company was owned by Sun Capital Partners Inc., a Boca Raton, Fla.-based private investment group, it filed for Chapter 11 bankruptcy protection in 2008. The latest owner, Current-USA Inc. of Colorado Springs, Colo., closed the Virginia Beach headquarters last year, citing a decline in sales.
The Stihl family, which still owns and runs Stihl Inc., founded the company in Germany in 1926. It has developed a reputation for producing high-quality tools, such as chain saws and blowers, at above-average prices, and servicing them through a network of small independent dealers.
Stihl has grown significantly since it moved into a 20,000-square-foot warehouse, with fewer than 50 workers, in Virginia Beach near Norfolk International Airport in 1974. It moved to its current location, on Lynnhaven Parkway, in 1978.
The privately held company does not release sales totals. But Mueller said it enjoyed record sales in the United States last year. The company has reported record sales for more than 15 consecutive years, except in 2009.
"We are really glad that we can do the expansion and maintain our presence here in the city," Mueller said. "Back in 1974, when we selected Virginia Beach, we made the right choice."
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