Cornerstone’s next step

The end of summer tends to be quiet for many businesses-but not for Cornerstone Brands. On Aug. 25, the Portland, ME-based multititle cataloger acquired its seventh catalog, Corona, CA-based window treatment mailer Smith & Noble, for an undisclosed sum. Then the next day, it filed an initial public offering, with the intention of selling $103.5 million worth of common stock.

Cornerstone’s properties, including Smith & Noble, posted pro forma net sales of $240 million for the year ended Jan. 31. The company reported pro forma net income of $6.9 million for the year.

According to Jeff Mills, an associate at lead underwriter Nationsbanc Montgomery Securities, Cornerstone will wait until the Securities and Exchange Commission has approved its filing to announce which exchange and under what symbol its stock will be traded, as well as the price per share. Mills expects approval by early October. Goldman Sachs and Merrill Lynch are also underwriting the IPO.

Cornerstone’s offering may face challenges from a volatile market. The Dow Jones Industrial Average had crept up to over 8,600 points at the time of Cornerstone’s announcement, but it then plummeted more than 1,000 points over the next five days.

The company’s integration of Smith & Noble, on the other hand, should proceed smoothly. Like Cornerstone’s other catalogs, which include Garnet Hill, Ballard Designs, and The Territory Ahead, Smith & Noble targets affluent home furnishings and apparel buyers who are 35-54 years old. As with its other titles, Cornerstone plans to keep Smith & Noble’s management and front-end operations intact while assuming responsibility for back-end operations.

A court decision regarding the upcoming national census could affect the accuracy of demographic data. On Aug. 24, a special three-judge federal court ruled against the use of statistical sampling in the 2000 census. The ruling favors House Speaker Newt Gingrich (R-GA) and other Republican congressmen who had sued the Census Bureau, charging that sampling isn’t “actual enumeration” as specified in the Constitution. But proponents of sampling contend that it would correct what’s believed to be an undercount of minorities, who are less likely to respond to the traditional polling methods of questionnaires and in-person interviews. At press time, the Clinton administration was expected to appeal to the Supreme Court.

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