Nine months after putting its Fingerhut Cos. titles on the market, Federated Department Stores has sold the Figi’s and Arizona Mail Order catalogs to JP Morgan Partners. The private equity arm of JP Morgan Chase & Co., JP Morgan Partners has named the catalog company Crosstown Traders.
Federated and JP Morgan Partners have not disclosed terms of the sale, which was announced Oct. 30, nor the value of the business. But sources close to the deal estimate the transaction at $100 million-$150 million. Catalog industry estimates peg the revenue for the combined company at more than $350 million.
The Arizona Mail Order catalogs include women’s apparel and accessories titles Old Pueblo Traders, Bedford Fair Lifestyles, Willow Ridge, Lew Magram, Brownstone Studio, and Coward Shoes. Old Pueblo Traders and Coward are based in Tucson, AZ; food gifts catalog Figi’s is in Marshfield, WI, and the others are headquartered in Greenwich, CT. All told, Crosstown Traders has 3.7 million active customers.
Steve Lightman, formerly the president of Arizona Mail Order, now heads Crosstown Traders as president/CEO. Former Fingerhut president Michael Sherman is vice chairman.
Lightman’s response to the deal is simple: “We’re thrilled,” he says. Not only does JP Morgan Partners have deep pockets, “but they bring a lot of expertise to the products by having invested in other direct marketing companies,” Lightman says, referring to marketers such as 1-800-Flowers.com, Cabela’s, and Cornerstone Brands.
Jonathan Lynch, a general partner of JP Morgan Partners, said as much in a statement: “JP Morgan Partners’ acquisition of Crosstown Traders is consistent with our strategy of investing in direct marketing companies with outstanding management teams and unparalleled competitive positions.”
Alive and kicking
While JP Morgan Partners may have obtained the titles at a reasonable price, another selling point was that Federated continued to operate the catalogs after putting them up for sale. Such was not the case with its Fingerhut general merchandise title, which Federated folded before selling it in July. (See “Fingerhut Catalog Back in the Mail” below right.)
“Federated was able to sell these properties — and keep them intact with a fine management team — to a premier private equity group with a great deal of experience and a number of portfolio companies in the direct marketing space,” says Claire Gruppo, president/managing director of New York investment banking firm Gruppo, Levey & Co. which advised JP Morgan Partners in the deal. “This is very positive deal for the catalog industry.”
Federated now has only one property from the former Fingerhut Cos. to unload: general merchandise catalog Popular Club Plan. At press time, Federated spokesperson Carol Sanger expected the retailer to sell the Popular Club “sooner rather than later.” That will leave the $15.3 billion Federated with Bloomingdale’s by Mail as its only catalog; the company also operates the Bloomingdale’s and Macy’s Websites.