External Factor Analysis of The Vermont Teddy Bear Company Opportunities New York Real Estate Litigation Resolution Vermont Teddy Bear Company Settles to Close New York Retail Store is a positive step for the company. In March 2005, the Company continued settlement negotiations with the Company and on April 27, 2005, the Company entered into a final settlement of its litigation relating to a prior lease for commercial space in New York City. Under the terms of the agreement, the Company paid its former owner $1.15 million upon entering into the settlement agreement, including the release of a $150,000 security deposit previously held by the owner, and the Company will pay the owner an additional $1.2 million on or before March 15, 2006, without interest (“Vermont Teddy,” 2005). While this negatively impacted third quarter 2005 net income, it also signals an end to legal fees and a loss of focus from executives due to this issue. It was a good move to end it, but it lasted almost 5.5 years and drained the company of both human and financial resources. Going PrivateThe privatization of Vermont Teddy Bear Company was a bold but positive short-term move for the company by CEO Elisabeth Robert. Going private will allow the company to focus on execution instead of short-term strategies to pacify Wall Street. Instead of wasting valuable management time and effort on quarterly financial calls, the Vermont Teddy Bear Company is free to follow its long-term plan and execute it without Wall Street's push for short-term gains. The company wanted to invest in expanding and improving its infrastructure, but as a public company that would have drawn the ire of Wall Street. “We hoped to get [Vermont Teddy Bear] out of the tyranny of quarterly earnings,” says founder Chris Covington (Sheahan, 2005). Furthermore, the Sarbanes-Oxley Act was expected to place enormous pressure on the company. From both a manpower and financial resources perspective, this law enacted by Congress would have been more than the company could bear (no pun intended). “The prospect of having to implement Section 404 [regulations] was burdensome for a company like ours,” says CEO Elisabeth Robert (Sheahan, 2006). The sale closed in September 2005. Threats 800-Flowers 800-Flowers poses a huge threat to the long-term health of the company. They have 120 retail outlets compared to 0 for VTB.