On March 5, the day that its assets were put on the block for bankruptcy liquidation, the upscale cataloger/retailer J. Peterman Co. finally found a buyer. Indianapolis-based women’s apparel retailer Paul Harris Stores bought the ñ50 million apparel and home decor marketer for ñ10 million.

Charlotte Fischer, the chairman/ president/CEO of ñ209 million Paul Harris, “had been watching the Peterman bankruptcy unfold for three weeks,” says Paul Harris spokesman David Sease. “Then she received a fax regarding the date of the liquidation auction in Kentucky, so she sent a management team down there, and as the day unfolded, it clicked.”

Several days after the acquisition, Paul Harris’s plans for the Lexington, KY-based J. Peterman were not yet clear, though in a statement the company said that Peterman would operate “as a subsidiary” of Paul Harris. But Howard Rosencrans, an equity analyst with Great Neck, NY-based securities brokerage firm HD Brous & Co., notes that the acquisition gives Paul Harris entry into direct mail and electronic commerce.

What’s more, thanks to J. Peterman’s high brand recognition after having been regularly featured on the hit television show Seinfeld, “its brand-name assets were definitely worth more than what Paul Harris paid for them,” Rosencrans adds. “The J. Peterman line might add some brand cachet to the company.” Where were the bidders?

When Peterman filed for bankruptcy protection in late January, many assumed it would have no problem finding a buyer. The climate for acquisition seemed ripe, what with recent transactions such as Fingerhut’s purchases of Popular Club Plan and Arizona Mail Order, and Reader’s Digest’s acquisition of Good Catalog Co., to name just a few within the second half of 1998.

But except for a bid by Columbus, OH-based Schottenstein Bernstein Capital Group, no one besides Paul Harris stepped forward. Peterman’s strong retail push (the company had planned to add 50 full-price stores and 20 outlets to its existing six full-price stores and seven outlets within five years) may have made the company less appealing. “There is more difficulty in finding buyers when you run a catalog/retail operation,” says John Lenser, president of San Raphael, CA-based catalog consulting firm Lenser & Associates. “The potential buyers interested in the catalog operations of the company may not want to deal with the retail end of things, and vice versa.”

Peterman’s attempt to grow its retail division may also have contributed to its downward spiral. “Retail can be too much too soon for some companies,” says Don Libey, president of Haddam Heights, NJ-based Libey Inc., a private investment firm and catalog consultancy. And especially for a cataloger like Peterman, which relied heavily on romantic copy to sell goods, “the concept doesn’t always translate into retail. It’s like trying to change a thoroughbred horse into a bunny.”

But former Peterman president Arnie Cohen insists that the stores did not put the company under. He claims that they reaped revenue in excess of ñ500 per square foot, compared to the National Retail Federation’s average of ñ248 per square foot.

Rather, Cohen says, the retail business was built on the assumption that the catalog would remain stable. But its holiday sales faltered-in large part, some observers say, because the merchandise couldn’t live up to the dramatic copy. “When the core business didn’t hold up, it shook the foundation of everything else,” Cohen says.

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