STRATEGIES: Cornerstone pushes for synergy, not IPO

International Cornerstone Group, the approximately $500 million, Boston-based cataloger, has been planning an initial public offering for more than a year. But since postponing it last year to complete an acquisition, the firm has decided to delay the offering indefinitely due to the stock market’s volatility. Instead, Cornerstone is concentrating on its long-term plan of consolidating operations to increase economies of scale among its seven catalogs.

The firm is gradually moving its catalog operations into a new $60 million-plus warehouse in suburban Cincinnati. “We felt it was best to move into the new fulfillment center as a private company and wait to file,” says managing director Don Steiner.

Previously, Cornerstone had kept the core operations of its catalogs – apparel books TravelSmith and The Territory Ahead and home goods titles Frontgate, Garnet Hill, Ballard Designs, Whispering Pines, and Smith & Noble – in the hands of the original owners, while achieving economies in printing, paper, and postage. But now it will be moving the back-end of Ballard Designs and Travelsmith and part of Frontgate’s and Whispering Pines’ fulfillment operations into the new warehouse. By mid-2000, Steiner says, all the other titles will be moved.

Cornerstone is apparently also looking to expand its holdings in the home category. It recently loaned Great Falls, VA-based home decor book French Country Living an undisclosed sum “that we can convert to majority ownership,” Steiner says. “But we will follow its progress, then decide.”

Although Cornerstone hasn’t yet acquired French Country Living, the $10 million-plus cataloger’s COO, Paige MacDonald, says Cornerstone’s backing will help the mailer reach its “very aggressive” goals, and achieve the synergies of the other Cornerstone properties. “When a company moves into its third year of aggressive growth, it becomes consumed with building an infrastructure. But we now have the confidence to concentrate on our customers and on bringing them good products,” MacDonald says.

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