Genesis Direct is at it again. On Aug. 5, the multititle cataloger agreed to acquire the $118 million Carol Wright Gifts direct marketing division from Cox Enterprises, an Atlanta-based media and communications company, for 2.7 million shares, or 8.3%, of Genesis Direct common stock. (As of Aug. 5, the deal, which includes Carol Wright’s Applecreek Creations gifts and collectibles catalog, was valued at approximately $18 million.)
The acquisition, which is expected to close in early September, is by far the biggest yet for the $93.5 million Genesis, which has specialized in acquiring smaller titles. “I wonder how Wall Street will react to this deal, which is totally outside what Genesis has been verbalizing,” says Larry West, of consultancy West & Co. “Making a transaction of this size may be a step in the right direction for Genesis because many have been critical of its buying too many small companies.”
Secaucus, NJ-based Genesis does not plan to move Carol Wright’s Stamford, CT-based headquarters or its Lincoln, NE, warehouse at this time, says Genesis president/CEO Warren Struhl. And he declines to comment on the future role of Carol Wright president Bob Ginsberg.
For his part, Ginsberg is optimistic about the deal, “because it’s the first time Carol Wright has been owned by someone in the direct marketing industry.” Cox had been trying to sell the division for more than a year, he says.
Carol Wright Gifts sells apparel, gardening products, and housewares via catalog and direct mail. The typical customer is 45 years old with a median household income of $35,000. The Applecreek Creations catalog skews slightly younger than the rest of the division: Its typical customer is 35 years old, with a median income of $40,000. Carol Wright’s database contains nearly 9 million names; Genesis Direct’s totals more than 20 million names.
Struhl says that Carol Wright’s lists have consistently been some of the most successful for Genesis, which publishes 33 catalogs, including gifts books The Voyager’s Collection and Gifts for Grandkids. “Carol Wright and Applecreek Creations have proved highly successful in the gifts and collectibles product categories,” Struhl says. “Clearly, combining our merchandise expertise with theirs will provide an opportunity to cross-market products.”
More than likely, Genesis Direct will include best-selling products from its 30-plus catalog brands in the Carol Wright offerings, Struhl says. Plus, Carol Wright’s expertise in overseas product sourcing should help Genesis gain a foothold in international product sourcing, he adds.
Genesis’s deal with Cox goes beyond a typical acquisition. The cataloger plans to take advantage of Cox’s diversified operations and investments in U.S. and international newspapers, television and radio stations, cable systems, programming, telecommunications, and Internet Websites. “We’re excited to work with them in exploring different media channels to further expand our core brands,” Struhl says. “Cox has some of the most highly visited Websites, but they’re mainly information-based. We’re going to work with them to sell products on those sites, with a special focus on sports products.”
Genesis in Germany At the same time that Genesis announced the Carol Wright acquisition, the company reported it had also bought Germany-based Fan and Fun Sports Catalog for $800,000 in cash. Genesis hopes the acquisition will boost its international presence and enhance its USA Pro Sports Direct catalog, which it launched in June exclusively in the U.K., France, and Germany. Fan and Fun Sports sells branded sports merchandise similar to that of Genesis’s stateside
1-800-Pro-Team catalog. Struhl says the company will fold Fan and Fun into USA Pro Sports Direct. “The incredible amount of traffic to our sports-related Websites as well as calls from overseas consumers told us that there was an interest in Americana sports products,” Struhl says. “In fact, Fan and Fun was buying products from USA Pro Sports Direct at wholesale. Plus, Fan and Fun had a database of 150,000 names, which we felt was an undercapitalized asset.” Struhl expects the Carol Wright and Fan and Fun Sports acquisitions to add $160 million in revenue to Genesis Direct.