Spiegel’s Next Act

Jul 01, 2004 9:30 PM  By

The news that bankrupt Downers Grove, IL-based Spiegel Group on May 24 agreed to sell its flagship general merchandise business to Hinsdale, IL-based Pangea Holdings wasn’t much of a surprise to observers. After all, Pangea had earlier agreed to buy Spiegel’s Newport News women’s catalog unit.

But these same industry watchers are wondering what Pangea plans to do with the ailing catalog giant. So far Pangea — run by Christian Feuer, formerly Spiegel Catalog’s vice president of marketing and advertising production, and two partners based in China — isn’t saying: Calls to the company were not returned.

The Spiegel catalog transaction was not complete at press time. Pangea had agreed to pay about $53.4 million: $22 million in inventory commitments, $29.4 million in assumed liabilities, and $2 million in cash. But a bankruptcy court was expected to hold a public auction on June 15. As was the case with Newport News, Pangea was the “stalking horse” bidder. Other prospective buyers had until June 11 to make bids that exceeded Pangea’s by at least $300,000.

Spiegel, which filed for Chapter 11 in March 2003, is still seeking a buyer for its Eddie Bauer division and its Groveport, OH, fulfillment center.

What would you do?

Pangea is keeping mum about its plans for Spiegel, but that didn’t stop Catalog Age from asking several in the industry how they would turn around the business.

“I would slice and dice that database to create a multititle business that was more targeted to either hard or soft goods,” says Danielle Savin, general manager of the direct division of women’s apparel marketer Frederick’s of Hollywood.

Katie Muldoon, of Tequesta, FL-based catalog consultancy Muldoon & Baer, advocates a similar strategy — or rather, a return to what she recalls as an earlier Spiegel strategy: creating catalogs for specific audience segments. As it is, Muldoon says, Spiegel has “no identity, no positioning, no definitive stance.”

One reason for the lack of identity could be the big book’s breadth of merchandise. Douglas Timms, a former chairman of gifts cataloger Tyrol International and now a consultant specializing in turnarounds, would get rid of unprofitable products: “The core has far too many SKUs, too big an inventory.”

Which is not to say that Spiegel should discontinue its legendary big book. Scott Weiler, vice president, business development for Minneapolis-based direct response firm Penn Garritano, would retain the core catalog for its “iconic value.” But Weiler, who was a marketing director in charge of customer acquisition for the Spiegel catalog from 1999 to 2002, would “use it only for customer activation and retention.” Limiting circulation of the big book would be part of what Weiler views as a necessary reduction of costs.