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Edgewater, NJ-based multititle cataloger Hanover Direct on May 6 announced the resignation of Thomas C. Shull as chairman of the board/president/CEO. In his place are William B. Wachtel as chairman of the board and Wayne P. Garten as president/CEO. Wachtel, a managing partner of New York-based law firm Wachtel & Masyr, and Garten have both served as members of the Hanover’s board of directors since late 2003, each as a designee of Chelsey Direct, the holder of the company’s preferred stock. Garten was previously president of Edison, NJ-based toiletries marketer Caswell-Massey, a post he’d held only since January; his resume also includes executive stints at Micro Warehouse and Popular Club Plan. And from 1983 to 1996, Garten had held various financial positions at Hanover and its predecessor, Horn and Hardart Co. Hanover has had its noncore assets — plus-size women’s apparel catalog Silhouettes, upscale home decor cataloger/retailer Gump’s, and men’s apparel book International Male — on the selling block since November; it also owns bedding and home decor catalogs Domestications, The Company Store, Company Kids, and Scandia Down.


Apparel and home goods cataloger Blair Corp. announced May 3 that it will drop its four-year-old women’s fashion catalog Crossing Pointe early next year to focus on its core brands. According to a statement, the decision was made following an extensive consumer and brand strategy survey the Warren, PA-based company undertook to enhance profitability and shareholder value. Blair brought in strategy consulting firm McKinsey & Co. to assist in the study. Blair president/CEO John Zawacki said in the statement that the actions “will enable us to get closer to the markets we serve best, maintain the customer intimacy that has been the hallmark of our business, and further establish the Blair brand for a new generation of customers.”


Reading accessories cataloger Levenger is opening a Boston store in The Shops at Prudential Center this month. The Delray Beach, FL-based mailer, which in September 2003 opened a boutique within retailer Marshall Field’s State Street department store in Chicago, will also unveil a shop in the flagship Marshall Field’s store on North Michigan Avenue, also in Chicago, this September.

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Milwaukee-based Brady Corp., the $555 million parent company of business safety and signage cataloger Seton, is buying one of Seton’s rivals: Buffalo, NY-based EMED Co. Brady is paying private equity firm Summit Partners $190 million for the $55 million EMED. “EMED is a well-established brand with a proven track record of high, sustainable profitability,” Brady president/CEO Frank M. Jaehnert said in a statement. “It aligns well with Brady’s core business and strengthens our position in several key areas, including government, transportation, traffic control, and grounds identification.”


Golf equipment cataloger/retailer Golfsmith on April 13 entered into a partnership with The Golf Digest Cos. to handle all the fulfillment for Golf Digest magazine’s Golf Digest Pro Shop catalog and online orders. Golf Digest Cos., which entered the catalog business last year, will make Golfsmith its premier national golf retail advertiser for its magazines, which include Golf World, Golf for Women, and Golf World Business. In the arrangement, Golfsmith will increase its advertising in the magazines, says Golfsmith spokesperson Andy Craig. Golfsmith will also handle all of Golf Digest Pro Shop’s logistics, shipping, and customer service from Golfsmith’s Austin, TX, fulfillment center. The Golf Digest catalog plans to increase its circulation this year from 550,000 in a two-mailing test last year to more than 6 million. The catalog exceeded plan for its first mailing last year by more than 25%, according to Tom Witschi, Golf Digest Cos.’ vice president of new business and international development.


San Francisco-based gadgets cataloger/retailer Sharper Image reported a 51% leap in March catalog sales, to $17.1 million from the previous March’s $11.3 million, exceeding expectations. Internet sales increased 79%, to $10.0 million from $5.6 million. Overall company sales for the month, meanwhile, increased 38%, to $54.8 million.…At Dallas-based Neiman Marcus Direct, which mails the upscale Horchow, Neiman Marcus, and Chef’s Catalog titles, March sales increased 16%. Combined March direct and retail sales increased 26%, to $345 million.…Catalog/Internet sales at Plano, TX-based J.C. Penney Co. rose 10%, to $261 million from$238 million for March 2003, exceeding expectations. Comparable department store sales increased 11%, while total March Penney sales climbed 11%, to $1.6 billion.

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Two manufacturers that launched catalog divisions last fall recently closed their catalogs. Apparel manufacturer Nautica mailed its last Nautica Home catalog in January. According to sources, its parent company, manufacturer VF Corp., decided to focus more closely on clothing. And gun maker Smith & Wesson Holding Corp. dropped its Crossings catalog of apparel, gifts, and home products to focus on its core firearms business. The company, which is moving its headquarters from Scottsdale, AZ, to Springfield, MA, has had a particularly rocky several months. Both its chief financial officer and its general counsel were replaced. Then on Feb. 27, chairman James Joseph Minder resigned after a published report revealed he had served prison time during the 1950s and ’60s for armed bank robberies. Fellow board member Dennis Bingham was named chairman.


Shortly after Spiegel Group, the parent company of cataloger/retailer Eddie Bauer, filed for Chapter 11 in March 2003, apparel, home goods, and outdoor gear mailer L.L. Bean expressed interest in buying Bauer. But on March 5, Freeport, ME-based Bean issued a memo to employees stating that it was no longer pursuing a purchase. According to spokesperson Rich Donaldson, Bean CEO Chris McCormick said in the memo that Spiegel’s financial condition “is more complex and troublesome than we originally thought. We’ve decided that an acquisition of this size, and this one in particular, is not in L.L. Bean’s best interests.”


Wine products cataloger The Wine Enthusiast on March 8 announced a partnership with Go Ahead Vacations, a provider of educationally focused trips. The two companies will provide 10 behind-the-scenes tours of the most popular wine countries in the world. The Elmsford, NY-based Wine Enthusiast, which also publishes Wine Enthusiast magazine, will offer its editorial staff’s expertise to Go Ahead Vacations’ tour directors on the trips’ locales and help develop each tour itinerary.

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In keeping with its strategy of winning more baby boomers as customers, apparel and home goods cataloger Blair Corp. is relaunching its Irvine Park menswear title. Like its successful Crossing Pointe women’s apparel catalog, Irvine Park is geared toward consumers in their 30s-50s, rather than the mature customers who have been the company’s traditional buyers. Blair had introduced the book several years ago, only to put it on hold before the end of 2001, blaming the weak economy. Warren, PA-based Blair also announced plans to launch Allegheny Trail Corp., a wholesale business targeting outdoor sporting goods retailers.


New York-based private equity firm Clayton, Dubilier & Rice (CD&R) has agreed to buy West Chester, PA-based laboratory supplies cataloger VWR International from manufacturer Merck for $1.65 billion. Two-thirds of the $2.8 billion VWR’s sales are from North America, with the remainder from Europe; its annual sales increased 6% last year. “CD&R has a track record helping to build and grow successful global distribution businesses, so VWR should continue to prosper and remain an outstanding partner for us,” Merck CEO Bernhard Scheuble said in a statement. The transaction, subject to regulatory approvals, is expected to close by April.


Cheerleading-uniform catalogers Varsity Spirit and National Spirit have announced plans to merge, forming a new entity called Varsity Brands. Both companies operate catalogs and field sales organizations. Memphis-based Varsity Spirit owns a catalog of the same name; Garland, GA-based National Spirit owns the Athens, GA-based Danzteam catalog. No layoffs are planned, and not much will change aside from the corporate name, according to a report in the Athens (GA) Review. National Spirit president/CEO Jerry Dilettuso will remain in his role as well as take on the duties of chief operating officer, overseeing Varsity Brands and its president/CEO, Jeff Webb.

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Prospective buyers of New Hartford, CT-based Executive Greetings — which mails 15 business forms, labels, and stationery catalogs including Baldwin Cooke, HR Direct, and U.S. Diary — have until Feb. 16 to enter their bids in a Section 363 sale. Executive Greetings filed for Chapter 11 bankruptcy protection on Dec. 29, listing $113.5 million in liabilities and $50 million-$100 million in assets. The company listed $88 million in sales for 2002 in its filing. Just 11 days earlier, North Mankato, MN-based conglomerate Taylor Corp. had signed a purchase agreement for $53 million for Executive Greetings’ assets in the Section 363 sale. A company or investors can still outbid Taylor, but offers must exceed Taylor’s byat least $1.825 million.


On Jan. 6, Cedar Knolls, NJ-based MediaBay, the parent company of the Audio Book Club and Radio Spirits catalog, announced the resignation of CEO Ron Celmer. Replaced in the interim by chairman of the board Carl Wolf, Celmer left following a decision by the company to pursue “new directions, new initiatives,” says executive vice president/chief financial officer John Levy. The initiatives include wholesaling some of its classic-radio recordings to fellow catalogers Lillian Vernon Corp. and LTD Commodities.


Groton, MA-based business forms and supplies mailer New England Business Service (NEBS) on Jan. 7 acquired the assets of Stephen Fossler Co., a manufacturer of embossed anniversary seals and a marketer of store signage and commemorative specialty products.

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President Bush at press time was expected to sign into law the Can Spam Act (S. 877) by the end of 2003. The bill, cosponsored by senators Conrad Burns (R-MT) and Ron Wyden (D-OR), passed through the Senate in November and the House on Dec. 8 and was scheduled to take effect Jan. 1. The Can Spam Act (formally the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003) was conceived to combat the increase in unsolicited e-mail. It includes a number of tough penalties to stop spammers of deceptive offers and pornographic offers. “I am pleased to see this bill receive such overwhelming bipartisan support,” Burns said in announcing the bill’s passage out of Congress. The Direct Marketing Association approves of the bill, which should have little effect on legitimate e-mail marketers, other than requiring them to provide an recipients with an opt-out. “This law gives added teeth to the FTC that it didn’t have before. It shows that we can create a marketplace and delineate legitimate e-mail marketing and spam,” says DMA spokesperson Lou Mastria. The bill overrides state legislation, including the stringent California law that sought to punish all bulk e-mailers who sent unsolicited marketing e-mails.


Wellspring Capital Management, the New York-based private equity firm that owns model-trains maker Lionel and the CCM hockey skates company, in December acquired Edwin Watts Golf. Fort Walton Beach, FL-based Edwin Watts Golf sells golf accessories through catalogs, the Internet, and 48 company-owned and franchised stores in Florida, Alabama, and Massachusetts. Founders Edwin and Ronnie Watts will remain with the company, as will the rest of the management team. Edwin Watts, which mails about 15 million catalogs a year, will use Wellspring’s capital for retail expansion, says vice president of marketing Lincoln Cox. Edwin Watts plans to open three to five stores within the year with with a few in new markets, such as Nashville, TN; St. Louis; and Chicago.


Media management firm ZelnickMedia, which backed by a private equity fund managed by New York-based Ripplewood Holdings bought Lillian Vernon Corp. in July, ordered a new business plan for the cataloger’s corporate gifts division and brought in a consultant to oversee the initiative. “We’re doing a formal business plan for that division,” says David Hochberg, spokesperson for Rye, NY-based Lillian Vernon. “Zelnick realizes the potential is greater in b-to-b for us.”

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SAN DIEGO MAILERS SURVIVE WILDFIRE SCARE It was a little too close for comfort for San Diego-based RoadRunner Sports: Sixty-foot flames from the October wildfires were just minutes away from engulfing the athletic shoes cataloger’s headquarters and warehouse. At one point on Oct. 26, CEO/“chief runner” Michael Gotfredson was on the roof of RoadRunner’s headquarters with a hose to ward off the embers. But the wind shifted, and RoadRunner was spared. Other San Diego County mailers, including Spring Valley, CA-based books and gifts cataloger Chinaberry and Loma Portal, CA-based gifts marketer Sovietski Collection also escaped the fires with their facilities unscathed. But they had to scramble on Oct. 28 to get out a backlog of orders that could not be fulfilled earlier, since the fires had closed the surrounding freeways.

PC MALL RELAUNCHES FORMER EGGHEAD SITE Computer reseller PC Mall on Oct. 28 relaunched, an online marketplace and auction site. The Torrance, CA-based cataloger is hoping to repeat the success of its first online auction business, uBid, which was spun off to shareholders in 1999. The original was one of the first online auction businesses. PC Mall acquired its URL last year through a bankruptcy proceeding of now-defunct computer marketer Egghead. Initially, OnSale will add technology capabilities while it offers free listings.

SKYMALL FOUNDER STEPS DOWN In-flight co-op cataloger SkyMall has hired a new president to succeed retiring founder/CEO Robert Worsley: Christine Aguilera. Not to be confused with the pop singer, Aguilera is an attorney and a certified public accountant who has served as SkyMall’s general counsel/chief financial officer since 1997. SkyMall was acquired by Gemstar-TV Guide in May 2001 in a cash-and-stock merger agreement.

For the most up-to-date industry news, visit each weekday.

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Beleaguered California governor Gray Davis on Sept. 23 signed into law a bill that will penalize those who send commercial e-mails to anyone in the state who hasn’t requested them. The law, which also prohibits California-based companies from spamming anyone outside the state, calls for fines of $1,000 for each message and of up to $1 million per incident. The broadest anti-spam law in the country, the California bill was designed to have no loopholes, said its sponsor, State Sen. Kevin Murray (D-Los Angeles). “There’s no way of getting around it,” he said in a statement. In describing the bill recently, Murray said that the state isn’t looking to differentiate spammers from legitimate e-mail marketers. And if the latter rent e-mail lists from consumers who have agreed to receive e-mail offers, those companies are still subject to fines if they don’t get permission from each recipient for their individual offers.

This could certainly mean more work for marketers. “We are very diligent with our opt-in e-mail procedures, but with this new California law, we would consider requesting a second opt-in confirmation from our California customers,” says Tracy Lamb, director of marketing for reading tools cataloger Levenger. By requesting a second opt-in, she adds, “hopefully, this would eliminate those who ‘forgot’ that they’d requested Levenger e-mail, as we would cite the law in the second e-mail request.”


A federal judge on Sept. 23 ruled that the Federal Trade Commission overstepped its authority in creating the national do-not-call list against telemarketers. The ruling by Judge Lee West of the U.S. District court for the Western District of Oklahoma, which effectively threw out the do-not-call list, sided with a lawsuit brought by telemarketers. The marketing group challenged the list of 50 million individuals who had signed up to not receive telephone solicitations. The list, which the FTC introduced in June, was to be enacted on Oct. 1. Telemarketers would have been subject to fines of up to $11,000 per call if they called any of the numbers collected by the FTC. The Direct Marketing Association, which was one of the plaintiffs in the telemarketers’ suit, walked a tightrope on the issue: “The FTC doesn’t have the authority to implement and enforce a national do-not-call list,” president/CEO Bob Wientzen said in a statement. “The DMA, however, acknowledges the wishes of millions of consumers who have expressed their preference not to receive telephone marketing solicitiations.”


Children’s book and magazine publisher Scholastic recently — and quietly — announced that it bought $15 million cataloger Back to Basics Toys from in August. New York-based Scholastic paid $4.75 million for the toys catalog. Scholastic’s direct-to-home division, which markets continuity programs to 5 million households, will oversee the title. Back to Basics continues to be run by the Ridgely, MD-based staff that produced the catalog under Amazon. The first edition under Scholastic was scheduled to mail in early October. “We intend to effectively promote this catalog to our database, and vice versa,” says Scholastic senior vice president of finance Ray Marchuk.

But the Back to Basics deal does not mean that Scholastic plans to heavily expand into catalogs. “We look at these things that have a strategic fit, and where Scholastic can add value and vice versa,” Marchuk says. “Back to Basics Toys fits in with our direct-to-home businesses, though this isn’t the signal of a strategic shift of direction into the catalog business for us by any means.”

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Computer reseller CDW Corp. announced on Sept. 8 that it would buy the North American assets of rival Micro Warehouse for $22 million. According to CDW, the U.S. and Canadian operations of privately held Micro Warehouse bring in roughly $940 million in annual revenue. Norwalk, CT-based Micro Warehouse will retain its overseas business, which accounts for approximately $1 billion in sales. Last year Vernon Hills, IL-based CDW had net income of $185.2 million on sales of $4.265 billion.

According to a Reuters report, analysts from A.G. Edwards & Sons wrote following the announcement that “we believe that this is a good purchase for CDW as the company is essentially buying $1 billion in revenues for $22 million…We do not believe, however, that Micro Warehouse was profitable at a $1 million annualized run rate so we expect to see a significant amount of block-and-tackling on CDW’s part to get these operations up to corporate profitability levels.” CDW says that the purchase makes it the largest dealer of Apple Computer products in the country. What’s more, it estimates that 75% of Micro Warehouse’s corporate and public-sector customers are not part of CDW’s house file. CDW expects to have Micro Warehouse’s employees and operations completely integrated by the end of the year. It estimates that transition costs, including severance, will total $10 million-$12 million and will be incurred primarily in the fourth quarter.


Plymouth, MI-based Broder Bros. has made its fourth acquisition in two years. In early September, the b-to-b cataloger of imprintable sportswear agreed to buy competitor Alpha Shirt Co. from Cleveland-based private equity firm Linsalata Capital Partners. The deal is expected to close in later this month. During the past two years, Broder Bros. also acquired Full Line Distributors, Gulf Coast Sportswear, and T-Shirts & More. Broder expects to keep the Alpha Shirt brand separate, supporting it with its own catalog, Website, unique product offering, customer service, and sales force.


Morris “Moe” Biller, longtime president of the American Postal Workers Union (APWU), died on Sept. 5 at 87. He had served as president of the U.S. Postal Service’s largest union from 1980 to 2001. After retiring wo years ago, he took the title of president emeritus. In 1970, Biller led the only federal workers strike in history, leading a postal workers strike in New York. The action led to the Postal Reorganization Act in 1971, which created the U.S. Postal Service as a quasi-governmental public company.

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Like the temperature, sales for the publicly traded cataloger/retailers tracked by Catalog Age rose in July. In fact, sales growth at the direct units at many of these companies outpaced that of their retail divisions. July sales at the catalog/Internet division of Plano, TX-based J.C. Penney Co., for instance, rose 11%, to $177 million from $160 million last year. Total company sales increased 3%, to $2.2 billion from $2.1 billion. … At Dallas-based Neiman Marcus Direct, which mails the Horchow, Neiman Marcus, and Chef’s Catalog titles, sales for the fiscal month ended Aug. 2 were 16% higher than for July 2002. July revenue for parent company Neiman Marcus increased 13%, to $188 million from $166 million last year. … Direct sales at Philadelphia-based Urban Outfitters, which includes cataloger/retailer Anthropologie, increased 37%, to $9.2 million for the month ended July 31, compared with $6.7 million the previous July. The apparel and home goods marketer launched an Urban Outfitters print catalog earlier this year. … At San Francisco-based cataloger/retailer Sharper Image, July’s combined wholesale/catalog/Internet sales increased a scant 1%, to $9.9 million. But catalog sales alone climbed 23%, while Internet sales jumped 60%. Total Sharper Image sales for July increased 20%, to $37.6 million from last year’s $31.2 million. Total store sales increased 23%, to $22.1 million. … The catalog/Internet unit at Jos. A. Bank Clothiers posted a 25% growth in July sales. Not too shabby — though it did trail behind Bank’s overall sales increase of 32%, to $17.5 million for the month ended Aug. 2. Comparable store sales increased 19%. … Apparel cataloger/retailer The Talbots announced that catalog sales for the quarter ended Aug. 2 were $50.2 million, up 6% from the comparable quarter of last year. Talbots does not release monthly catalog sales data. Total second-quarter sales for the Hingham, MA-based company also increased 6%, to $100.5 million from $94.5 million last year. … Bucking the sales growth trend once more is Downers Grove, IL-based The Spiegel Group, which mails the Newport News, Spiegel, and Eddie Bauer catalogs. Its July net sales fell 29%, to $99.2 million for the four weeks ended July 26, compared with $139.1 million last year.


Few, if any, major new lists will be making their way to the market, agreed representatives from several list firms during a panel discussion at the Direct Marketing Association’s List Vision conference in New York on Aug. 12. But panelists stressed that catalogers can find new customers amid a shrinking universe of names, by delving deeper into larger lists, such as women’s apparel catalog files, and modeling off co-op databases and house files. Panelist Paulette Schlottman, vice president of list firm MeritDirect, advised list managers to take “a more holistic approach in order to find some hidden treasures.”

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REDENVELOPE FILES IPO Gifts cataloger RedEnvelope is going public. The San Francisco-based company filed with the Securities and Exchange Commission for an initial public offering of as much as $41 million in common stock. In its preliminary prospectus RedEnvelope did not specify how many shares it plans to offer or estimate a price for the proposed offering. The company did say it would be registered on the Nasdaq exchange. W.R. Hambrecht & Co. will underwrite the initial offering. Ken Packer, managing partner of Waukee, IA-based Financial Advisory Partners, believes that Red- Envelope’s IPO is well timed. “There’s been a dearth of IPOs in the past three years,” he says, adding that investors may be enticed by the recovering Dow and Nasdaq along with RedEnvelope’s solid Web prescence. For the year ended March 30, RedEnvelope had sales of $70.1 million, up 26% from $55.8 million the previous year. What’s more, the company pared its net loss 45%, to $7.7 million from $14.1 million for fiscal 2001.

AMAZON LAUNCHES WEB SERVICES SUBSIDIARY Seattle-based, which spends more than $200 million annually on its Website technology, is creating a Website services subsidiary, Amazon Services. Target Corp. and Toys ‘R’ Us already use Amazon’s technology to run their online stores.

FEDEX GROUND STARTS RETURN SERVICE The Ground division of Memphis-based carrier FedEx on June 9 launched FedEx Consolidated Return Service. The new service provides a network of drop-off locations, return packaging for small items, and physical consolidation of multiple product returns to streamline returns processing.

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Office products cataloger OfficeMax on May 7 entered the Canadian market by launching a Canadian Website, In addition, the Cleveland-based company plans to launch a catalog in Canada before the end of the year. Like its offerings on the new Canadian Website, the products to be sold in the OfficeMax Canadian catalog will be “similar to our full line in the U.S.,” says spokesperson Steve Baisden. “We may have some different iterations but are working on those now.” The catalog and Website will target small businesses, just as OfficeMax’s catalog and site do in the U.S.


The weather isn’t the only that’s warming up. Many catalogers are seeing business heat up too. For instance, Hampstead, MD-based men’s apparel cataloger/retailer Jos. A. Bank Clothiers posted a 23% rise in combined catalog and Internet sales in April. Total sales for the four-week period ended May 3 were $22.9 million, up 14% from $20.1 million for April 2002. … Dallas-based Neiman Marcus Group, whose titles include Horchow and Chef’s Catalog, said sales increased 16% in its direct-to-customer segment for the four weeks ended May 3. Total company revenue for April increased 6%, to $240 million from $226 million last year. … High-tech gadgets cataloger/retailer Sharper Image enjoyed a 17% increase in April sales, to $39.8 million from last year’s $34.1 million. Excluding infomercial revenue, catalog sales increased 20%. Internet sales increased 50%, to $6.2 million from $4.2 million. … At New York-based apparel cataloger/retailer J. Crew, revenue for the four weeks ended May 3 was $57.7 million, up 5% from $54.8 million the previous April. Net sales for the direct division increased 11%, to $18.8 million. But catalog sales fell 28%, to $5.5 million from $7.6 million. … At women’s lingerie marketer Victoria’s Secret Direct, April sales were down 4% on reduced circulation. Internet sales continued to grow, however. … At Plano, TX-based J.C. Penney Co., April catalog sales decreased 7%, to $175 million for the four weeks ended April 26. Internet sales, which are included in catalog revenue, increased more than 25% for the month. Total April company sales fell 3%, to $2.40 billion from $2.46 billion last year. … Finally, Downers Grove, IL-based Spiegel Group, which mails the Eddie Bauer, Newport News, and Spiegel catalogs, reported that net sales fell 31%, to $115.6 million for the four weeks ended April 26. Last year, April sales totaled $167.0 million.

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Discount pool supplies cataloger In the Swim, based in West Chicago, IL, bought the assets of Montgomery, IL-based rival cataloger Poolside Express on April 1. Poolside, which mailed its final catalog last fall, closed its operations the day the sale was completed, and both its Website and it toll-free phone line began channeling customers over to In the Swim’s site and toll-free line. The deal includes Poolside’s mailing list, Website, and inventory. In the Swim, whose annual sales are “approaching” $50 million, is majority-owned by Svoboda, Collins LLC, a $150 million Chicago-based private equity fund that is focused on investing in service and value-added distribution companies. “Poolside was for sale, and it was a competitor, and therefore it made sense to make the acquisition for growth,” says Patrick Goff, an analyst with Svoboda, Collins. Poolside’s annual sales were less than $10 million.


The intellectual property of Libertyville, IL-based home decor and entertaining cataloger Panache were sold at an auction for $20,000 to American Pacific. The last Panache catalog mailed in fall 2002. According to San Rafael, CA-based catalog consultant John Lenser, who managed Panache’s list, the cataloger’s sales reached $11 million at its peak.


Radnor, PA-based Airgas plans to acquire the assets and operations of Stockton, CA-based distributor Delta Safety Supply. Airgas sells industrial, medical, and specialty gases and welding, safety, and related products through branch-based sales, telesales, catalogs, and the Internet. The acquisition of the $9 million Delta was expected to close on April 30 and to be accretive in the first year. Delta will enhance the safety-products capabilities of Airgas Northern California & Nevada, one of 12 regional companies within Airgas.

Where can you hear Spiegel Catalog president/CEO Geralynn Madonna, Alloy chairman/CEO Matt Diamond, School Specialty president/CEO Dave Vander Zanden, and Crosstown Traders president/CEO Steve Lightman talk about industry trends?

Only at the Annual Catalog Conference 2003 Power Forum. Cosponsored by Catalog Age and the Direct Marketing Association, the Annual Catalog Conference runs June 1-3 in San Francisco. For more information, visit or call 800-927-5007.

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DHL AGREES TO BUY AIRBORNE EXPRESS GROUND NETWORK DHL Worldwide Express, a delivery service owned by Deutsche Post AG of Germany, has agreed to acquire the ground delivery business of rival Airborne Express for about $1.05 billion. Deutsche Post will buy Airborne’s ground unit for $21.25 per share in cash in a deal that continues Deutsche Post’s aggressive expansion strategy. Once the deal is complete, Airborne’s air operations will be separate from its ground operations and will become an independent public company, called ABX Air. The deal creates a stronger competitor to United Parcel Service and Federal Express in the U.S. Although recognized as the largest foreign overnight carrier, DHL has been a distant third to UPS and FedEx in the U.S. because it had no ground delivery network.

SCIENTISTS RELY ON PRINT CATALOGS If you’re selling to scientists, don’t phase out the print catalog from your marketing strategy. Among the more than 1,000 scientists surveyed in a report by market research firm BioInformatics, 70% said it was important that they receive a print catalog even if the same information was available online, and even if they were likely to order online. According to the report, “Life Science Product Catalogs: Maximizing Effectiveness in Print and Online,” after word of mouth from colleagues, print and online catalogs were the most useful sources of information for scientists searching for lab products. And 48% of those surveyed who use online catalogs more than four hours a week also spend more than four hours a week looking at print catalogs. Among the print catalog features deemed most useful by the scientists surveyed: cross-indexing (83%), company information on the spine (75%), and a catalog number index (74%). The most useful online catalog features included links to manuals, protocol, and similar information (95%), links to journal articles (86%), and product availability information (85%).

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SPIEGEL CHIEF JUMPS SHIP He was supposed to right the wrongs of troubled Spiegel Group. But on Feb. 28, less than two years after becoming president/CEO/vice chairman of the Downers Grove, IL-based multititle mailer, Martin Zaepfel resigned, effective March 1. Spiegel, which is terming Zaepfel’s departure a “retirement,” has replaced him with William Kosturos, a managing director at turnaround firm Alvarez & Marsal. Hired as chief restructuring officer, Kosturos is also serving as interim CEO.

Zaepfel’s announcement came just three days after the company said in an 8-K filing with the Securities and Exchange Commission that it didn’t think it would have enough funds to finance its operations in the future. At the time, spokesperson Debbie Koopman said that Spiegel was “exploring a range of strategic options in conjunction with lenders” to provide for its continued operations. In an earlier filing, Spiegel noted that if it could not sell its bankcard business by March 31, the federal government would force it to stop accepting new charges on existing accounts.

At least the company — which includes women’s apparel cataloger Newport News and apparel and home goods cataloger/retailer Eddie Bauer — has a new chief financial officer. In late February, two weeks after James Cannataro resigned as chief financial officer to join Nintendo of America, Spiegel named James Brewster to the post. For the past 10 years Brewster was senior vice president/chief financial officer for Newport News.

DMA BUYS DMD SHOW The Direct Marketing Association bought the DMD Marketing Conference & Expo in early March. The annual DMD conference is often scheduled around the same time as the Annual Catalog Conference, which the DMA co-owns with Catalog Age. This year the DMD show is scheduled for June 2-4 in New York; the Annual Catalog Conference will run June 1-3 in San Francisco.

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SPIEGEL CFO JUMPS SHIP As if Downers Grove, IL-based Spiegel didn’t have enough woes (see “Spiegel Cuts 300 Jobs, Faces SEC Investigation” on page 7), the multititle catalog giant will have to operate without a chief financial officer for the time being. Executive vice president/CFO James Cannataro — an 18-year Spiegel veteran — resigned on Feb. 5 to take a post as executive vice president of Nintendo Co. Ltd.’s U.S. unit.

JANUARY SALES ROUNDUP For many of the publicly traded catalogers tracked by Catalog Age, the song remains the same. For instance, San Francisco-based high-tech gadgets cataloger/retailer The Sharper Image continues its roll, with total January sales increasing 42%, to $34.7 million from last January’s $24.7 million. Catalog sales increased 16%, to $10.3 million from $8.9 million. Comparable store sales increased 37%. Internet sales, including auction sales, increased 64%, to $6.1 million from $3.7 million.

Likewise, at cataloger/retailer Jos. A. Bank Clothier, sales for the month ended Feb. 1 were $15.4 million, up 20% from $12.8 million for January 2002. Combined catalog and Internet sales at the Hampstead, MD-based men’s apparel marketer increased 8%. Comparable store sales increased 10%.

Dallas-based Neiman Marcus Group posted a 5% increase in January revenue, to $188 million from $179 million last year. Sales at Neiman Marcus Direct, which includes the Horchow and Chef’s Catalog titles, increased 27%.

Sales at Hingham, MA-based apparel cataloger/retailer The Talbots rose 4%, to $111.2 million from $107.3 million the previous January, while comparable store sales decreased 3%.

On the down side, January revenue for New York-based apparel cataloger/retailer J. Crew fell 6%, to $33.7 million from $35.9 million last year. Net sales for the direct division, which includes catalogs, decreased 5% from last year. Worse, comparable store sales declined 19%.

January sales at Plano, TX-based general merchandiser J.C. Penney slid 3%, to $2.07 billion from $2.13 billion last year. Direct sales tumbled 28%, to $153 million from $212 million, but the company said the decline was within expectations.

Finally, there’s poor Spiegel Group, which posted a 16% decrease in January sales, to $135.8 million from $162.6 million last year. The marketer’s total direct sales decreased 26%.

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General merchandise cataloger/retailer J.C. Penney on Jan. 10 announced that it will close its Atlanta fulfillment center as well as its Atlanta and Lenexa, KS, catalog call centers. The closings will result in 2,000 lost jobs, though Penney plans to restructure the Atlanta warehouse to handle central store distribution, which will enable it to rehire 500-700 employees. “All the changes have been made in terms of [fulfillment] centralization of both the catalog and stores to be able to move more quickly and respond better to customer demand,” says J.C. Penney spokesperson Rita Trevino Flynn. But Penney is also scaling back its catalog business to improve its bottom line. This past holiday season, Penney’s combined catalog/online sales dropped 18.4% — close to its plan that called for a 20% decrease. The Plano, TX-based company has already reduced page counts and the overall circulation of its catalogs, and will discontinue such specialty titles as scouts, bridal, special needs, petites, and tall women’s apparel — the last two of which will be combined into one specialty book.


As further proof of hard times for the industry, Chicago-based home accessories cataloger/retailer Chiasso and King of Prussia, PA-based children’s products marketer FAO Inc. filed for Chapter 11 bankruptcy protection in early January. Chiasso CEO David Marshall says he plans to close 10 of the company’s 14 stores, but he won’t curtail the catalog and Internet operations, which account for about half of Chiasso’s revenue. FAO, which includes cataloger/retailers FAO Schwarz, The Right Start, and Zany Brainy, had in December temporarily fended off a liquidity crisis with its lenders in a deal that expired on Jan. 10. In its Jan. 13 filing, FAO listed $257.4 million of assets and $238.4 million in debts. The company plans to close up to 70 stores by the end of March.

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APG DIRECT PARENT COMPANY SEEKS SALE American Paper Group, a manufacturer of church offertory and other types of envelopes, is seeking a buyer following its Nov. 6 filing for Chapter 11 bankruptcy protection. The Youngstown, OH-based company operates a catalog business called APG Direct. Although the Northern District of Ohio bankruptcy court held a hearing on Dec. 3 to explore the marketer’s cash collateral, the court didn’t demand that the company find a buyer. But attorney Matthew Matheney, from the Cleveland-based law firm Frantz Ward, said at press time that there are “a number of potential bidders actively working to buy American Paper as a going concern. We’re hopeful that a transaction will be well on its way by Dec. 13.” Competing bidders had until Jan. 6 to make their bids. Another bankruptcy court hearing for the expected sale of the company was scheduled to take place on Jan. 9.

VITAMIN SHOPPE SOLD TO BEAR, STEARNS Private equity player J.P. Morgan Partners has sold $260 million cataloger/retailer Vitamin Shoppe Industries to a private equity group from New York-based Bear, Stearns & Co. Terms of the deal were not disclosed. Vitamin Shoppe operates 120 stores, mostly on the East Coast, as well as a catalog. Its goal is to have 500 stores in five years. Despite a tough market for vitamins, Bear, Stearns feels that North Bergen, NJ-based Vitamin Shoppe has great potential, since its growth has reportedly outpaced that of competitors.

OFFICE DEPOT UNLOADS AUSTRALIAN BUSINESSES On Dec. 2, office products conglomerate Office Depot agreed to sell its Australian operations, including its Viking Office Products business there, to Officeworks. Terms of the deal, which was expected to be finalized by the end of 2002, were not disclosed. Officeworks is a subsidiary of Australian cataloger/retailer Coles Myer. Viking’s Australian business generates about $150 million in annual sales; the unit has 128,000 customers.

AIRGAS ACQUIRES FELLOW DISTRIBUTOR Radnor, PA-based Airgas on Dec. 2 acquired Detroit-based Welding Metals, a $10 million distributor of gases and welding supplies. The acquisition, which includes four locations in the Detroit area, is expected to be accretive to Airgas’s earnings in the first year. Airgas distributes its products and services through a catalog and a Website, and via telesales.

BROOKSTONE LAUNCHES CANADIAN SITE Nashua, NH-based cataloger/retailer Brookstone has launched a Canadian Website ( Borderfree, a Toronto-based transaction facilitation services provider, is handling customs clearance, currency conversion, and tax and duty payments for the gifts, gadgets and tool marketer’s site.

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NO USPS RATE HIKE FOR FOUR YEARS? Because the U.S. Postal Service has been grossly overpaying into the Civil Service Retirement System (CSRS) fund, it may be able to avoid increasing rates for four years. A review of retirement payments since 1971 was conducted by the Office of Personnel Management and affirmed by the Office of Management and Budget and the Treasury Department. It revealed that the USPS’s liability to the CSRS account is $5 billion, not the $32 billion originally believed. The USPS needs congressional legislation passed to make a potential rate freeze until 2006 a reality. Postmaster General Jack Potter assured the Mailers Technical Advisory Committee (MTAC) on Nov. 6 that the agency was working to get legislation on the Hill as soon as possible.

UPS TO INCREASE RATES JAN. 6 United Parcel Service on Nov. 8 gave parcel shippers two months notice for its annual rate hike, which is set for Jan. 6. While the 3.9% base increase for standard ground delivery is comparable to past annual rate adjustments, the surcharge for residential deliveries will jump 4.5%, from $1.10 to $1.15. UPS’s Next Day Air service will increase 3.2%, while its Worldwide Express delivery will go up 2.9% for U.S.-originating export shipments.

COLDWATER CREEK LAYS OFF 25 MORE Women’s apparel cataloger/retailer Coldwater Creek announced in a regulatory filing on Nov. 1 that it laid off 25 workers at its headquarters due to job consolidations. Coldwater had let go about 20 salaried staffers at its headquarters in January, along with 80 members of its national retail staff. Another 120 employees lost their jobs when the company closed its Sandpoint, ID, distribution center in March and consolidated all fulfillment in its Parkersburg, WV, facility. Although second-quarter sales at Coldwater were flat at $92.8 million, the company posted a net loss of $700,000 for the three months ended Aug. 31.

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HANOVER INTEGRATES DIVISIONS In a move designed to “further strengthen the financial performance of two solid brands,” according to a statement, Hanover Direct is integrating its Domestications and The Company Store divisions. Both titles sell bedding and other home decor items, with The Company Store appealing to a more affluent customer. John DiFrancesco, who had been helming The Company Store, is now president of The Company Store Group. Farley Nachemin, who had headed Domestications, was named chief merchandising officer of The Company Store Group and president of Domestications. Edgewater, NJ-based Hanover is also moving fulfillment operations from a leased facility in Hanover, PA, to its own distribution center in Roanoke, VA. About 50 operations and administration employees will be laid off as a result, and the company will take a $2.4 million special charge this fiscal year. The announcement follows news that the company, which also mails Silhouettes, International Male, and Gump’s by Mail, has appointed Brian Harris executive vice president for human resources and legal as well as secretary, effective Dec. 2. The move follows the Sept. 27 resignation of Charles Messina as executive vice president/chief administrative officer/secretary. Harris, who had been Hanover’s executive vice president/chief financial officer, will continue to serve as executive advisor to the chairman until he starts his new role in December, according to a Form 8-K filed on Oct. 2 with the Securities and Exchange Commission.

DRS. FOSTER & SMITH BUY WEB MARKETER Drs. Foster & Smith, a $150 million cataloger of pet products based in Rhinelander, WI, expanded its aquarium products line by acquiring the assets of Miami-based eTropicals is an online supplier of Caribbean fish, invertebrates, and rocks. Terms of the deal were not disclosed.

RADIO SHACK CANCELS CATALOG Don’t bother looking for your 2003 Radio Shack catalog in the mailbox. The $4.8 billion consumer electronics retailer has stopped producing the annual catalog, which it had been mailing since the 1940s. Radio Shack will now concentrate its direct marketing efforts on the Web. “We realized that a printed catalog becomes quickly outdated,” says spokesperson Mike Braun, adding that the Web more readily lends itself to rollouts of new gift and gadget products, the sort of merchandise featured heavily in the print catalog.

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In its monthly meeting held Sept. 5-6, the U.S. Postal Service told its Board of Governors (BOG) that it expects revenue to grow 6% in fiscal 2003, to $70.4 billion from $66.5 billion for fiscal 2002. The Postal Service also boasted that it was projecting a $600 million surplus for fiscal ’03, which begins at the end of September. And the agency said its fiscal 2002 net loss would total $1.2 billion, well below earlier estimates of more than $4.0 billion. Despite all the encouraging news, USPS chief financial officer/executive vice president Dick Strasser cautions catalogers not to expect any delays in the next postal rate increase. Earlier this year, Postmaster General Jack Potter promised there would be no postage increase before 2004. But Strasser says the agency hasn’t “made any commitment further than that.” Strasser even downplays the $600 million projected surplus, which is less than 1% of the USPS’s $70 billion operation. “One might term it virtual breakeven, in fact,” he says, “as opposed to significant net income.” By law, the USPS is supposed to break even.


Longmont, CO-based Concepts Direct is spearheading the relaunch of the Garfield Stuff catalog. The multititle mailer struck an agreement with licensing studio Paws, which owns the Garfield trademark, in which Concepts Direct will produce and manage the catalog of gifts and accessories inspired by the orange cartoon cat. Albany, IN-based Paws created Garfield Stuff in 1998 but had stopped mailing the title in fall 2001. Concepts Direct mails the Snoopy’s Etc. title, as well as stationery catalog Colorful Images and gift books Linda Anderson, Linda Anderson’s Collectibles, and Music Stand. The relaunched and revamped Garfield Stuff mailed in July, says Concepts Direct president Phil Wiland. “We’ve freshened up the creative and brought the merchandise up to date,” he says.


Mobile computing solutions manufacturer/marketer Mobility Electronics in early September completed its March 25 acquisition of Reno, NV-based print and online cataloger iGo Corp. Mobility also plans an October launch of a catalog featuring Mobility and iGo products. During the past five months, Mobility has restructured iGo’s operations, including outsourcing its fulfillment operations, moving its headquarters to a less expensive facility, and consolidating marketing and engineering functions. “We believe the cumulative effect of these changes will reduce iGo’s operating expenses by more than 50% from their historical levels,” said president Charlie Mollo in a statement.

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If the U.S. Bankruptcy Court approves its reorganization plan, women’s apparel cataloger/retailer Frederick’s of Hollywood could emerge from Chapter 11 bankruptcy protection shortly. Frederick’s, which has been operating under Chapter 11 since July 2000, has a Sept. 4 hearing with the court. Its reorganization plan, announced Aug. 9, calls for its creditors to convert substantial debt to equity. The plan also calls for a liquidity provision established by members of Frederick’s lender group, budgeted capital and marketing expenses, and the anticipated continuation of the company’s senior management team.


To expand its line of bird-related products, pet supplies cataloger Drs. Foster & Smith purchased certain assets of Rosemont, IL-based bird food and cages cataloger Hornbeck’s. Terms of the deal were not disclosed. The deal is expected to generate up to $2 million in revenue for Rhinelander, WI-based Drs. Foster & Smith in 2003.


Downers Grove, IL-based cataloger/retailer Spiegel Group, which mails the Eddie Bauer, Newport News, and Spiegel books, suffered a 13% drop in July revenue, to $139.1 million for the four weeks ended July 27. Total direct sales declined 19%, while retail sales decreased 6%. Web sales inched up 1% for the month….At Plano, TX-based general merchandiser J.C. Penney, catalog sales decreased 23%, to $160 million from $209 million, due to continued weak demand as well as circulation cuts. Total Penney sales fell O.6%, to $2.1 billion from $2.2 billion last July….Sales at Neiman Marcus Direct, which includes the Neiman Marcus, Horchow, and Chef’s Catalog titles, declined 2% in July. Total July revenue for the Dallas-based parent company, upscale retailer Neiman Marcus Group, fell 3%, to $165 million….July sales for Victoria’s Secret Direct increased 9%, to $249.2 million from $229.1 million last year. Total July sales for Columbus, OH-based parent Limited Brands, which also owns the Victoria’s Secret and Express retail chains, rose 6%, to $582.9 million….Catalog sales for San Francisco-based cataloger/retailer Sharper Image climbed 67%, to $9.8 million from $5.9 million in July 2001. Tests of several new proprietary products contributed to the increase. Web sales for the high-tech gadgets marketer increased 25%, to $3.5 million. Total company sales increased 35%, to $31.2 million.

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PENNEY, EDDIE BAUER NAME EXECS Cataloger/retailers J.C. Penney Co. and Eddie Bauer each appointed top-level executives on July 11. Penney has created a new position, president/chief operating officer of stores and merchandise operations, and has hired Ken Hicks to fill it. Most recently president of Payless Shoe Source, Hicks will be response for store environment, planning and allocation, and supply chain management for the catalogs and the Website as well as for the general merchandiser’s department stores. And at Eddie Bauer, Fabian Mansson was named president/CEO. He will report to Martin Zaepfel, vice chairman/president/CEO of Eddie Bauer parent company The Spiegel Group. Mansson was most recently executive vice president of Spray Ventures, a Swedish venture capital company. Previously he was CEO of Swedish retail chain Hennes & Mauritz (H&M).

CONCEPTS DIRECT LAYS OFF 100 Multititle mailer Concepts Direct laid off 27% of its work force on July 3, or approximately 100 people. The company also cut the salaries of many of its remaining workers, including managers, and plans to reduce catalog circulation. In a statement, president Phillip Wiland said that sales had not met expectations while costs had risen. For the first quarter of fiscal 2002, the company lost $2.1 million, compared with a loss of $1.2 million the previous first quarter. Concepts Direct mails stationery catalog Colorful Images and gifts books Linda Anderson, Snoopy Etc., Linda Anderson’s Collectibles, and Music Stand.

FIRE DESTROYS QUAD/GRAPHICS FACILITY A fire that broke out on July 12 destroyed printer Quad/Graphics’ paper and product storage facility in Lomira, WI. One person, an employee at a neighboring business, was killed. The fire began in the main printing plant adjacent to the storage building. On July 15, however, the printer reported that it was already reprinting the catalog and magazine pages that had been destroyed.

SMITHFIELD FOODS BUYS BASSE’S CHOICE CATALOG Food cataloger/retailer Basse’s Choice was acquired in June by manufacturer/marketer Smithfield Foods, which has supplied merchandise to Basse’s Choice for 12 years. Terms of the deal were not disclosed. Smithfield also owns the Smithfield Collection and Peanut Shop catalogs.

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Former Fingerhut chairman/CEO Ted Deikel and partner Tom Petters submitted a bid for the cataloger to parent company Federated Department Stores on May 16. Mary Pernula, spokesperson for Petters’s Eden Prairie, MN-based wholesale company, RedtagBiz, could not specify whether Petters and Deikel’s offer was for Fingerhut and its catalog subsidiaries, which include Arizona Mail Order and Figi’s, or only for segments of the company, citing contract confidentiality. Fingerhut spokesperson Ben Saukko would not comment on the offer. (For more on Fingerhut, see page 5.)


Computer cataloger PC Mall has agreed to buy substantially all the assets of technology solutions provider Wareforce out of Chapter 11 bankruptcy. The deal is subject to court approval. For fiscal 2001, Wareforce had sales of $89 million from continuing operations. Just last month PC Mall acquired the assets of $83 million Pacific Business Systems, the parent company of the ClubMac computer catalog.


Ritz Interactive, which mails the Ritz Camera catalog, acquired and its namesake catalog on May 1. Terms of the deal were not disclosed. The CameraWorld store in Portland, OR, was not included in the acquisition. According to reports,, which launched in 1996, saw its online sales fall 25% in 2001, while store sales dropped 10%. Ritz Camera spokesperson Marc Malkin says that the company has not yet decided if it will continue to mail CameraWorld’s catalog or if it will merge the title into its own book. About 65 employees at’s Portland headquarters will be laid off.

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Dynamic Resource Group (DRG), the parent company of the Annie’s Attic and House of White Birches needlecrafts catalogs, acquired Fort Lauderdale, FL-based cataloger Clotilde’s Sewing Notions on April 9. Clotilde’s was founded in 1971 by Don and Clotilde Lampe, who also own quilt catalog Quilts & Other Comforts. Under the deal, which was handled by Atlanta-based Aegis Capital Advisors, Clotilde Lampe will continue to be spokesperson for the catalog and will remain closely involved in product selection. George Hague, DRG’s catalog marketing manager, will oversee the book’s day-to-day operations. Stark Brothers Fulfillment Services in Louisiana, MO, now fulfills the catalog orders for Clotilde’s, but DRG plans to move fulfillment to its own company, Big Sandy, TX-based Strategic Fulfillment Group, before the end of the year.


Charles Anton, founder/CEO of gadgets and health products cataloger TechnoBrands, was fired by a majority of the board of directors on March 27. Anton remains on the board, however. Sources say the board members who voted Anton out were unhappy with how he had handled the Federal Trade Commission’s allegations last year of deceptive advertising and misleading buyer’s club billing procedures. Although neither side would comment on the situation, catalog director Shardul Pandya says that despite all that’s going on, “things are running great, the company is doing fine. The catalog is mailing on time, sales are coming in, and products are being shipped.”


Giftware cataloger/wholesaler Ebeling & Reuss was sold to Strathmore Corp. of Pennsylvania on April 15. Terms of the deal were not disclosed. The Allentown, PA-based Ebeling & Reuss sells to independent gift distributors via a print catalog and a 100-person national sales force. Strathmore Corp. president Graham Mudie says the acquisition will enable Ebeling & Reuss to add new crystal, silverware, and home decor items to its product line, beginning with the May catalog.


The U.S. Supreme Court will decide a trademark case involving lingerie cataloger/retailer Victoria’s Secret and a store called Victor’s Little Secret. Victoria’s Secret, part of Columbus, OH-based retailer The Limited, sued the owners of the Elizabethtown, KY-based adult-entertainment retailer, claiming its trademark had been diluted. A federal judge agreed, ruling that the store’s name was sufficiently similar to that of Victoria’s Secret and that it had a “tarnishing effect.” A U.S. appeals court upheld the decision for Victoria’s Secret. Now the Supreme Court will decide whether trademark dilution requires proof of actual injury to the economic value of a famous mark, as opposed to proof only of a likelihood of dilution, which is what the appeals court found. The Supreme Court will hear the case and make its decision during its upcoming term beginning in October.

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Reader’s Digest Association, which in addition to its magazines, books, and direct marketing businesses operates the Good Catalog, Good Finds, and catalogs, announced on March 22 that it had agreed to buy Greendale, WI-based publisher/cataloger Reiman Publications for $760 million from its owner, Chicago-based Madison Dearborn Partners. Reiman operates Country Store, a $20 million-plus catalog business that mails 7 million books a year and distributes more than 60 million miniature catalogs by polybagging them with most of its magazines. The deal is expected to close in May, according to Reader’s Digest spokesperson Bill Adler. Although the two businesses will explore synergies, Adler says that Reader’s Digest has no intentions of closing down or merging any offices, and that the Country Store catalog will continue to operate independently moved under the wing.


The Postal Rate Commission (PRC) on March 22 formally accepted the terms of the negotiated settlement between the U.S. Postal Service and different mailing concerns for an overall 8.75% postage increase that’s expected to take effect June 30. Standard Mail, the mail classification used for most bulk catalog mailings, will increase 7%-10%. The groundwork of the unprecedented rate settlement was laid out by the USPS and mailing groups earlier this year after PRC chairman George Omas initially proposed it last fall.


Martha Stewart Living Omnimedia, which publishes the Martha by Mail catalog, on March 14 laid off 40 people — or a little more than 6% of its overall staff — from its catalog/e-commerce division. Despite the highly publicized problems facing the company following the Chapter 11 filing by discount retailer Kmart, of which Martha Stewart’s domestics line is a major supplier, the layoffs are attributed to the New York-based direct division’s problems, including its $24.7 million EBITDA loss for 2001. “These were job eliminations as part of a restructuring of the unit,” says spokesperson Elizabeth Estroff, “and had nothing to do with Kmart.”


Computer cataloger PC Connection says it has settled a trademark and copyright infringement brought by computer giant Microsoft. Redmond, WA-based Microsoft alleges that five shrink-wrapped software packages sold by Merrimack, NH-based PC Connection were in fact counterfeit. According to PC Connection CEO Ken Koppel, the cataloger may have unwittingly purchased the counterfeit software packages on the spot market. Although PC Connection claims no wrongdoing, it has agreed to pay Microsoft $625,000 to settle the case. PC Connection will include the settlement costs and related fees — about $125,000 — as a special charge in the first quarter.


Postmaster General Jack Potter on March 13 appeared before the House Appropriations Subcommittee on Treasury, Postal Service, and General Government to request $1 billion from Congress. The amount — well more than President Bush’s prior request for $60 million — includes $29 million as a 10th payment in a series of 42 annual payments authorized by the 1993 Clay Compromise to help fund nonprofit mail. Another $49 million is to cover costs associated with free mail for the blind and overseas voting material. Potter seeks the additional $928 million for the remaining revenue forgone reimbursement.


Retailer The Limited on March 21 completed its offer for all the shares of Intimate Brands it does not already own, receiving 72.6 million tendered shares. On March 12, Intimate Brands, which mails the Victoria’s Secret and Bath & Body Works catalogs, recommended that shareholders accept The Limited’s $1.56 billion offer to buy back the shares it spun off in 1995. Limited will now own 98% of Intimate Brands. Limited offered 1.10 Limited shares for each Intimate Brands share to acquire the remaining 16% of the company. Earlier on March 12, Columbus, OH-based Limited raised its offer from 1.046 Limited shares per Intimate Brands share, which increased the total value of the offer to about $1.56 billion from the original offer of about $1.5 billion. Now that The Limited has completed a short-form merger of Intimate Brands with and into a wholly owned subsidiary of The Limited as of March 21, Intimate Brands shares will no longer be publicly traded.

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FINGERHUT AWAITING WORD FROM PROSPECTIVE BUYER At press time it was unknown whether Federated Department Stores’ nonbinding letter of intent to sell its Fingerhut Cos. division would be followed with a firm deal. On Feb. 21, Federated announced that Wayzata, MN-based Business Development Group (BDG) had signed a letter of intent, pending further due diligence and financing arrangements. BDG would acquire the core Fingerhut general merchandise catalog and all its subsidiaries, including the Arizona Mail Order and Figi’s titles. Under terms of the agreement, BDG was to notify Cincinnati-based Federated of its intent and ability to proceed by early March. “The Fingerhut deal is really a financing play vs. a catalog deal,” Mike Petsky, CEO of New York-based direct marketing mergers and acquisitions firm Petsky Prunier, said the day Federated reported the letter of intent. “With a billion-dollars-plus of receivables, it’ll be interesting to see who provides financing for this deal.” Petsky feels that few traditional direct marketing equity firms would be interested in financing the Fingerhut acquisition.

Should the BDG deal fall through, another buyer may be waiting in the wings. After Federated announced the letter of intent, former Fingerhut CEO Ted Deikel and Eden Prairie, MN-based wholesaler Tom Petters revealed that they had made an offer to Federated the same day. Under the nonbinding letter of intent, Federated is free to entertain other offers for Minnetonka, MN-based Fingerhut.

In published reports, Deikel and Petters said their offer would be good until March 8. But Federated spokesperson Carol Sanger said that while BDG’s intention is to buy the entire Fingerhut operation, “there is no other offer for Fingerhut as a full entity. We have several other offers for bits and pieces.”

Meanwhile, BDG chief Peter Lytle said on Feb. 22 that, should he emerge as the new owner of Fingerhut, he would try to preserve as many jobs as possible. While Lytle said some restructuring may be necessary, if employees had to be laid off he would aim to make the layoffs temporary. Federated had announced in January that it would shut down Fingerhut and lay off its 6,000 employees in Minnesota and Tennessee if it couldn’t find a buyer.

SPIEGEL PUTS CREDIT-CARD BUSINESS ON THE BLOCK On the heels of a disappointing fiscal year, The Spiegel Group said it was planning to sell its credit-card business, which includes its First Consumers National Bank (FCNB) subsidiary. Also, as a result of its 2001 financial performance, including the estimated loss recorded in the fourth quarter for the disposition of the credit-card business, the company was not in compliance with certain loan covenants. Spiegel was working with its bank group and its majority shareholder to restructure its credit facilities. For the year ended Dec. 29, the company reported a loss from continuing operations of $17.8 million, compared with earnings from continuing operations (before the cumulative effect of an accounting change) of $8.9 million for fiscal 2000. Revenue for the year from continuing operations was $3.08 billion, down 8% from $3.35 billion the previous year. In addition to the general merchandise Spiegel catalog, the company includes apparel cataloger/retailer Eddie Bauer and apparel mailer Newport News.

Postal Numbers Down

During the February MTAC meeting (see story at right), Richard Strasser, chief financial officer/executive vice president of the U.S. Postal Service, released a financial comparison of the fifth accounting period ended Feb. 1 and the fifth accounting period of last year. The bright spots: a slight rise in parcel revenue and a significant decline in overtime.

Compared with fifth accounting period, 2001
Total revenue down 3.5%
Standard mail volume down 8.3%
Parcel volume down 3.5%
Parcel revenue up 4.9%
Overtime work hours down 25.0%
Expenses down 1.7%

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The Limited has started an exchange offer to buy back the 16% of Intimate Brands it does not already own. Intimate Brands is the parent company of cataloger/retailers Victoria’s Secret and Bath & Body Works. The Limited’s exchange offer began Feb. 5 and is to expire March 11. The Columbus, OH-based retailer is offering 1.046 shares of its common stock in a tax-free exchange for each outstanding share of Intimate Brands Class A common stock.


Electrical gadgets cataloger/retailer Electric Odyssey had consisted of three stores and the catalog/Internet operations. This was a “strategic decision by our parent company,” says Electric Odyssey president Lori Collard. “Retail was not fitting Allete’s focus.” Nor did Electric Odyssey’s 2001 sales meet projections, though Collard adds that as Electric Odyssey accounted for only 2% of Allete’s 2001 revenue, disappointing sales should not be considered the only reason for the closing. Of Electric Odyssey’s 35 employees, some have been laid off, while others have been moved to different positions within Allete, Collard says.


James Matuszewski, cofounder/CEO of wellness products catalog FeelGood for Life, has resigned from the Lakewood, CO-based company effective Feb. 1. “I am leaving on the basis that both I need a break from FeelGood and FeelGood needs a break from me at this point in the company’s life cycle,” Matuszewski says. Cofounder/partner Jason Zinn will continue to run the company, which filed for Chapter 11 in October 2000 but emerged from bankruptcy last year when it was acquired by private investment group Sterling Health Concepts.


Kitchenware cataloger/retailer Sur La Table has completed a $14 million round of financing. The new funding was raised by private investment firm Freeman Spogli and Co. and the Behnke family, which bought Sur La Table in 1995. Seattle-based Sur La Table will use some of the funds to open five more stores this year and up to 10 stores in 2003. The company will also invest in its Website, sales of which grew 40% in 2001.


The Direct Marketing Association on Feb. 4 released a list of guidelines for commercial e-mail solicitations and Website privacy policies. The guidelines are part of the DMA’s Guidelines for Ethical Business Practice and will be enforced by the organization’s Committee on Ethical Business Practice.

The guidelines require that marketing e-mails disclose, among other things, the marketer’s identity; a clear, honest, and nonmisleading subject line; and specific opt-out contact information. In addition, the marketer’s street address must be made available in the e-mail solicitation or by a link to its Website. Marketers must also “scrub” e-mail lists obtained through third-party marketers by using the DMA’s e-Mail Preference Service suppression file.

The guidelines for Websites require members to list their information practices in a prominent place; to detail the type of personally identifiable information collected and for what purposes, along with how consumers can opt out; and to offer public self-certification or third-party verification and monitoring to demonstrate adherence with stated online practices. Members’ Websites must also provide consumers with a physical address for their company.

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LAYOFFS AT COLDWATER CREEK, L.L. BEAN Women’s apparel cataloger/retailer Coldwater Creek announced on Jan. 10 that it will close its Sandpoint, ID, distribution center by the end of March. About 120 workers there will lose their jobs. The company will consolidate all fulfillment activity within its Parkersburg, WV, facility. Coldwater Creek will cut another 80 jobs among its national retail store staff and 20 salaried positions in its Sandpoint headquarters. In addition, it will close two outlet stores by March. The company also announced the resignation of executive vice president/chief financial officer Donald Robson. Several days earlier, on Jan. 4, Freeport, ME-based L.L. Bean announced that it had laid off two vice president and one director. The outdoor gear and apparel cataloger, which saw sales decline more than 3% last year, wouldn’t disclose the names or titles of those laid off, but it did say at press time that it planned more job cuts among middle and upper management by the end of January, when its fiscal year ends. The marketing and merchandising departments will be the hardest hit; hourly fulfillment workers are not expected to be affected. Bean spokesperson Rich Donaldson says that rather than being a “kneejerk reaction” to slow fall/holiday sales, the layoffs are part of a companywide reorganization that started three years ago to eliminate duplication of efforts and streamline functions.

STAR STRUCK ACQUIRES PROTEAM On Jan. 7, licensed sports apparel cataloger Star Struck acquired the sports-related assets of defunct ProTeam, from Stamford, CT-based GE Capital. Terms of the deal were not disclosed. Formerly known as Genesis Direct, ProTeam consisted of specialty sports catalogs such as Manny’s Baseball Land, Hot Off the Ice, From the Sidelines, Nothin’ but Hoops, Soccer Madness, and Redline. According to Jason Scheets, Star Struck’s chief operating officer, ProTeam’s sports titles haven’t mailed in more than a year. Rather than relaunch the catalogs, Star Struck will fold select merchandise from the ProTeam books into its own catalog most likely starting with the spring book, which will drop in March and April. Along with ProTeam’s merchandise and multimillion-name customer list, Bethel, CT-based Star Struck also acquires its URLs.

FREDERICK’S SUITORS PUT ON HOLD Women’s apparel cataloger/retailer Frederick’s of Hollywood, which in October signed a letter of intent to be purchased, will likely not complete that or any other deal until the third quarter, says spokesperson Seth Jacobson. Frederick’s, which filed for Chapter 11 in July 2000, signed the letter of intent to be purchased by two New York-based private equity groups, Cerberus Capital Management and TGV Partners. Frederick’s now plans to wait until after the results from the 2001 holiday season and the upcoming Valentine’s Day have been tallied before moving forward, Jacobson says.

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DR. LEONARD’S, SUNBELT SPORTSWEAR FOR SALE Edison, NJ-based Dr. Leonard’s Healthcare Corp., a low-end health products cataloger, has hired an investment banking firm to explore the sale of the company. Dr. Leonard’s also mails the Carol Wright Gifts title, which it bought from now-defunct marketer Genesis Direct in December 1999 for $4 million. Also seeking a buyer is San Antonio, TX-based Sunbelt Sportswear, a $15 million women’s apparel cataloger.

GARDENER’S SUPPLY CO. INVESTS IN DUTCH GARDENS In its first venture into the “live goods” category of horticultural products, $50 million gardening merchandise cataloger Gardener’s Supply Co. acquired majority ownership of bulb cataloger Dutch Gardens in December. Terms of the deal were not disclosed. The Dutch Gardens catalog is a subsidiary of International Garden Products (IGP), which will run Dutch Gardens as part of a joint venture with Gardener’s Supply. IGP will supply the bulbs from The Netherlands. Burlington, VT-based Gardener’s Supply has tapped industry veteran Leo Vanderlugt, most recently director of merchandising/general manager for Breck’s Bulbs, to serve as president of Dutch Gardens.

NBTY BUYS HEALTHCENTRAL.COM ASSETS Bohemia, NY-based nutritional supplements marketer NBTY, which mails the Puritan’s Pride catalog, has acquired certain assets of out of bankruptcy, including the customer list of cataloger L&H Vitamins and the lists and URLs of the and sites. NBTY paid $2.8 million in cash for the assets. The acquisition, approved by the bankruptcy court on Dec. 6, was expected to close by Christmas. L&H Vitamins,, and had a combined customer list of about 1.8 million names and about $15 million in sales.

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SAN FRANCISCO MUSIC BOX SOLD Cataloger/retailer Foot Locker (formerly Venator) on Nov. 13 sold gifts cataloger/retailer The San Francisco Music Box Co. to SFMB Acquisition Corp., a unit of New York-based Kier Group Holdings. The sale was part of Foot Locker’s planned divestiture of its nonathletic businesses.

PRC, USPS, MAILERS PURSUE RATE CASE SETTLEMENT As this issue went to press, the Postal Rate Commission and the U.S. Postal Service continued to advance the idea of turning the 2001-02 rate case into a “settlement agreement.” If the parties involved, including mailers’ groups, agree to the simplified agreement, the months-long rate case hearings would not be necessary. If the rate case went through the hearings, new rates would not be implemented until fall 2002 at the earliest; if the parties settle on an agreement, the Postal Service could implement the new rates sooner — but such an agreement could also lead to smaller, though more-frequent rate hikes down the road. The option of settling on rate hikes without enduring the hearings “has been positively received by most rate case participants so far,” says USPS rate case attorney Dan Foucheaux. “Most are concerned about how rates will affect them and the timing of implementation of new rates.” The second meeting of the parties involved in the rate case was scheduled for Nov. 16.

USPS SPECIFIES $1.1 BILLION IN EMERGENCY FUNDING NEEDS TO CONGRESS Less than a week after his Nov. 8 appeal for some $5 billion in emergency funds (see story on page 5 of this issue), Postmaster General Jack Potter told the Senate Appropriations Committee that the U.S. Postal Service needs another $1.1 billion from Congress to help finance the acquisition of mail-sanitizing equipment and other costs related to the presence of anthrax in the U.S. mail. Specifically, Potter said, the USPS needs $9.8 million to cover operational costs in New York, $83.9 million for mail diverted from affected post offices, $43.1 million in extra transportation costs, $15.6 million in unusual postal inspection costs, and $48.5 million for additional security measures. The agency had received $175 million in emergency funding in late October.

HENRY SCHEIN, HARVARD BIOSCIENCE MAKE ACQUISITIONS Medical, dental, and veterinary supplies giant Henry Schein has acquired the dental distribution operations of Phoenix-based Zila. Terms of the all-cash acquisition were not disclosed. Zila will become part of Henry Schein’s U.S. dental business, Sullivan-Schein Dental. The Melville, NY-based Schein intends to continue operating Zila’s sales and service center in Kentucky and will merge Zila’s centers in California and Texas into its own facilities. Another marketer in the healthcare sector, Harvard Bioscience, has acquired Scie-Plas, a U.K. company that designs, manufactures, and markets equipment for gel electrophoresis, a technique for sample preparation in molecular biology. Scie-Plas is no stranger to Cambridge, MA-based Harvard Bioscience; the latter distributes Scie-Plas’s product line in the U.S. through its Harvard Apparatus catalog.

SPECIALTY CATALOG GOES PRIVATE The stockholders of Specialty Catalog Corp., whose titles include the Paula Young wigs catalog, on Nov. 6 approved and adopted a merger agreement to take the company private through a sale to Specialty Acquisition Corp., a corporation formed by several shareholders.

AMAZON.COM INVESTS IN CATALOGCITY.COM PARENT COMPANY On Nov. 9, online general merchant made a $5 million investment in Altura International, the parent company of online mall As part of the deal, CatalogCity merchants, who are primarily print catalogers, will be featured on Amazon’s Website. At the same time, Amazon’s products will now be available through CatalogCity.

GOLD VIOLIN OPENS FIRST STORE Gold Violin, a Web and print cataloger of specialty products for seniors, opened its first retail store in Charlottesville, VA, near the company’s headquarters. Gold Violin plans to use its two-year-old catalog to help identify future retail locations — most likely in the retirement havens of Florida and Arizona.

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DELIA’S TO MERGE WITH ITURF AND SELL NONCORE TITLES A little more than a year after teen apparel cataloger/retailer Delia’s spun off its online portal iTurf in April 1999, the two companies announced a definitive agreement to merge in a stock-for-stock transaction. As announced on Aug. 16, the combined company will be named Delia’s iTurf. The transaction is expected to close in the fourth quarter of fiscal 2000. Evan Guillemin, president of Delia’s, and Dennis Goldstein, chief financial officer of iTurf, will become copresidents of the new company, with Delia’s chairman/CEO Stephen Kahn retaining his role. New York-based Delia’s also announced that it plans to sell its noncore properties. The company has retained Tucker Alexander to advise it in the sale of girls’ apparel cataloger Storybook Heirlooms. Kurt Salmon Associates Capital Advisors will assist in the sale of TSI Soccer, which sells soccer gear to teen boys.

TREND-LINES FILES FOR CHAPTER 11 Trend-Lines, which owns golf equipment cataloger/retailer Golf Day and woodworking tools cataloger/retailer Trend-Lines filed for Chapter 11 bankruptcy protection on Aug. 11. In June, the Revere, MA-based company said it was hoping to sell the Golf Day division by September to concentrate on its more profitable tool business.

USPS, UNIONS SQUARE OFF IN LABOR NEGOTIATIONS With most of its labor contracts set to expire on Nov. 20, the U.S. Postal Service has launched its contract negotiations, starting small on Aug. 10 with the National Postal Mail Handlers Union (NPMHU), which represents 61,000 workers. On Aug. 22, the USPS was to start negotiating with the larger American Postal Workers Union (APWU), which represents 355,000 postal clerks. It was also slated to face off with the National Rural Letter Carriers Association (NRLCA), representing 114,000 rural letter carriers, beginning Sept. 6.

ORVIS TO RUN VOLVO ADS IN CATALOG Beginning in January, automobile manufacturer Volvo will be an exclusive advertiser in the catalogs of $200 million-plus outdoor sporting goods marketer Orvis. “Volvo’s customers have a lot in common with ours – the same [upscale/outdoorsy] demographics,” says Joe Cassidy, vice president of direct marketing for Manchester, VT-based Orvis. “We think it’s a good fit.” The cataloger/retailer will also participate in promotions with Volvo dealerships. “We’re looking to get involved at auto shows, for instance,” Cassidy says. As for a financial payback, “we’ve wanted to increase the profitability of our catalogs by carrying ads, but we’ve been very cautious about doing that,” he adds. “We wanted a relationship with one company and sought a brand that customers would be comfortable with.”

SUMMIT LEARNING PARENT TO MERGE WITH LARGEST SHAREHOLDER Boulder, CO-based American Educational Products (AMEP), which owns the Summit Learning catalog, agreed on Aug. 14 to merge with G.C. Associates Holdings Corp., its largest shareholder. But the merger, which has been in the works for several months, is being challenged in court by shareholder William Federman. His suit, filed on July 13 and not settled as of press time, seeks an order preventing AMEP from merging with GC or any other firm until an auction or other procedure designed to get the best price for shareholders is held. In a statement, president/CEO Clifford Thygesen said that AMEP “has made extensive efforts to identify a purchaser for the company because that course was determined to be in the best interests of all shareholders. Unfortunately, all of those efforts proved unsuccessful…until an agreement in principle to merge with GC was reached on July 11.”

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VIKING’S NELSON CLIMBS TO THE TOP Bruce Nelson, who succeeded the retired Irwin Helford last year as president/CEO of Viking Office Products, was promoted on July 18 to CEO of parent firm Office Depot. In addition to his role at Viking, Nelson had been serving as president of Office Depot International. He replaces David Fuente, who will remain chairman of Office Depot’s board of directors.

FEDERATED PROMOTES FINGERHUT’S SHERMAN The Federated Direct catalog division of Federated Department Stores, which owns multititle cataloger Fingerhut Cos., promoted Fingerhut executive vice president Michael Sherman to president/chief marketing officer on July 12. He joins current Fingerhut president/chief operating officer John Bach in a newly created Fingerhut office of the principals – a structure similar to that used by Spiegel, which has a jointly occupied office of the president. The office of the principals will “put the two of us in the position of being responsible for all activities of Fingerhut,” Sherman says. “I’m going to focus more on the marketing and merchandising side; John will focus more on operations and fulfillment.”

UPS TO ROLL OUT E-SIGNATURE VERIFICATION SERVICE After testing it for the past few months, United Parcel Service will roll out its electronic signature verification service in September. The free service will enable shippers to go to UPS’s Website, punch in a pin number, and access electronic images of the signatures of parcel recipients. Though most standard ground delivery packages to residences don’t require signatures, all commercial delivery packages, premium air, and COD deliveries must be signed for.

ALLOY ONLINE BUYS SKATEBOARD/SNOWBOARD MARKETER Teen apparel cataloger/Internet retailer Alloy Online acquired CCS, a skateboard and snowboard cataloger/Internet retailer, on July 19 for 3.3 million shares of stock and the repayment of $10 million in assumed debt. CCS, which targets teen boys, also sells action-sports-oriented clothing and footwear.

WEB SALES WILL KEEP GROWING DESPITE SHAKE-OUT, STUDY SAYS While not all of today’s pure-play marketers will survive the dot-com shake-out, e-commerce sales will nonetheless increase substantially over the next two years. Internet research firm Giga Information Group expects Web sales to reach $152 billion by 2002, a $127 billion increase over 1999’s $25 billion. What’s more, e-commerce sales may reach $233 billion by 2004.

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PLAYBOY SELLS COLLECTORS’ CHOICE CATALOG Four months after putting its Collectors’ Choice Music and Critics’ Choice Video catalogs on the market, Playboy Enterprises signed a letter of intent to sell Collectors’ Choice to Soundies, a Chicago-based music label/cataloger. Soundies, which specializes in previously unreleased jazz and big band music, will acquire the Collectors’ Choice Website as well and will continue to use the Chicago-based Playboy Catalog Group’s customer service and order fulfillment facilities. Gordon Anderson, vice president of Collectors’ Choice, will join Soundies. Terms of the deal, which is expected to close later this summer, were not disclosed.

DMA REPORTEDLY TO ABSORB NONPROFIT GROUP Following the consolidation trend of its members, the nonprofit Direct Marketing Association has done its own share of consolidating over the past few years. Having absorbed the Association for Interactive Media and the Internet Alliance over the past couple of years, the DMA at press time was expected to take over the National Federation of Nonprofits (NFN), a Washington-based legislative lobbying group for nonprofit organizations. The DMA would then merge the organization with its own nonprofit council, according to a report from the Alliance of Nonprofit Mailers, a postal affairs nonprofit lobbying organization. The deal was expected to be completed by July 1.

LANDS’ END LOWERS EXPECTATIONS In its first-quarter filing with the Securities and Exchange Commission, apparel cataloger Lands’ End says it now expects its sales for the first half of the year to be flat compared with last year’s. The company had previously forecast a low-single-digit sales increase. Lands’ End won’t comment on why it lowered its expectations.

J. CREW BOUNCES BACK Apparel cataloger/retailer J. Crew Group posted an 11% first-quarter revenue gain. For the three months ended April 29, total sales were $158.8 million, up from $143.0 million a year ago. The company also enjoyed a nice bump in earnings before taxes of $5.0 million for the quarter, compared to just $100,000 for the same quarter last year. The catalog division, which includes online sales, improved a modest 2.7%, from $58.6 million in first-quarter sales last year to $60.2 million.

CALIFORNIA BILL PROPOSES TO TAX E-COMMERCE While the House of Representatives wants Internet taxes to be suspended for at least the next six years on a national level, in early June the California Assembly narrowly approved legislation that would force Internet marketers with a physical presence in the state to collect and remit taxes on all sales. The bill, AB 4212, was sent on to the state Senate following a 41-36 vote of approval (with nine abstentions) in the Assembly. Assemblywomen Carole Migden and Dion Aroner cosponsored the bill.

NORDSTROM ENTERS MEN’S BUSINESS CASUAL Upscale clothing cataloger/retailer Nordstrom has expanded its stable of catalog titles by adding a print book of men’s apparel in conjunction with the launch of its men’s online Business Casual Guide. The guide offers advice on how to select business casual clothing.

HANOVER DIRECT OPENS DISTRIBUTION CENTER Multititle cataloger Hanover Direct is leasing additional distribution space for its Keystone Fulfillment Services, a unit of its Internet subsidiary, Erizon. The Maumelle, AR-based facility had been occupied by the Venator Group, which owns Eastbay and San Francisco Music Box Co., although it has stopped mailing the latter’s catalogs while it seeks a buyer for that unit. The distribution center, which adds 700,000 sq. ft. to Hanover’s fulfillment capacity, will house 500 employees fulfilling product for such Internet clients as Oxygen Media and


POSTAL RATES: GOOD NEWS AND BAD It may be too soon to celebrate, but the buzz at the Direct Marketing Association’s Government Affairs Conference on May 2 in Washington was that the Postal Rate Commission may trim the size of the U.S. Postal Service’s proposed rate increase. Because the rate case is now in a 10-month hearing stage at PRC headquarters, sources would not go on the record. But many believe that the PRC will reduce the $3.7 billion the USPS wants in its overall revenue requirement – an amount that could result in a 14%-plus increase in some catalog postal rates. As one source says, “for this rate case, there’s positive USPS equity in a strong economy,” so it’s possible that the PRC will reduce the size of the proposed rate increase. On the other hand, mailers will see more frequent rate hikes, since recently appointed deputy postmaster general John Nolan says that the USPS is considering raising rates every other year throughout the first decade of 2000. Regularly! scheduled increases, combined w ith the USPS’s ongoing cost-cutting measures, should mean lower rate hikes, he says. “If the economy remains healthy, the 2003 rate case will be just about the rate of inflation. The 2005 case will be 1-1/2 times the inflation rate, then the 2007 case will be two times the inflation rate.” All told, the USPS hopes to strip $6 billion in costs over six years, Nolan says. As part of a corporate management downsizing over the next two years, “we hope to trim 13% of our administrative Washington headquarters staff this year, 10% next year, and 10% in 2002” to keep the rate increases down.

PASS POSTAL REFORM OR DIE In other news from the Government Affairs Conference, U.S. Postal Service governor David Fineman warned that some catalogers won’t be able to stay in business much longer unless Congress passes postal reform. At issue is the Postal Modernization Act (H.R. 22), which has stalled in the subcommittee phase for more than four years since it was introduced by Rep. John McHugh (R-NY). “If you don’t change the 1970 law that governs the USPS,” Fineman said, “it’s going to be too expensive to mail soon.” Mailers must work out the kinks in H.R. 22 with the USPS and each other to make the bill appeal to Congress, he said. “I gave this same speech to this group in 1995 and ’97, and nothing’s happened. You have to tell Congress that you’ll go broke unless it legislates.”

MEXICAN BILLIONAIRE BUYS INTO CDNOW Mexican billionaire Carlos Slim Helu has bought a 9.2% stake, or 3.03 million shares, in the troubled online music retailer CDNow for $52.8 million, according to a filing with the U.S. Securities and Exchange Commission in early May. With losses mounting and cash running low, CDNow announced in March that it was looking for an investor or an acquirer after a proposed merger with Columbia House fell through. Helu, who paid an average of $17.43 per share for his stake, had bought 50,000 shares of CDNow over the previous two months, at $3.83-$8.27 a share, the SEC filing says.

HANOVER DIRECT LOSSES WIDEN Although Hanover Direct reported a 1.9% first-quarter increase in revenue from $127.7 million to $130.1 million, the multititle cataloger/Internet retailer also posted a $13.4 million net loss, or $0.06 per common share, compared to a $4.2 million net loss, or $0.02 per share for the same quarter last year. The Weehawken, NJ-based company blames the loss for the quarter ended March 25 on its continued investment in Erizon, its e-commerce services business.

J.C. PENNEY TO DUMP DIRECT MARKETING SERVICES UNIT General merchandise cataloger/retailer J.C. Penney is considering selling its Direct Marketing Services (DMS) subsidiary, according to a company statement. DMS markets insurance products and membership services. Proceeds from the sale would be used to pay down debt and repurchase J.C. Penney stock. Also at Penney, company chairman James Oesterreicher announced in early May his plan to retire.

INTERNET SALES WILL EXPLODE IN U.K. NEXT, SURVEY SAYS Consumer spending online in the U.K. will jump from $2.6 billion (U.S.) in 1999 to more than $30 billion by 2005, says a report from Fletcher Research, the U.K. arm of Cambridge, MA-based Forrester Research. The report notes that wireless products and interactive TV will lead the ‘Net rush, and that online sales will account for 7.5% of the U.K.’s retail market by ’05, a considerable increase over its 0.25% online market share in 1999.

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FINGERHUT BAILS OUT MAGRAM, BROWNSTONE On March 10, Fingerhut Cos. bought the inventory, lists, and trademarks of StyleSite Marketing’s Lew Magram and Brownstone Studio catalogs. Formerly known as Diplomat Direct Marketing, Teaneck, NJ-based StyleSite filed for Chapter 11 bankruptcy protection on Jan. 13. Since then, it has sold its Ecology Kids unit to its lender, First Source Financial. Fingerhut paid $6.75 million – subject to adjustment downward based on inventory – to add the two women’s apparel titles to its growing portfolio. In 1998, Fingerhut bought the Arizona Mail Order stable of women’s apparel catalogs as well as another women’s apparel cataloger, Bedford Fair. Before then, “we realized that only 7% of our business was in apparel, but with 24% of consumer purchases made in apparel, we thought we could do more there,” says Fingerhut Cos. executive vice president Michael Sherman. “So we have an ability to integrate these titles and build a bigger buyer file in women! ‘s apparel.”

LANDS’ END FINISHES TRANSITION YEAR WITH LOSSES Casual apparel cataloger Lands’ End blames a planned 15%-plus decrease in catalog pages circulated for its 3.8% decline in net sales for its fiscal year ended Jan. 28. Sales dropped from $1.37 billion to $1.32 billion. Gross profit fell 3.9%, from $617 million, or 45% of net sales, to $593 million, or 44.9% of net sales. The company has dubbed fiscal 2000 “a transition year,” during which it cut unprofitable mailings, reduced expenses, and liquidated excess inventory to prepare for a “reinvigorated and new merchandise offering.” Within the core business unit, sales dropped 9%, to $780 million. But Internet sales more than doubled, reaching $138 million. In addition, sales within Lands’ End’s specialty catalogs unit rose 9%, to $397 million, spurred by big sales gains in the $140 million corporate sales division. To build on the growth of its b-to-b sales, on March 13, the corporate sales division joined Commerce One, a global e-c! ommerce solutions provider that exchanges goods among businesses worldwide. For FY 2001, Lands’ End is changing sourcing and, beginning in the second quarter, will circulate 6% more catalog pages for the year, most of them in the fourth quarter.

REGULATION CHANGE COULD HELP DDU MAIL DELIVERABILITY On March 12, the U.S. Postal Service began enforcing a new regulation that could improve delivery of bulk mail and parcels. The USPS is now forcing bulk shippers to make appointments for mail and parcels drop-shipped into destination delivery units (DDUs) – the postal facilities located closest to recipents’ homes – on a week-by-week basis rather than a month-by-month basis. The regulation also requires mailers or shippers to give postal staff accurate five-digit zip codes prior to making delivery appointments. The USPS believes the new rule will help speed up processing and delivery of the mail. Since January 1999, when the USPS began offering discounts for Standard A and Standard B mail drop-shipped into DDUs, there’s been an increase in the amount of mail coming in to the wrong DDUs, and mailers have been failing to keep scheduled appointments. In other postal news, the USPS plans to increase postal rates 15% later this y! ear in all categories of interna tional mail, with rates for mail into Mexico rising 20%.

SPECIALTY CATALOG CORP. BREAKS OFF GOLUB MERGER On March 9, Specialty Catalog Corp., which mails the Paula Young Wigs and Especially Yours catalogs, said it had terminated a December 1999 merger agreement with Golub Associates, a privately held investment partnership. According to a Specialty Catalog statement, although the financing was arranged, the two firms abandoned the agreement because some other, undisclosed conditions couldn’t be satisfied in a timely manner.

INTERNET TAX COMMISSION IN STALEMATE The congressionally appointed Advisory Commission on Electronic Commerce (ACEC) is scheduled to present its recommendations on Internet taxation on Capitol Hill before the end of April. As of mid-March, however, the panel appeared to be in a deadlock. One group of ACEC panelists, led by Virginia governor James Gilmour, would like to see a complete ban on Internet taxes. An opposing group, headed by Utah governor Michael Leavitt, wants to recommend that states decide how to tax online purchases. Meanwhile, Forrester Research, which forecasts $184 billion in online sales by 2004, says that if taxes go uncollected from Internet sales, police departments and road construction efforts, among other state services, could be hurt.

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LOOK OUT, HERE COMES SPIEGEL Spiegel Inc. continued its yearlong-plus comeback in high style by announcing a 78% gain in fourth-quarter earnings per share. Net earnings for the quarter ended Jan. 1 rose to $74.7 million, or $0.57 per share, from $41.5 million, or $0.32 per share, for the fourth quarter of fiscal ’98. Fourth-quarter revenue rose 11%, from $1.08 billion to $1.13 billion, fueled by a 38% sales gain from the Spiegel catalog. (The company also includes the Eddie Bauer and Newport News apparel titles.) For the entire year, total catalog sales rose 12%, to $1.44 billion, while online sales surged 324%, to $78.9 million. Most impressive, net earnings for fiscal 1999 jumped to $85.3 million from $3.3 million for ’98.

CHAMPION INTERNATIONAL MERGES WITH FINNISH PAPER COMPANY On Feb. 17, Stamford, CT-based paper manufacturing giant Champion International agreed to merge with Helsinki, Finland-based paper producer UPM-Kymmene Corp. to create a paper company with sales of more than $20 billion. Some catalogers, such as Jack Laidlaw, creative director of institutional recreational equipment mailer J.L. Hammett, are heartened by the news. “It will make the foreign paper market more attractive to companies like ours,” he says. “The big holdback in the past with using foreign paper producers has been time and reliability. If we were to choose to use a company like UPM-Kymmene now and if the paper didn’t perform or we received baggy rolls, I’d be able to rely on a local Champion distributor to back us up. And over the past half-year, I’ve been looking into foreign paper, because in some cases, you can get superior sheets and better pricing.”

USPS LAUNCHES RIDE-ALONG TEST On Feb. 26, the U.S. Postal Service started a two-year experiment allowing catalogs that weigh up to 3.3 oz. to ride along with polybagged magazines for a cost of $0.10 a copy. That rate is $0.05-$0.20 per copy less than the Standard A mail rate for a 3.3-oz. catalog. In early February, the Postal Rate Commission had recommended the USPS-proposed test, and on Feb. 14, the postal Board of Governors authorized the test to be launched. The USPS hopes to gain nearly $5 million in net revenue from ride-alongs.

FORMER BROWNSTONE STUDIO CHIEF PILOTS LIGHTHOUSE CATALOG On Feb. 14, former Brownstone Studio catalog president and Mokrynski Associates senior vice president Roberta Nasta took over the catalog operations for Lighthouse International, a New York-based nonprofit organization serving visually impaired people. Nasta, whose title is vice president for the Lighthouse Enterprises marketing unit, says she hopes “to make the catalog more visible to consumers so that they know about Lighthouse’s wonderful work” while building up the book’s sales and a complementary Website.

NEWSPAPER CATALOG INSERT TO DEBUT Taking a page from inflight co-op cataloger SkyMall, list firm The SpeciaLists has begun selling catalogers on a co-op catalog that it plans to test-insert in selected editions of six Times Mirror Corp. newspapers: the Los Angeles Times, Newsday (Long Island, NY), the Baltimore Sun, the Hartford (CT) Courant, the Greenwich (CT) Advocate, and the Allentown (PA) Morning Call. The insert will appear in four consecutive Sunday editions beginning Sept. 17. The insert will reach a different 500,000 readers each of the four weeks. Catalogers will pay $1.90/M for each page they buy and will keep 60% from all sales (with Times Mirror pocketing the other 40%). Catalog participants will also be able to keep the names of all the newspaper customers they sell to. SpeciaLists client management director Mike Konikow says that while he’s yet to sign up any catalogers, “there’s been a lot of interest.” Orders will be centrally processedby Cresskill, NJ-based ! Corporate Express, which will el ectronically transmit the orders to the individual catalogers for fulfillment.

CATALOG/INTERNET BIGGIES FORM MARKETING PROGRAM Eight big-name online and print catalog marketers have joined forces in a reciprocal marketing program that will link each of their sites to those of their marketing partners. The companies are gifts marketer 800-Flowers, book cataloger/retailer Barnes & Noble, travel Website, apparel catalogers J. Crew and L.L. Bean, pet supplies cataloger/retailer PetSmart, online drugstore, and online vitamin marketer All participants will take part in joint promotions and customer offers.


DAMARK EXITS CATALOG BUSINESS On Jan. 26, Damark International said it will close its $292.8 million discount electronics and general merchandise catalog business by June. Instead, the company plans to focus on its profitable $138.2 million membership services business, which will be renamed Insyte, and its $17.1 million e-commerce business. In addition to liquidating assets and cutting about 150 jobs, Damark plans to close its Brooklyn, NY, call center. Minneapolis-based Damark’s net catalog revenue plunged nearly 26% in ’99, while net revenue from its membership services division jumped more than 54%. “We got a lot of miles out of the Damark catalog over the past 10-12 years,” chairman/CEO Mark Cohn says. “But over that time, Best Buy, Circuit City, Office Max, Walmart, Dell, and Gateway have become more targeted, and their brands have become more ubiquitous. Now these large brand owners will continue to dominate the market, leveraging their brands across multiple channels. ! We’ve chosen to exit this busine ss, because we don’t have the ubiquity of brand to compete with them.” But Damark will use its catalog experience to develop a Web services business called ClickShip Direct.

NEW OWNER FOR IN THE COMPANY OF DOGS In yet another acquisition of a print cataloger by a virtual-only company, on Jan. 24, online pet supplies marketer bought In the Company of Dogs, which sells upscale gifts and apparel for dog lovers, for an undisclosed price. “Petopia will promote our Website through its site, as well as through its PetCo stores. We’ll also be able to distribute catalogs through the stores,” says Company of Dogs spokesman Scott Vertrees. The acquisition also gives In the Company of Dogs access to another medium – television. has formed an alliance with TV network ValueVision and minority owner NBC to produce a weekly series for ValueVision’s Snap TV network. spokeswoman Donnelle Koselka says the program will begin airing in early spring. “The show offers a lot of cross-promotional opportunities,” Koselka says. “For instance, we could have a segment on fashion for dogs featuring apparel from In the Company of Dogs.”

B-TO-B CATALOG VETERAN JACK MILLER RETIRES Jack Miller, who launched the Quill Corp. catalog of office supplies in 1956 in the back room of his father’s chicken store, retired as president/CEO on Jan. 31. Miller had sold the company, which he co-owned with brothers Arnold and Harvey, to office superstore retailer Staples in April 1998. He has been replaced by former Quill senior vice president of operations Lawrence Morse.

HA-LO BUYS STARBELLY.COM On Jan. 18, promotional products purveyor Ha-Lo Industries announced its acquisition of, an online seller of promotional goods, for $240 million. will be merged with Ha-Lo’s promotional products group. The transaction will give $19 million in cash to stockholders, with the remaining $221 million of the purchase price to be paid in Ha-Lo stock. Shareholder approval, required to close the transaction, is expected in March.

PC CONNECTION RESTRUCTURES, BUYS CALL CENTER Shortly after it announced in January that it would restructure itself into a holding company to support further growth, computer cataloger PC Connection bought a Marlborough, MA, call center from Merisel, a distributor of technology products. The 42,000-sq.-ft. facility is configured for some 250 work stations. As for PC Connection’s holding company structure, the new company will own three subsidiaries: PC Connection Sales Corp., which includes the PC Connection and MacConnection computers catalogs; ComTeq Federal, which sells equipment and services to the federal government; and Merrimack Services Corp., which provides service functions to the other subsidiaries.

AIRBORNE OFFERS ALTERNATIVE FOR BULK CATALOG MAILINGS Airborne Express is offering a service that it says will deliver bulk catalog mailings in four to six days. The rates, according to the carrier, are 10%-15% less than those for U.S. Postal Service first class but “a little higher” than Standard A rates for bulk-mailed catalogs. Airborne will pick up the mailings and send them to the Indianapolis hub of consolidator QuikPak, which will sort the mail and drop-ship it into USPS destination delivery units. At that point, USPS carriers will make the final deliveries.

Even so, one cataloger, who requested anonymity, believes the increases will ultimately squelch demand and hurt the paper industry. “In 1994-1995 [when paper prices soared 60%], we were forced to survive on less paper. But there was no viable Internet option then. This time they’ll force us to migrate more of our marketing onto the Web, and when that happens, the business they lose will be gone forever.”

At Deadline

GENESIS DIRECT DOWNSIZES After building a stable of more than 30 catalogs over three years, Genesis Direct announced on Feb. 3 that it would sell all its non-sports-related titles and lay off 150 salaried positions-about 30% of its work force. Genesis announced that same day that it had sold its $32.6 million Sporttime division, which consists of four catalogs selling recreational products to schools and other institutions, to b-to-b educational supplies cataloger School Specialty for $23 million. Genesis expects to raise another $60 million from the sale of its nonsports consumer catalogs and use the proceeds to expand the Web presence of its nine sports titles, which include Manny’s Baseball Land, Hot Off the Ice, and 1-800 Pro-Team. To reflect its new emphasis on selling licensed sports merchandise, Genesis planned to change its name to Genesis’s decision came on the heels of a third-quarter loss of $18.9 million (significantly less than the previous year’s third-quarter loss of $32.2 million). “Because of the stock market crash over the summer, their stock price got below the point where it wasn’t easy for them to make acquisitions and their losses continued,” says Kevin Silverman, managing director of Chicago-based investment bank ABN Amro.

TRANSMATION TO BUY METERMASTER Transmation, which sells and services test, measurement, and calibration equipment through its Transcat catalog, has agreed to buy Marietta, GA-based Metermaster, the largest distributor in the world of standard and customized panel instruments. In addition to selling its products through local distribution offices, the $21 million Metermaster was to mail its first full-line catalog by early March. The $100 million-plus Transmation will pay $1.8 million to buy all the Metermaster stock, long-term employment contracts and settle other liabilities. The acquisition, which at press time was supposed to be completed by the end of February, is exactly the business in which Transcat is engaged, said Transmation chairman Robert Klimasewksi in a statement. Metermaster’s operations include a value-added meter modification business, a test and measurement distribution business, and a service division.

SPORTS SUPPLY GROUP BUYS ONE, LAUNCHES ONE Seeking to become the one-stop source for schools’, daycare centers’, parks’ and other institutions’ sporting goods, playground and remodeling needs, in January, Sport Supply Group, a $100 million b-to-b cataloger, bought Conlin Bros. Sporting Goods shortly after launching its own Junglebug Play.Works product line. Conlin Bros., which mails a catalog to, and circulates field salespeople throughout, California, represents the first of many other acquisitions of similar regional b-to-b direct sellers of institutional sporting goods. It’s a significant first step, says Sports Supply vice president of sales and marketing Adam Blumenfeld. There are other large team dealers/catalogers with proprietary brands like Colin. So if we combine them with our product line, we can make them all more profitable. As for Junglebug Play.Works, Sports Supply dropped 125,000 JungleBug catalogs in early January to schools, park systems and daycare facilities nationwide. Blumenfeld says the catalog’s prices range from $5,000 to $250,000 centswith the largest orders including complete interior and exterior overhauls of daycare centers.

GARDEN BOTANIKA BOOTED OFF NASDAQ On Feb. 1, cosmetics cataloger/retailer Garden Botanika was removed from the Nasdaq National Stock Market exchange and that its securities would cease trading. Nasdaq said that Garden Botanika doesn’t meet the requirements for continued listing on account of its market capitalization and continuing bid price deficiencies. The Company’s securities, however, are eligible to trade on the Over The Counter Bulletin Board.

FINGERHUT BUYS 19.9% OF ROXY SYSTEMS In its sixth major deal in as many months, Fingerhut Co. acquired a 19.9% equity interest in Roxy Systems, which sells digital communications and entertainment services such as home satellite TV, digital wireless phones, and dial-up Internet services online. Fingerhut will provide back-end services including order processing, fulfillment, merchandise integration, and database management, as well as assist in promotional advertising and marketing support. The acquisition continues Fingerhut’s surge into e-commerce and build-up of assorted direct marketers. In July 1998, Fingerhut acquired an equity interest in PC Flowers and Gifts, an online cataloger of flowers and gourmet food; in August, November, and December, the company had bought catalogers Arizona Mail Order, Popular Club Club, and Bedford Fair, respectively. Also in December, the company purchased equity interests in Internet-based companies and The Zone Network.

J. PETERMAN SCRAMBLES TO SURVIVE On Jan. 27, two days after J. Peterman filed for Chapter 11 bankruptcy protection in the Eastern Kentucky District Bankruptcy court, the apparel cataloger/retailer was granted a $1.96 million bridge loan from an unnamed primary creditor, allowing operations to continue at least through Feb. 12. Sources say founder John Peterman was hoping to find a buyer by that time. At press time, a court hearing was scheduled for Feb. 8 and the company was continuing to operate its mail order division and 13 retail stores. Despite a 17% sales increase, to $74 million in 1998, poor holiday sales, which created excess inventory problems, and an aggressive retail expansion strategy that included 70 new stores found Peterman in debt. By December, the company was unable to obtain additional financing from lenders or partners. The company, which listed $40 million in liabilities and $35 million in assets, seems it just got caught in the crossfire of a tough fall and holiday selling season,” observes Bill Nicolai, senior vp of marketing for The Good Catalog Co. and a former consultant to Peterman.

At deadline

FINGERHUT CONTINUES ITS SPENDING SPREE In one week, general merchandise cataloger Fingerhut Cos. acquired a $100 million-plus cataloger and equity interests in two Websites. On Dec. 15, Fingerhut announced a definitive agreement to buy women’s apparel cataloger Bedford Fair Industries, which produces the Bedford Fair Lifestyles and Willow Ridge titles. Bedford Fair, which filed for reorganization under Chapter 11 in September 1997, will operate as a freestanding company reporting through Arizona Mail Order, the $140 million multititle mailer Fingerhut had bought during the summer. During the second half of ’98, Fingerhut had also acquired $180 million general merchandise catalog Popular Club Plan from J. Crew Group. The day before announcing the Bedford Fair deal, Fingerhut announced it had bought 19.9% of FreeShop International, an online buyers club that also makes trial offers available to Web surfers. And just days earlier, Fingerhut acquired 19.9% of, which sells mountain sports merchandise, from Zone Network. The investments follow Fingerhut’s purchase of nearly 20% of online floral marketer PC Flowers this past July.

BARNETT BUYS U.S. LOCK On Dec. 14, business-to-business cataloger Barnett, which sells plumbing, electrical, and hardware supplies, bought the assets of $27 million cataloger U.S. Lock from Waxman Industries for $33 million. U.S. Lock, which sells hardware to locksmiths and other security installers, “is a good strategic fit for us,” says Barnett CEO William Pray. “It is a company with strong management and good growth potential.” U.S. Lock, which employs an outbound telesales staff of 19, will operate as a stand-alone business for the time being, “but somewhere down the road, we may begin to integrate our warehouses and administrative staff,” Pray says.

PETALS CATALOG AGREES TO BE SOLD In December, home accessories supplier Interiors agreed to buy $42 million silk flowers manufacturer/cataloger Petals for an undisclosed sum. While Petals is Interiors’ sixth acquisition since February 1998, it is the $100 million marketer’s first catalog. Petals’ Website also represents a new distribution channel for Interiors.

SUCCESSORIES CONSIDERING ACQUISITION BIDS Motivational products manufacturer/cataloger Successories has retained investment bank William Blair & Co. to evaluate unsolicited acquisition bids and investment inquiries it has received, confirms CFO Steven Kuptsis. Successories made the announcement at the same time it released its third-quarter financials; the company posted a net loss of $1.5 million, compared to net income of $522,000 for the previous third quarter. Sales dropped 9%, to $12.4 million, following the end of Successories’ kiosk program with retail chain Waldenbooks.

EDISON BROTHERS LOOKS TO UNLOAD CATALOG Apparel cataloger/retailer Edison Brothers Stores announced it’s looking to sell Repp By Mail, a big-and-tall men’s apparel catalog. The $950 million company, which emerged from Chapter 11 in October 1997, says it plans to concentrate on its retail division, which includes the 5-7-9, Coda, and Bakers chains.

USPS RELEASES NEW RATE DATA ONLINE The U.S. Postal Service has released on its Website an advance copy of its Domestic Mail Manual, containing all rates and classification specifications for the rate schedule that takes effect Jan. 10. At that time, postal rates for catalogers will increase an average of 4.5%. This is the first time the USPS has put an advance copy of its Domestic Mail Manual online. The manual is available by clicking the “What’s New” link on the Postal Explorer Website,

FURTHERMORE…Having pushed out vice president of sales William Ferry at the same time it forced CEO Mike Smith to resign at the end of October, the Lands’ End board on Dec. 10 hired Mindy Meads to replace Ferry. Meads had worked for the casual apparel cataloger from 1991 to 1996 as executive vice president of merchandising….Teen clothing cataloger Delia’s announced in mid-December that it will likely spin off its Internet business in an initial public offering. Internet sales make up 5%-6% of Delia’s total revenue, up from 2%-3% in June, chairman/CEO Stephen Kahn said in a statement….Creative Computers’ online offshoot, Ubid, closed its initial public offering on Dec. 9, netting $25 million from the sale of some 1.8 million shares of Ubid common stock.

At deadline

DRESS BARN TO LAUNCH CATALOG Discount women’s apparel retailer Dress Barn has begun recruiting executives for the catalog division it plans to launch in fall 1999. “We have a customer list of more than 1 million and a strong national presence,” says David Jaffe, executive vice president of the Suffern, NY-based 670-store company. “We think there’s an opportunity to extend our brand further through the catalog.”

HERITAGE PARTNERS BUYS G. NEIL Heritage Partners, an investment firm that owns organizational materials catalog 20th Century Plastics, bought human resources materials cataloger G. Neil on Oct. 13 for an undisclosed sum. “20th Century is an excellent platform to continue growing aggressively through acquisitions,” Heritage general partner Mike Gilligan said in a statement. “We are excited about providing the capital to continue such growth.”

CONNEY SAFETY SOLD TO K+K AMERICA On Oct. 21, safety and industrial supplies cataloger Conney Safety Products was sold to K+K America, a wholly owned subsidiary of Germany’s Kaiser + Kraft Gmbh, for an undisclosed amount. The business will continue to operate as Conney Safety Products LLC, a separate business under the K+K umbrella, in Madison, WI. K+K America also owns industrial supplies catalogs C&H Distributors in Milwaukee and Avenue Industrial Supply in Toronto.

SUNDANCE CATALOG LEADERSHIP CHANGES HANDS Harry Rosenthal, president of the Sundance gifts catalog for 10 years, has relinquished the role to former Cherokee apparel manufacturer CEO Patricia Warren. Rosenthal has been handling transitional tasks for parent company Sundance Group since July; he expects to leave the company, which is owned by actor/director Robert Redford, by mid-January. “I’ve been doing this for 10 years; it’s time for a new direction,” says Rosenthal, who intends to take some time off before possibly pursuing a career in real estate development.

HARRISON DIRECT REVIVES NABISCO CATALOG Two months after snack manufacturer Nabisco killed its catalog of licensed gift items, Harrison Direct acquired the title, for an undisclosed sum. The Chattanooga, TN-based Harrison also produces gift catalogs for Campbell’s Soup, Meguiar’s auto care, Pennzoil oil, and the Coca-Cola Co., which maintains an equity interest in Harrison. Nabisco shuttered the catalog division in July to focus exclusively on its food business. Weeks after buying the Nabisco title in late September, Harrison mailed a new Nabisco holiday issue. Harrison also plans to mail a corporate gift book touting the Nabisco brands.

LANDS’ END not guaranteed in germany Citing a 1932 German law called the Free Gift Act, a consortium of German retailers has forced apparel cataloger Lands’ End to yank its guarantee from its German catalogs. Lands’ End’s “Guaranteed. Period” policy states that the cataloger will replace any item if the customer is dissatisfied for any reason. But a German regional high court, agreeing with the retailers that sued the Dodgeville, WI-based mailer, ruled that the guarantee is not common in German business nor is it economically feasible for most German retailers; by promoting the guarantee, then, Lands’ End is competing unfairly with German businesses. Lands’ End was forced to black out the guarantee on its November issue as it was on the press. But the cataloger plans to “appeal the ruling as high as we can,” says spokeswoman Anna Schryver. “Germany is the only European country that has this rule. For us, it’s a business philosophy and our way of doing business in 175 other countries.”

FURTHERMORE…Teaming with one of the few airlines that doesn’t distribute co-op inflight catalog SkyMall, catalog conglomerate Genesis Direct in mid-October agreed to produce a cobranded gift catalog with American Airlines. Genesis also produces inflight catalogs-spin-offs of its Voyager’s Collection title-for Northwest Airlines and Midwest Express Airlines….1-800-Batteries, a cataloger of batteries for mobile professionals, received $6 million in capital from an unnamed Silicon Valley investor. Catalog president Ken Hawk says he will use the money to double the $14 million company’s circulation to 2 million, increase its Website marketing efforts, expand its corporate inbound sales division 300%, and grow its proprietary product development….On Oct. 14, Riverfront Development Corp. broke ground for a Wilmington, DE, outlet mall that will consist primarily of catalog stores, among them L.L. Bean, Lillian Vernon, Coldwater Creek, and Exposures.

At Deadline

FINGERHUT TO BUY ARIZONA MAIL ORDER, LAUNCHES YOUTH CATALOG Fingerhut, whose $1.5 billion catalog business sells predominately electronics, housewares, and other hard goods to budget-conscious customers, is committing itself to the apparel market with its asset purchase of $140 million apparel cataloger Arizona Mail Order for $120 million in cash. At press time, the deal was expected to close by the end of August. With the acquisition, Fingerhut gains five titles-Old Pueblo Traders, Regalia, Intimate Appeal, Unique Petite, and Coward Shoe-and a 1.6 million-name database. “We think scale is what lets you target products to specific customers,” says Fingerhut president/chief operating officer Will Lansing. “The more names you work with, the more likely you can get a good match among product, mailing, and customer.” Lansing expects Fingerhut will make other deals before the end of this year. Fingerhut is also in a launch mode; in August it debuted, a Website and a print catalog targeted at 18- to 24-year-olds. Fingerhut mailed 300,000 catalogs, half to names from its database, the other half primarily to names rented from youth-oriented magazines and catalogs. Plans call for Fingerhut to mail another 200,000 books in September. “It’s part of the Fingerhut life cycle,” Lansing says. “We want to catch potential customers when they’re young, growing up and leaving their homes to set up apartments or dormitory rooms. We’ll provide entry-level credit to these kids who have no credit history and therefore no ability to get Mastercards or Visa cards.”

GENESIS DIRECT BUYS THE EDGE CO. On Aug. 12, just days after agreeing to buy multititle cataloger Carol Wright Gifts (see p. 5), Genesis Direct acquired $28 million gadget cataloger The Edge Co. The purchase “puts us on track to meet our goal of $240 million in acquisition revenue for fiscal ’98,” Genesis president/CEO Warren Struhl said in a statement. Genesis now operates nearly three dozen catalog titles.

MACY’S LAUNCHES MAIL ORDER BUSINESS Aided by the deep pockets of $15.6 billion parent firm Federated Department Stores, Macy’s By Mail debuted in mid-August. Most of the 2 million recipients of the 120-page catalog were Federated Department Stores credit cardholders plucked from Federated’s 58 million-name database. Federated also owns Bloomingdale’s, Rich’s Department Stores, and Burdines, among other retail properties. Macy’s plans to mail 10 million catalogs this year and “a lot more” next year, according to catalog president Ron Ramseyer, a former executive with the Sears and Talbots catalogs. The new book, which sells apparel, domestics, and some hard goods from the Macy’s private- label brands as well as name brands such as Tommy Hilfiger and Ralph Lauren, isn’t targeting any specific demographic, says Ramseyer, whose plan calls for at least $250 million in sales within five years. “The Macy’s customer is extremely wide open,” he says. “Demographics are interesting but not that useful for us.” Macy’s will fulfill catalog orders out of the Cheshire, CT, warehouse of sister cataloger Bloomingdale’s By Mail.

DIRECT MARKETING TRANSACTIONS JUMP 59% FOR HALF-YEAR The reported value of direct marketing transactions for the first half of 1998 totaled $23 billion, up 59% from $14.4 billion for the same period last year, according to New York-based investment banking firm Gruppo, Levey & Cappell (GLC). Likewise, the number of deals rose 52%, to 991 from 651 for the same period last year. Public offerings by direct marketing companies increased 171%, to 46 from 17, GLC reports. Joint venture and strategic alliance activity also rose 93%, to 282 deals from 146 deals. There were only 15 bankruptcies and closings, down from 22. But new direct marketing ventures for the six months dropped 11%, to 205 from 228 last year.

At deadline

RATE COMMISSION REDUCES POSTAGE HIKE On May 11, the Postal Rate Commission (PRC), the independent government agency that has deliberated over the U.S. Postal Service’s July 1997 proposal for rate increases, determined that most of the USPS-proposed rate hikes were too high. As a result, the PRC recommended that, among other rates, the cost of standard A mail (which includes most catalogs) be increased on average to two-thirds the amount proposed by the USPS. (The USPS proposed rate hikes for catalogs of 1.8%-7.4%, depending on the extent to which they automate and presort.) The PRC also urged the USPS not to implement the new rates until January 1999, rather than in July ’98 as the USPS had requested. “While the decision rests with the USPS Board of Governors,” said PRC chairman Ed Gleiman in announcing the recommendation, “given the strength of the economy and the upswing in mail volume that traditionally begins in late summer, [we] see no reason any increases should be put into effect” before January. Overall, the PRC recommended that the USPS be allowed rate increases that will bring in only $1.65 billion in revenue, rather than the $2.4 billion in revenue the USPS had sought. The adjustment to the USPS revenue requirement “corrects Postal Service overestimates of the impact of inflation on its costs and for computational errors and the failure to reflect fully the savings from cost-reduction programs,” Gleiman said. “It also recognizes the impact of recent operating surpluses on the recovery of prior years’ losses.” News of the recommended modification of the postal rate hike delighted Direct Marketing Association president/CEO Robert Wientzen. In a statement, he commended the PRC “for keeping the postal rate increases within the growth rate of inflation.” As of mid-May, the USPS Board of Governors was expected to meet on the PRC recommendation by early June. At that time, the governors will either approve and implement the rate changes as per the PRC recommendations, or reject the PRC proposal and turn the whole case back to the PRC for reconsideration. They’ll also decide when to implement the new rates.

HENDERSON SUCCEEDS RUNYON AS POSTMASTER GENERAL For the first time since 1986, the U.S. Postal Service Board of Governors has chosen a postal employee to become postmaster general. William Henderson, who was promoted to chief operating officer under former PMG Marvin Runyon, was named Runyon’s replacement on May 12; his term began on May 16. The board chose Henderson for his operations and marketing expertise as well as for his reportedly solid relations with labor and management. The USPS begins negotiating with its two biggest labor unions-the American Postal Workers Union and the National Association of Letter Carriers-later this summer. Industry organizations applaud the choice. “Henderson’s appointment is a good move for the USPS,” says Gene Del Polito, president of the Advertising Mail Marketing Association. “Coming from a marketing and operations background, Henderson knows what mailers’ concerns and needs are in regard to the Postal Service. He has worked at all levels of the organization and has a true strategic vision for the future.”

J. CREW TO UNLOAD CLIFFORD & WILLS Apparel cataloger/retailer J. Crew Group said in mid-May that it was looking to sell women’s apparel catalog Clifford & Wills. “Our decision to divest of Clifford & Wills reflects our strategy to focus on building the J. Crew brand,” CEO Howard Socol said in a statement. The CW catalog showed a 50% growth in earnings in 1997, according to analysts. J. Crew as a whole did not fare as well, however. While ’97 sales increased to $830 million from $571 million in 1993, profits fell from $14 million to $12.5 million, as operating expenses also grew to 43.1% of sales from 41.6%. Investment firm Texas Pacific, which borrowed money to buy J. Crew last fall, saddled the cataloger/retailer with a substantial amount of debt-$283.9 million, compared with $86.9 million before the deal. Kevin Silverman, an analyst with Chicago-based Everen Securities, says J. Crew is taking a logical step in exploring a Clifford & Wills sale to raise badly needed capital. Perhaps, Silverman says, J. Crew views its women’s apparel subsidiary as a “distraction to the core catalog.” Meanwhile, J. Crew has promoted Trudy Sullivan, who has served as president of CW over the past three years, to president of J. Crew Mail Order, the company’s catalog unit.

No real threats in ’98 For catalogers, the most important bills in the Senate and the House of Representatives address Internet taxation, privacy, and federal use tax. Yet “I don’t see any of those bills as they now exist being passed,” says Richard Barton, senior vice president of congressional relations for the Direct Marketing Association.

That doesn’t mean catalogers can rest easy, however, and assume that they’ll be free from legislative interference indefinitely. The current bills, even if they don’t pass, are likely to beget compromise bills that Congress could find more palatable.

Internet taxes Both the Internet Tax Freedom Act, introduced by Rep. Christopher Cox (R-CA) in 1997, and the Internet Fairness and Interstate Responsibility Act (S.1888), introduced on March 31 by Sen. Judd Gregg (R-NH) and Sen. Joe Lieberman (D-CT), seek a three-year moratorium on Internet taxation. The key difference between the two bills is how they’d structure the commissions that would decide on post-moratorium taxation.

Cox’s bill would establish a 29-member commission that would include 15 local and state representatives. These members, who would make up a majority of the commission, would likely be in favor of taxation. Gregg-Lieberman’s commission would be made up of an equal number of members representing federal, state, and business interests, which should more fairly represent catalogers’ interests.

The DMA, which supports the Gregg-Lieberman proposal, doubts that either bill will muster enough support to pass. But Barton believes that a compromise bill will pass eventually. “I see some resolution regarding Internet tax” within the next three years, he says.

Privacy “There are 35-40 privacy-related bills in Congress now, and we’re watching some of them,” says DMA spokesman Chet Dalzell. “Not many of them, however, have legs.”

Perhaps the most notable privacy bill is the Children’s Privacy Protection and Parental Empowerment Act of 1997, introduced by Sen. Dianne Feinstein (D-CA) and Rep. Bob Franks (R-NJ). The bill would prohibit the buying, selling, and renting of lists that contain information about children without the consent of the child’s parents. The bill also gives the parents the right to receive from the list user the source of the data and whether it had been transmitted to another entity. The bill, according to the DMA, would effectively eliminate children’s lists.

Luckily for catalogers of children’s products, “as Franks’s bill is currently written, there is little chance of it being passed,” Barton says, as the House subcommittee charged with reviewing the bill doesn’t believe mailing lists in any way endanger children.

But some observers speculate that Franks will try to attach his restrictions on the use of children’s marketing lists to the Child Protection and Sexual Predator Punishment Act of 1998 when it comes up for a floor vote. Sources in the DMA don’t know when that is likely to happen, however.

In the last several Congresses, and most recently this past April, Sen. Dale Bumpers (D-AR) has introduced legislation that would require out-of-state marketers to collect sales tax on purchases-even in states where the marketers have no physical presence. Such use-tax collection, he feels, will level the playing field for retailers that must collect sales tax.

But Bumpers has had no success with such bills in the past, and he’s unlikely to this year, Barton says. And to paraphrase Richard Nixon, catalogers won’t have Bumpers to kick around anymore: He will be retiring from Congress in October.-YM