Sales wax at Hanna’s Candles

Fayetteville company fights back after recession, lawsuit

Workers at the Hanna’s Candles factory in Fayetteville last week prepare containers of potpourri to be shipped to Sam’s Club.
Workers at the Hanna’s Candles factory in Fayetteville last week prepare containers of potpourri to be shipped to Sam’s Club.

— The flame at Hanna’s Candles is burning brightly again after battling through tough economic times.

After hitting a low of $9 million in yearly sales during the recession, Hanna’s Candles should be back to nearly $14 million this year, said Thad Hanna, the company’s chief financial officer.

Burt Hanna, the Fayetteville-based candle company’s founder, president and chief executive officer, and Thad Hanna’s brother, said he hopes to double or triple sales next year.

Burt Hanna started the business in 1987 as Hanna’s Potpourri Specialties with$2,500 in the basement of his Fayetteville home. He said his original goal was to make an extra $100 a month. He switched to making scented candles in 1992. Sales peaked in the early 2000s at $60 million annually.

Candle retail sales in the United States hit approximately $2 billion annually, according to the National Candle Association.

Recently, the company relaunched its online store, candlemart.com, in an attempt to boost sales. Burt Hanna said the updated site received 20 orders shortly after going live last week.

“We had more than $1.7 million in sales on the site in the late 1990s, but we let the site dwindle down,” he said.

Thad Hanna said the company continues to do business with most major retailers, including Wal-Mart, Sam’s Club, Kmart, Walgreens, Sears, Pier 1 and QVC. Among the company’s most popular scents are Jolly Rancher, TimberWick, Cinnabon and Natural Soy.

Hanna’s produces many Mainstays candles, Wal-Mart’s store brand. It is one of Hanna’s largest lines.

“Flip it over and if it says ‘Made in Fayetteville’ you know it’s a Hanna’s Candle,” Thad Hanna said.

He said the company really took off in 1997, when it started producing a pillar candle for Wal-Mart that was 6 inches tall and 6 inches in diameter.

“No one was making candles that size, but Burt said, ‘I can do that,’” he said.

Burt Hanna designed the equipment to make the candle and had it built in-house.

Hanna’s produced 125,000 6-by-6-inch candles to meet Wal-Mart’s initial order. Thad Hanna said they produced the candle until 2007, accounting for more than $200 million in sales over 10 years.

Production of the candle stopped as the recession forced consumers to pull back on discretionary spending, he said.

The company also had a 20-month fight with Bank of America that hampered sales.

The bank claimed Hanna’s defaulted on more than $16 million in business loans and tried to foreclose on three of the company’s properties.

“Our competition told our customers that we were going out of business,” Thad Hanna said.

A federal court jury ruled in June that Hanna’s had not defaulted.

“Once we won the lawsuit, business started flooding back in,” he said. “It gave our customers a sense of relief.”

The financial pressures forced Hanna’s to sell its 660,000-square-foot Fayetteville warehouse in May.

Karcher, a company that makes professional-grade cleaning supplies, purchased the building and leased about half of it back to Hanna’s.

“We are a leaner company now, but you have to be in today’s world,” Thad Hanna said.

Hanna’s has almost 90 full time employees, with employment reaching a couple hundred when part-time workers come on board during heavy production periods. More than 400 employees worked at Hanna’s during the company’s peak in the early 2000s, Thad Hanna said.

Burt Hanna is always looking at new products and ideas to increase sales.

“If it involves wax or fragrance we’ll make it,” he said.

A new addition to the company’s portfolio are scented urinal pads.

“You have to constantly be innovating to keep customers interested,” he said.

The owner is also finding new success in older ideas. The factory just completed a holiday potpourri order for Sam’s Club. Potpourri accounts for less than 1 percent of the company’s sales, but Burt Hanna said making it is special.

“I never thought we would make potpourri again,” he said. “I love it. It’s like returning to our roots.”

Business, Pages 21 on 11/13/2012

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