Arizona Mail Order, Bedford Fair, now Lew Magram
On March 10, Fingerhut bought the inventory, lists, and trademarks of StyleSite Marketing’s Lew Magram and Brownstone Studio women’s apparel catalogs for $6.74 million, subject to adjustment downward based on inventory. Formerly known as Diplomat Direct Marketing, the Teaneck, NJ-based StyleSite had filed for Chapter 11 bankruptcy protection on Jan. 13.
For Fingerhut, which itself was bought by the $18 billion Federated Department Stores in February 1999, the StyleSite acquisitions are the latest in a two-year effort to build up an apparel division. The goal is not only to broaden its offerings beyond hard goods and home products, but also to maximize its synergistic opportunities with sister marketers Bloomingdale’s and Macy’s, which sell primarily apparel and home merchandise.
In 1998, Fingerhut bought the $140 million Arizona Mail Order stable of women’s apparel catalogs as well as another women’s apparel cataloger, $100 million Bedford Fair. Leading up to those deals, “we had realized that only 7%of our business was in apparel,” says Fingerhut Cos. executive vice president Michael Sherman. “But with apparel making up 24% of all consumer purchases, we thought we could do more there.” With its purchase of the StyleSite books, apparel now accounts for nearly 20% of Fingerhut’s sales. Fingerhut plans to resume mailing both titles by the summer.
“Fingerhut has a great mailing list to which it’s sold jewelry, towels, and electronics; why not sell apparel?” says Steve Kernkraut, senior managing director for New York-based investment banking firm Bear Stearns & Co., referring to the company’s 7 million-name database. “There are a lot of cross-marketing opportunities.”
As for future apparel-related acquisitions, “our eyes are open all the time,” Sherman says. “We have a great formula and are a natural consolidator in this sector.”
On March 23, William Lansing resigned as chairman of Fingerhut Cos. “to pursue other interests.” Just four days later, Web portal NBCi named Lansing chief executive. The Internet company, an amalgamation of Snap, Xoom.com, and several NBC Web properties, clearly hopes that Lansing can profitably synthesize its diverse offerings.
Meanwhile, Fingerhut has no plans to replace Lansing. A wholly owned subsidy of Federated Department Stores, Fingerhut will now fall under the auspices of the New York-based Federated Direct division. Bloomingdale’s president Jeffrey Sherman was named to the new position of chairman/CEO of Federated Direct the same day Lansing resigned. Sherman will oversee the Bloomingdale’s, Macy’s, and Fingerhut catalogs and online businesses.