Smith & Hawken garden chain considers Atlanta

Struggling luxury garden retailer Smith & Hawken is considering moving its corporate headquarters from a San Francisco suburb to Atlanta.

The move would bring 120 jobs and a flagship store to Sembler’s under-construction mixed-use project, Town Brookhaven.

Pat Farrah, interim head of Smith & Hawken, said Monday, however, the headquarters won’t move if the company is not on sound financial footing.

“It’s all very speculative,” said Farrah, a co-founder of Atlanta-based Home Depot and retail guru tapped to help Smith & Hawken rebound.

“Assuming Smith & Hawken ends up being viable, Atlanta would probably be the No. 1 choice,” he said. “We need to make sure it would warrant moving.”

Austin, Texas, also has been considered for a change of venue, Farrah said.

Smith & Hawken would be a key tenant for Sembler’s project. Sembler is seeking a $52 million tax incentive from DeKalb County over 20 years.

Sembler President Jeff Fuqua said incentives from the county, as well as the state, would be key to attracting the Smith & Hawken headquarters, if the company decides to relocate.

“They can go to any city in the country to get all kinds of incentives,” Fuqua said.

He explained his current proposal for Town Brookhaven doesn’t assume a Smith & Hawken headquarters.

“If they decide they want to do it, we can expand the project to accommodate them,” said Fuqua.

Sembler would help woo Smith & Hawken by cutting the company a good deal.

Fuqua called the deal “tough economically for us, but what it does for the profile of our project outweighs the financial difficulties of it.”

The retail portion of Town Brookhaven is zoned for 600,000 square feet at a cost of $207 million and that could include the flagship store and offices for the retailer.

Smith & Hawken sells garden items from tools to furniture to bulbs in stores and online, as well as to other retailers. The company has two Georgia stores, one in Buckhead and one in East Cobb.

In a memo obtained using Georgia open records laws, Maria Mullins, the director of DeKalb’s Office of Economic Development, calls the potential headquarters move “Project JOSH.”

The memo says a Smith & Hawken headquarters would bring $12 million to $15 million in private investment and 130 to 170 high-paying jobs. (Farrah said the figure was 120 jobs.)

The confidential memo, written to Burrell Ellis, DeKalb County’s CEO, says Austin’s “incentives became very aggressive. We attempted to match.”

The DeKalb development agency did not wish to comment for this story.

The tax proposal is expected to be on the agenda of the DeKalb Development Authority board on Thursday.

Farrah is already well-known by some Atlantans. He joined Home Depot in the company’s early days, moving from Los Angeles to Atlanta just as founders Bernie Marcus and Arthur Blank were opening their first four stores here.

Farrah helped develop the “big box” concept and became a key merchandiser and marketer for the chain.

At Smith & Hawken, Farrah was originally hired in an advisory capacity to, as he said, “do what I can to save it. It’s been a troubled company.”

That’s because Smith & Hawken’s high-end goods relied on luxury consumers and orders from fast-growing retail chains like Starbucks. Both markets have dried up during the recession.

Founded in Marin County, Calif., in 1979 by environmental guru Paul Hawken and catalog specialist Dave Smith, Smith & Hawken now is a division of The Scotts MiracleGro Co., a nearly $3 billion, publicly traded company based in Marysville, Ohio.

To right the ship at Smith & Hawken, Farrah has closed underperforming stores, slashed headquarters staff by 30 percent and cut employees’ salaries by 25 percent. The chain now has 56 stores.

Still, in the company’s second-quarter earnings report, Scotts reported Smith & Hawken lost $15 million year-to-date. Scotts has been looking for a buyer “on and off” for the chain for 18 months, said Farrah.

In the process, however, Farrah said he “fell in love” with Smith & Hawken.

“It’s a combination of buying time and seeking out a potential new owner,” said Farrah. “We’ve made some real strides to improve the company, but it’s a tough model to do particularly well in this economic climate.”

Moving the headquarters to Atlanta, however, could help Smith & Hawken recruit talented staff because the cost of living is so much lower than Marin County. Smith & Hawken is based in Novato, a bedroom community of San Francisco, where the median price for a single-family home was $402,000 in the first quarter of 2009, according to the National Association of Realtors.

In the Atlanta area, by comparison, the median price for a single-family home was $115,600.

Staff writer Ty Tagami contributed to this report.