Legendary gardening empire facing its Waterloo

Originally published Aug. 12, 2012

The Italianate copper-and-iron gates at Waterloo Gardens in Devon are locked, the rhododendron outside turning brown, as the gardening mecca on Philadelphia's Main Line withers this summer from a financial collapse few would have imagined given its gilded past.

Nationally renowned Waterloo Gardens has gone bankrupt, a dramatic denouement following a recent triumph and tragedy for the legendary retailer that peddled plants for decades while also filling patrons with a sense of status by offering an eclectic assortment of exotic greenery and adornments aimed at new- and old-wealth sensibilities.

In April, the Devon store celebrated its 70th anniversary. In October, matriarch Zelinda LeBoutillier passed away. In late June, Waterloo went bankrupt.

The legendary garden center on Lancaster Avenue that once brimmed with merchandise waiting to be loaded into idling BMWs and Land Rovers has been reduced to bare greenhouses and skeletal trellises. The property is being marketed for sale in one of the most envied zip codes on the East Coast, while the rest of the business courses through Chapter 11.

Waterloo's Devon store closed in July, despite family members' hope it might survive their last-ditch bankruptcy filing June 26. Situated next to the century-old Devon Horse Show grounds, the store's startling disappearance has fueled chatter across the Main Line and has left a gaping hole.

The shuttering of the flagship store was the calamitous by-product of a failed expansion into Warminster in 2007 that stripped the family-owned business of millions in cash just as the global economy was about to shudder.

Waterloo was crushed also by the impatience of creditors, the end of the suburban housing boom that had long fed its bottom line, and a sustained drop in business as even wealthy shoppers trimmed budgets to cope with economic stagnation.

At Waterloo's only remaining store, in Exton, the founding family has scraped for weeks to stay open and restructure what remains of a business once considered as enduring as the pedigrees of its well-heeled clientele.

"It's disheartening to see Devon close," said third-generation Waterloo operator Bobby LeBoutillier (pronounced luh-boo-till-EER), 58, who was only 6 when he began pulling weeds and watering plants at the Devon outpost founded by his Italian American grandfather. As president, he is determined to rescue what is left of the business, despite resistance from the bank to whom Waterloo owes millions.

LeBoutillier is angling to rejuvenate Waterloo's 50-acre store in Exton, the lone remnant of what had been, only a few years ago, a four-store enterprise.

"I think we have a very good chance," said LeBoutillier, whose mother, Zelinda, was Waterloo's chief executive before she died of cancer last year at the age of 76. "We need to get Devon customers here to actually help us grow our sales."

Waterloo's final days before bankruptcy were filled with nail-biting phone calls and the kind of stress most business leaders hope to never experience. But before sitting down with his top accountant for a lengthy interview to discuss the ordeal last week, LeBoutillier felt the need for a detour.

A hulk of a man whose day-to-day attire includes suspenders and the navy-blue work pants of a field laborer, LeBoutillier ventured to a large vegetable patch behind the Exton store. Elsewhere, a tour group from Canada was exploring the vast grounds.

"I grew up in the fields here," he said, standing in a 20,000-square-foot plot. Its earthy simplicity was in stark contrast to the $1,500 fountains and $5,000 patio sets inside the store a few hundred feet away.

The garden, he said, was born a few months before his mother's death. Cultivated each evening by him and fellow volunteers from a Bible study class he attends at Calvary Fellowship Church in Downingtown, it produces 800 pounds of vegetables a week for The Lord's Pantry, a nearby food bank.

"Look at those beans - aren't they something?" he said, admiring plants rising eight feet high. "That brings me a lot of peace. I don't know how I'd be dealing with all this if I didn't have something like that."

Waterloo's Chapter 11 filing in U.S. Bankruptcy Court in the Eastern District of Pennsylvania marked a stunning end to a glorious run of growth and distinction for a business founded in 1942 by the son of Italian immigrants, James Paolini.

Paolini's green thumb sprouted a gardening empire. In 1959, he opened nurseries about 15 miles away on what was then farmland in Exton to supply the Devon store with homegrown goods.

In 1972, Paolini sold the business to his daughter, Zelinda, and her husband, Roberts "Bo" LeBoutillier. What came next was head-spinning growth.

Gardening became a national craze, dovetailing with the development of the suburbs and exurbs. The boom in construction of large homes in Malvern, Paoli, Exton, and beyond, for example, was wonderful for Waterloo.

Customers eager to landscape McMansions, estates, or more simply spacious Colonial homes feasted on Waterloo's extravagant inventory of affordable ferns, $700 trees, or elaborate patio sets.

"At lunchtime, you'd walk through just to see what was new," said Jan Leaf, who browsed there 30 years ago during lunch breaks with coworkers while working at an office on Lancaster Avenue.

On weekends, the scene was a madhouse, particularly during spring and around the holidays, when Waterloo filled the store with elaborate seasonal displays.

"You had to get there early if you wanted a parking spot," said Leaf, who today is director of The Lord's Pantry, the very nonprofit that receives Waterloo's bounty of donated vegetables.

"Oh, you shop here?" LeBoutillier once heard a woman exclaim when she ran into an acquaintance at the Devon store. A long promenade of gilded gates evoked an aura and era of the landed gentry.

Customer demand was so high in the 1970s that the Exton nurseries opened to the public as a retail outlet.

There were bumps along the way, of course. In 1990, Paolini died at 83, unleashing a rancorous legal battle when, in his will, the horticultural patriarch left his daughter mere pennies in favor of his housekeeper. The family rift would play out in court for several years before fading away.

Business, however, stayed strong, even after Zelinda's husband died in 2001 at the age of 67.

"Sales were booming all through 2005, 2006, and 2007," said chief financial officer Gerald Monagle, who joined Waterloo about 21/2 years ago.

When he arrived, the former Charming Shoppes Inc. back-office man was impressed by the computerized inventory and customer-analysis systems at Waterloo. Those tools, however, had seldom been used to maximum effect.

The company had not investigated, for instance, how much excess inventory it had in stock, or what that needlessly cost in terms of cash flow.

"Waterloo was always built on selection and quality," LeBoutillier said. And so, having 20 times more than the needed number of pots on hand was viewed as an asset - something that set Waterloo apart from competitors such as Home Depot that came onto the scene with lower-priced wares and leaner selections.

"When times were good," he said, "you don't look at that pile of pottery like it was evil. You looked at it and said, 'We're selling it.' "

Such unbridled optimism would contribute to the company's undoing.

In July 2007, Waterloo spent about $8 million to acquire an old Pathmark supermarket near Street Road and Route 263 in Warminster. Its own workers did the remodeling - LeBoutillier even installed the bathrooms himself - because the economy was so overheated that contractors were scarce.

Waterloo had also opened a fourth location in Wilmington.

After opening in November 2007, Warminster shut down Dec. 31, 2008, with huge losses amid the worst global financial collapse since the Great Depression.

"The timing of Warminster was so poor," said Monagle, a retail veteran.

Wilmington hemorrhaged money for four years before that store closed in December 2011.

Sales plummeted even at Waterloo's mainstay locations, mirroring what was happening broadly at hardware and garden stores as the housing market contracted. Revenue fell 80 percent in 2010 in Devon and Exton, 12 percent in 2011, and 20 percent so far this year.

"We're still carrying the $9 million loan that we have for Warminster," Monagle added, though the store has been converted to a retail marketplace with rent-paying tenants, which has helped.

In April 2011 came more bad news. Major rains wiped out what was to have been a critical, cash-filled month. In October, Zelinda LeBoutillier died.

Coming into this year, Waterloo owed one of its largest vendors, Commerce Corp., $400,000 in unsecured debt, Monagle said. Commerce tightened Waterloo's payment terms for deliveries, which became a point of contention between the two up to the bankruptcy filing. Sales at Devon and Exton, meanwhile, kept falling faster than Waterloo could slash costs.

The day it filed for bankruptcy, Waterloo owed Mid-Atlantic Farm Credit nearly $15 million - loans guaranteed personally by Zelinda LeBoutillier and, now, her estate. Devon and Warminster have been put up for sale, expected to fetch $12 million or more, said Monagle.

Through court filings, Mid-Atlantic has resisted Waterloo's efforts to continue spending its cash to finance operations in Exton, expressing little faith in the company's prospects.

LeBoutillier, however, remains convinced that customers want what Waterloo offers - smothering service and the highest-quality plants, patio wares, and gifts.

"They brought out ponies to distract our children!" said Trish Haxton, 44, who traveled all the way from Swarthmore one day last week with a Wallingford friend to load up on hydrangeas, hostas, black-eyed Susans, and more. "I couldn't believe that Devon closed," she said. "I remember going with my dad. It was the only place he would go."

At the food pantry, there are only good wishes for Waterloo in this, its greatest time of need.

"We keep them in our prayers," said Leaf, "and hope they'll be able to pull through this."

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