Montgomery Ward’s new alias

Jun 01, 1998 9:30 PM  By

When ValueVision International, the nation’s third-largest TV home shopping network, bought the Montgomery Ward Direct catalog from Fingerhut two years ago, it was allowed to use the Montgomery Ward name on the catalog through March 1998. Now ValueVision’s Catalog Ventures division must keep the book going without the legendary name.

The home goods catalog, now called HomeVisions, was test-mailed using both titles last December to phase in the new title, according to Jonathan Fleischman, president/CEO of Chelmsford, MA-based Catalog Ventures. Following a March 29 mailing, which contained both titles for the last time, HomeVisions mailed in mid-May without the Montgomery Ward moniker for the first time.

Although no results were in at press time, the company is planning for a significant falloff in response due to the loss of the Montgomery Ward brand name. Stuart Romenesko, senior vice president of finance/chief financial officer for the $217 million ValueVision, says the company expects catalog sales to drop $40 million this year, from roughly $110 million in 1997. ValueVision’s seven catalogs, which include the Mind’s Eye, NorthStyle, and Nature’s Jewelry gifts books, represent half of ValueVision’s annual revenue.

With the anticipated drop in sales in mind, the company last year decided to scale back the catalog. Whereas the Montgomery Ward book often exceeded 100 pages, HomeVisions will average 78 pages.

To reduce page count, HomeVisions is dropping some merchandise as well. But “it’s less eliminating categories of merchandise; it’s more continuing to sell items that meet our revenue criteria,” Fleischman says-without specifying the criteria. “Instead of looking at the book on gross margin or demand, we’re looking at it on net variable contribution-calculating net sales after catalog and fulfillment costs.” So in addition to dropping slower-selling products, the cataloger could conceivably eliminate some better-selling products because “the margins for those items may not be enough to make an adequate contribution” to the bottom line.

The concept is nothing new for Catalog Ventures, Fleischman points out. “It’s the way we’ve built our businesses and improved the performance of our acquisitions over the past eight to 10 years,” he says. “It’s not necessarily a catalog-only concept. You can apply it to ValueVision’s TV business or to retailing in general.”