New York-based Delia’s, the $106 million teen apparel cataloger, in September paid $4.75 million for the trademarks and mailing lists of bankrupt Fulcrum Direct’s five catalogs: Zoe, which sold clothing for teen girls, and Storybook Heirlooms, Playclothes, After the Stork, and Just for Kids, which sold children’s apparel. The acquisition enhances Delia’s house file by 5 million names-nearly doubling its database. As part of the deal, Delia’s also received $2.4 million worth of Storybook and Zoe merchandise. Delia’s plans to relaunch Storybook Heirlooms in the spring.
By snapping up Zoe before anyone else could, Delia’s eliminates a potential rival. And the cataloger can use Storybook as a “feeder” to its flagship book. Storybook, which had 1996 sales of $30 million, sold upscale clothing for girls ages 8-12; now, as its customers “outgrow” its offerings, they can presumably be converted into Delia’s buyers.
“The database provides us with excellent prospects,” says Delia’s president Stephen Kahn, “and now we can pick them up a little bit earlier in the process. It’s a great strategic fit.”
Storybook will continue to operate from its Foster City and Hayward, CA, facilities with the same management, Kahn says. But in relaunching the apparel title, Delia’s has to settle $1.1 million worth of merchandise exchanges and refunds due its disgruntled customers, says Alex Navarro, Delia’s senior vice president. Then there’s the negative publicity due to the abruptness with which Fulcrum shut its doors on July 29, giving no advance notice and leaving customers wondering about their unfulfilled orders.
In hopes of restoring customer loyalty, at the end of January, Delia’s plans to send letters detailing the catalog’s relaunch to all 159,828 names on Storybook’s 12-month buyer file, and it will offer them gift certificates and credits as incentives. “We will go the extra mile for our customers,” Kahn says. “We’ll make sure the Storybook customers know the present company is well financed.”
Monica-gate” wasn’t the only taxing issue on legislators’ minds last month. On Oct. 8, the Senate voted 96-2 in favor of the Internet Tax Freedom Act (S. 442), which would make cyberspace tax-free for at least three years. The House passed a similar bill (H.R. 4105) in June. Both bills bar state and local governments from implementing taxes aimed at Internet users and businesses for three years, during which time a commission will study the matter and issue recommendations.
The House will now review the Senate bill, and differences between S. 422 and H.R. 4105-such as the makeup of the federal commission-must be resolved. Once it’s approved by Congress, the compromise bill will head to the White House; President Clinton has already indicated that he would sign the bill into law. This will most likely not occur until Congress reconvenes next year.-SO