DIVESTITURES: F&G selling two units

To focus on its core horticultural business, $370 million multititle cataloger Foster & Gallagher will try to sell its $68 million children’s group and its $55 million gift division.

The Peoria, IL-based company’s children’s division includes the Learn and Play, HearthSong and Magic Cabin Dolls catalogs, while the gift group includes the Walter Drake catalog and the Home Marketplace title. Its gardening catalogs include Spring Hill Nurseries, Breck’s, Stark Bros., and Michigan Bulb, among others.

If the divestiture goes as planned, the company plans to use the proceeds to help integrate its catalog/Web infrastructure and customer service. “As we recognized the potential of e-commerce, we saw the need to develop an integrated strategy between marketing and customer care and realized we needed more capital investment,” says Foster & Gallagher president/CEO Robert A. Ostertag Jr. “It made sense to at least explore the possible divestiture of these titles.” F&G has already talked to several potential buyers, he says.

Ostertag calls the selloff plan a “continuation” of a strategy to unload non-core catalogs, which began in July 1999 with the sale of the Popcorn Factory title to NY-based holding company Wand Partners. To reinforce its stable of gardening catalogs, Foster & Gallagher that same month bought seed catalogers Gurney’s Seed & Nursery and Henry Field’s Seed & Nursery Co.

The sale of the children’s and gifts units may not happen this year, however. If a buyer is not found by the end of this month, F&G will take both divisions off the selling block to concentrate on getting them ready for the holiday season.

Beefing up the back end

A delay in the sale might put a crimp in some of F&G’s plans. All told, Ostertag says the purchase of new systems and other customer service additions are going to run in the “millions of dollars.”

Already the company has purchased the Web-enabled Mozart order processing system from CommercialWare to provide real-time customer service online. “From an information systems standpoint, we want to move away from legacy systems,” says Cindy Faulknier, senior vice president/customer relations officer.

Foster & Gallagher has also recently added an e-mail management system, and will need to invest in introductory and ongoing system training for all its customer service reps. n

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