Three years’ worth of red ink led apparel and home goods marketer Faith Mountain Co. to close its catalog. The company’s last book mailed during the past holiday season. Rather than filing for bankruptcy protection, however, Faith Mountain is living off the business generated by its lone store, which as of the beginning of April is now housing the company’s entire operations.
“Our plan is if we can raise some financing, we’ll reenter the catalog business,” says president/CEO John Lappegaard. “For now, it’s kind of on hold.”
The company sold off its fulfillment center in Sperryville, VA, during the fall, then leased the space through this past March. In April all operations were moved to the Faith Mountain store. Faith Mountain’s Website is being discontinued, and most catalog merchandise has been liquidated or is being sold in the store.
At its peak in 1999, Faith Mountain reached $20 million in annual sales. But even then it wasn’t profitable. “As a consequence,” Lappegaard says, “the company has had no access to financing in the sense of a working capital line. That became too constraining, and I didn’t see how we could be profitable in the catalog business in the short term.”
Lappegaard says that the company is operating as a one-store business with 15 employees, one-fifth the number of workers it had employed as a catalog business. “We could conceivably operate for quite a while,” he says. “We don’t need the major working capital that’s required to run a catalog. So our focus is to build the company’s financial strength, then readdress our catalog situation. The store has always been a profitable piece of the equation, but it’s also always been sort of the stepchild of the catalog. We’ll see if we can improve on that.”