Deadheads and Boarders Unite: Alloy Buys Old Glory

The 12.5-million-name house file of multititle cataloger Alloy consists largely of fashion-conscious teens, BMX bikers, and skateboarders. With its Dec. 17 acquisition of Old Glory Distributing, the New York-based company has added 300,000 Deadheads, headbangers, and other rock-n-roll aficionados to its file.

Alloy bought the direct marketing division of Westbrook, CT-based cataloger/retailer Old Glory for $9.6 million in cash. In addition to its flagship catalog of apparel for teen girls, Alloy mails the Dan’s Competition catalog of gear for BMX bikers and the CCS catalog of extreme-sports gear. Alloy also has a marketing services division, which develops billboards and Web and print promotions for clients.

A marketer of rock-music-related apparel, accessories, and collectibles, Old Glory is the largest distributor of licensed Grateful Dead memorabilia in the country, says Glenn Morelli, the company’s founder, who retains ownership of the four Old Glory stores in Connecticut. Old Glory mailed about 10 million catalogs last year and offers roughly 40,000 SKUs.

“The deal extends our direct marketing franchise,” says Alloy chief financial officer Sam Gradess, adding that Old Glory’s product line “is a natural extension of our business.” Indeed, both marketers appeal primarily to teens and young adults. The $124.1 million Alloy expects the Old Glory acquisition to increase its fiscal 2003 merchandise revenue by $8 million-$10 million and to provide at least $1 million in incremental earnings before interest, taxes, depreciation, and amortization (EBITDA). Alloy also plans to use Old Glory’s considerable rock-n-roll licensing and promotional expertise to enhance its marketing programs for music and entertainment clients.

The Old Glory catalog will keep its name, but Alloy will move the business out of its Westbrook distribution center to third-party fulfillment provider NewRoads’ Portland, TN, facility during the first half of the year. NewRoads already handles fulfillment for Alloy.

For his part, Morelli will focus on building Old Glory’s retail base. He’s looking to expand the business to 20 stores. “I didn’t have the capital needed to take the catalog business up to $20 million, which is where I think it can go,” he says. Morelli says he will also start a wholesale business obtaining licenses from bands and other entertainment properties.

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