Hanover says goodbye to Gump’s

Weehawken, NJ-based multititle mailer Hanover Direct sold upscale gifts and decor cataloger/retailer Gump’s to a consortium of private investors for $8.5 million. The buyers are San Francisco-based venture capital firm WaldenVC, Beverly Hills, CA-based Stone Canyon Venture Partners, and New York private investment firm Sand Springs Holdings.

Hanover, which bought Gump’s in 1993, had been trying to sell it — along with its plus-size women’s apparel book Silhouettes and men’s apparel catalogs International Male and Under Gear — since November 2003. Gump’s president Jed Pogran will continue to lead the company after the sale. Gump’s, which has one store, in San Francisco, mails “north of 12 million catalogs annually,” according to Pogran.

A bargain price?

Some observers were surprised that Gump’s went for a mere $8.5 million. According to one industry source, who spoke on the condition of anonymity, the lease on Gump’s store represented a huge amount of debt — hence the low price.

Also, a former executive says that the Gump’s catalog business was never the same after Hanover moved it from San Francisco to New Jersey in 1997. The move proved so disruptive that Hanover moved Gump’s back to the Bay City in 1999.

Calls to the $415 million Hanover Direct were not returned, but a source familiar with the company estimates that Gump’s did about $25 million in retail sales and around $20 million in direct sales. The source estimated earnings before interest, taxes, depreciation, and amortization at about $4 million.

Hanover Direct, which recently moved its executive offices from Edgewater, NJ, and consolidated its operations under one roof at its Weehawken facility, has not been profitable since 1998. In 2003 the company lost $15.4 million on sales of $414.9 million.

As of early March, Hanover Direct had yet to release its financials for 2004; in February the mailer’s shares were halted on the American Stock Exchange because of a failure to comply with the exchange’s filing requirements. And in November, Hanover had said that it needed to restate five years’ worth of financial statements because of an accounting error relating to the buyer’s club programs of three of its catalogs.

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