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Orchard Supply Hardware

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Orchard Supply Hardware, LLC
Company typeSubsidiary
NASDAQ: OSH (2012–13)
IndustryRetail – Home Improvement
FoundedSan Jose, California (1931; 93 years ago (1931)) (2020; 4 years ago (2020)) as Outdoor Supply Hardware
DefunctNovember 2018; 6 years ago (November 2018) (original company)
Fate
  • Chapter 11 bankruptcy
  • Liquidation sale
  • Shut down by Lowe's in 2018
  • Rebranded to Outdoor Supply Hardware after purchase of brand name and intellectual property by Central Network Retail Group
HeadquartersSan Jose, California, USA
Number of locations
99 (Before closure)
ProductsHome improvement and gardening products
Number of employees
5,400[1]
Parent

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

After starting as a non-profit cooperative in 1931, the company later turned into a for-profit corporation before it was bought and sold by a number of different corporations during the 1980s. In 1996, the company was acquired by Sears. After a brief period as a public company in 2012–13, the company filed for a Chapter 11 reorganization. In 2013, the bulk of OSH's assets and locations were purchased by the home improvement store chain, Lowe's. For the next five years, the chain was operated as a subsidiary of Lowe's and used for strategic expansion of retail operations. All stores were closed in November 2018.[2][3]

In January 2020, the Memphis-based Central Network Retail Group purchased the OSH brand from Lowe's.[4]

History

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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, as shown in 2013

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.[5] Each farmer put up $30 and in the midst of the Great Depression a new company was formed. Stanley B. Smith served as the company's first general manager and president.[6]

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 had 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.[7] 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) each, were considered large at the time.[8]

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 a for-profit corporation, "Orchard Supply Hardware" retail stores.[9][10]

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.

Interior of an Orchard Supply Hardware store in San Rafael, California as shown in 2016

Corporate acquisitions

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Orchard Supply Hardware ceased to be a privately owned company when it and its seven stores were acquired by the conglomerate W.R. Grace and Company in 1979.[11]

W.R. Grace began to sell off its 660-store retail division piecemeal in 1985.[12] OSH and another hardware chain, Home Centers West, were sold to Wickes Companies in May 1986.[13][14]

Wickes had already owned the Builders Emporium hardware chain. It was restructuring after emerging from bankruptcy under the leadership of turnaround specialist Sanford Sigoloff. Under Wickes ownership, OSH grew to 31 stores in California, and was spun out again April 1989. The $134 million management buyout was led by OSH president Maynard Jenkins and Freeman Spogli & Company.[15][16]

In March 1993 OSH made an initial public offering on the New York Stock Exchange under the symbol ORH.[17] The same year OSH expanded into Southern California by acquiring several hardware stores from Builders Emporium chain when this former sibling chain went out of business.

OSH was purchased by Sears in 1996 after seven years of independence.[18] By the end of 2000, OSH had grown to 274 stores.[19] In 2005, Sears sold a 19.9% interest in the company to Ares Management of Los Angeles for US$58.7 million, announcing expansion plans at the time.[20][21] 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.[21] This debt was later cited as one of the primary reasons for its 2013 Chapter 11 filing.

Mark Baker took over leadership of OSH as President and CEO in March 2011. Mr. Baker was a veteran of the major hardware chains HomeBase, Home Depot, Scotty's, as well as Gander Mountain and Scotts Miracle-Gro companies.[22]

OSH was spun out of Sears Holdings in 2012 and became a public company.[23] In January 2012 shares began trading on the Nasdaq stock market (Nasdaq: OSH).

Expansion

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

Bankruptcy and Lowe's acquisition

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On June 17, 2013, Orchard Supply 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 agreed to acquire no fewer than sixty of the (at the time) ninety-one Orchard Supply stores,[1] operating them separately from Lowe's.[24] At the close of the process, Orchard Supply remained 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.[25] Two of the stores were closed in June as a part of normal operations.[26][27] 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."[25] Lowe's also committed to investing US$200 million in OSH over the next five years.[28]

In November 2014, the company opened its first location in the city of San Francisco. The North Beach store located at 2598 Taylor St. was a former Petco and had a planned June 2015 opening. The store represented a new strategy for Lowe's to enter urban regions and markets using the OSH brand. This was following the opening of a store in the population dense Mid-Wilshire district of Los Angeles.[28] In 2016, Lowe's announced the expansion of the Orchard brand to South Florida.[29]

Lowes robotics

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Via a technology program launched initially by Lowe's in 2014, OSH announced a pilot program using "robot employees" at their San Jose store at 377 Royal Ave.[30] The devices, called OSHbots, were supplied by a Mountain View company called Fellow Robots. The OSHbots resembled white columns with two large LCD screens and were equipped with 3D cameras, so they could identify items brought in by customers, and had wheels on either side that helped them move. Customers could research items on the screens and then the robot could lead them to the aisle where an item was located. The robots spoke English and Spanish and were connected to an inventory database so they could inform customers if an item was out of stock.[31][30]

Post-Lowes

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On August 22, 2018, Lowe's publicly announced that Orchard Supply Hardware would be closed down nationwide, and would begin liquidation.[32] It said stores would be closed by the following February, and all had been closed by November.

Outdoor Supply Hardware

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In 2019, Central Network Retail Group (CNRG) purchased leases to 7 former OSH locations in the San Francisco Bay Area. New hardware stores in these locations were branded "Outdoor Supply Hardware", and kept a similar appearance and experience as the old OSH stores.[33] CNRG bought the full "Orchard Supply Hardware" trademark in January 2020.[34]

Marketing

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Boxcar

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Orchard Supply Hardware boxcar (OSHX 1) at History Park at Kelley Park

In the early 1960s, the City of San Jose denied Al Smith permission to install a sign along Auzerais Street to promote his Orchard Supply Hardware store because a sign for the store already existed facing San Carlos Street. Undeterred, Smith bought a railroad boxcar from Southern Pacific, painted the car with the OSH logo, and placed it at the end of the spur track behind his store and alongside Auzerais Street. It remained in that spot for nearly 50 years, and was occasionally featured in OSH's promotional material. Recognizing its historic relationship to the San Jose community, OSH donated the boxcar to the California Trolley and Railroad Corporation in 2013 for display in History Park at Kelley Park.[35][36][37]

Calendars

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Originally conceived as a marketing program, company president, Al Smith who had worked for the Southern Pacific Railroad, had a love of trains and is credited with the theme. 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.[37] Other images have featured landscapes, steam-powered machines, automobiles, historical drawings, produce from the Santa Clara Valley.[37]

From 1975 until 1992,[38] railroad artist and local politician 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.

OSH's calendars have featured the works of twenty-three different artists who have created over 450 unique pieces including railroad artists such as Kotowski, John Winfield,[39][40] James R Mann, 2017 Calendar,[41] and Ken Muramoto; Muramoto has the distinction of being the youngest artist to provide paintings for the calendar.[37]

References

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  1. ^ a b c Gunderson, Laura (June 17, 2013). "Most Orchard Supply Hardware stores to be bought out of bankruptcy". The Oregonian. Archived from the original on 2013-12-05. Retrieved 2013-06-27.
  2. ^ Snider, Mike (August 22, 2018). "Lowe's to close all Orchard Supply Hardware stores nationwide". USA Today. Retrieved 2018-08-22.
  3. ^ OSH.com Retrieved 2018-11-21
  4. ^ Jody Meacham (January 23, 2020). "Exclusive: New OSH makes deal with old OSH owner Lowe's for hardware brand". Silicon Valley Business Journal. American City Business Journals. Retrieved October 25, 2020.
  5. ^ Chapman, Robin (April 16, 2013). California Apricots: The Lost Orchards of Silicon Valley. The History Press. pp. 90, 160. ISBN 978-1609497958.
  6. ^ "Orchard Supply Hardware Corporate Office Headquarters". Corporate Office Headquarters. 2019-02-05. Retrieved 2020-04-08.
  7. ^ Rodriguez, Joe (29 May 2014). "Orchard Supply Hardware rises from hard times". San Jose Mercury News. Retrieved 4 January 2015.
  8. ^ Vereen, Bob (2010). Surviving—in spite of everything: a postwar history of the hardware industry. Indianapolis, IN: Dog Ear Publishing. pp. 15, 148. ISBN 978-1608444168.
  9. ^ "OSH Website". Osh.com. 2012-03-25. Retrieved 2013-06-27.
  10. ^ Pederson, Jay P., ed. (1997). International directory of company histories. Vol. 18. Detroit: St. James Press. ISBN 978-1558623521.
  11. ^ "W.R. Grace Acquisition". Wall Street Journal. February 2, 1979. p. 17. ProQuest 134364418.
  12. ^ Talley, Jim (December 11, 1985). "W.R. GRACE TO SELL ITS RETAIL DIVISION". Sun-Sentinel.
  13. ^ "Wickes Buys Grace Units". Chicago Tribune. May 7, 1986.
  14. ^ "Wickes to Acquire 2 W.R. Grace Units". New York Times. May 6, 1986.
  15. ^ "Wickes to Sell Subsidiary: Wickes Cos. has agreed to sell..." Los Angeles Times. April 13, 1989.
  16. ^ "Wickes Is Selling Hardware Division". New York Times. April 13, 1989.
  17. ^ "Equity Issues This Week". The New York Times. 1993-03-29. ISSN 0362-4331. Retrieved 2023-07-10.
  18. ^ "Sears to buy 60 California hardware stores". Baltimore Sun. August 16, 1996.
  19. ^ Form 10-K (Report). Sears, Roebuck and Co. December 30, 2000.
  20. ^ "Growing in new areas: Orchard Supply Hardware celebrates 75 years of …". Archived from the original on 14 July 2012.
  21. ^ a b Friedman, Josh (October 8, 2005). "Ares Buys 20% Stake in Orchard Hardware". Los Angeles Times. Retrieved 15 October 2013.
  22. ^ "Orchard Supply Hardware Appoints Mark Baker President and Chief Executive Officer" (Press release). March 7, 2011. Retrieved July 9, 2023.
  23. ^ Said, Carolyn (January 4, 2012). "Orchard Supply on its own again". San Francisco Chronicle. Retrieved 17 June 2013.
  24. ^ Prasad, Sakthi (17 June 2013). "Orchard Supply files for bankruptcy, Lowe's steps in". Reuters. Retrieved 2013-06-27.
  25. ^ a b Radin, Rick (August 16, 2013). "El Cerrito OSH store among those closing". Mercury News. Retrieved 15 October 2013.
  26. ^ van Romburgh, Marlize (August 22, 2018). "San Jose-based Orchard Supply Hardware to close all stores by end of the year". American City Business Journals.
  27. ^ Siegal, Daniel (September 27, 2013). "Orchard Supply Hardware store prepares to close - It's one of 17 stories being shuttered but for now, good deals abound". Burbank Leader. Archived from the original on 2013-10-07. Retrieved 15 October 2013.
  28. ^ a b Donato-Weinstein, Nathan (Nov 24, 2014). "Orchard Supply snags first-ever San Francisco store in urban push". San Jose Business Journal. Retrieved 4 January 2015.
  29. ^ Bandell, Brian (April 18, 2016). "Lowe's hardware subsidiary secures first South Florida location". South Florida Business Journal.
  30. ^ a b Anderson, Mae (29 October 2014). "Robots to assist customers at San Jose Orchard Supply Hardware store". San Jose Mercury News. Associated Press. Retrieved 4 January 2015.
  31. ^ Bloom, Jonathan (December 2, 2014). "SJ hardware store uses robot to help customers". KGO-TV. Retrieved 5 January 2015.
  32. ^ Ellison, Stephen; Cull, Ian (August 21, 2018). "Orchard Supply Hardware Stores to Shut Down Nationwide". NBC Bay Area.
  33. ^ "Orchard Supply Hardware to be revived — sort of". Chain Store Age. 2019-05-02. Retrieved 2020-10-31.
  34. ^ Meacham, Jody (January 23, 2020). "New OSH makes deal with old OSH owner Lowe's for hardware brand". American City Business Journals. Retrieved July 9, 2023.
  35. ^ "History San Jose -- "Railroad Steam Locomotive and Cars"".
  36. ^ Pizarro, Sal (August 3, 2013). "Pizarro: Orchard Supply Hardware's historic boxcar will soon roll to new home". San Jose Mercury News.
  37. ^ a b c d "Inside cover notes". 2015 Orchard Supply Hardware Train Calendar. 40 (1): 2. December 2014.
  38. ^ "California State Railroad Museum -- "Sweet Stop: Mike Kotowski's Sugar Cane Trains of Hawaii" Exhibit". parks.ca.gov. Archived from the original on May 30, 2013. Retrieved 9 April 2013.
  39. ^ Winfield, John. "About". Archived from the original on 2013-07-07. Retrieved 9 April 2013.
  40. ^ "2013 Orchard Supply Hardware Calendar". Annual Calendar. December 2012.
  41. ^ "OSHX-1 Boxcar at San Jose watercolor illustration".
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