The distressing tale of DMSI

Sep 01, 2008 9:30 PM  By

When the Word Got Out that Direct Marketing Services Inc. (DMSI) would be sold at a public auction on Aug. 5, not many people even knew the multititle mailer was in trouble. DMSI, which — in addition to the Charles Keath gifts book and HomeVisions Website — includes the venerable Montgomery Ward brand, was forced to sell at auction as part of a legal assignment for the benefit of creditors.

The company had high hopes — particularly for the Ward brand, which it had acquired in 2004: It had reintroduced the Montgomery Ward holiday catalog in 2006, and started a Spanish-language version of the Website in early 2007.

What happened? DMSI isn’t saying, but it appears to be more of the same: higher costs, slower consumer spending, a tighter credit market. (Another headache: It was disclosed in June that hackers last year had broken into DMSI’s database and exposed more than 50,000 customer records. DMSI said it met the obligations for handling the breach, but it was rebuked harshly in the press for not notifying customers about the matter.)

As our story “Swiss Colony Unit Buys DMSI” (page 9) points out, at least DMSI was lucky enough to find a buyer in Midwest Catalog Brands — a new subsidiary created by Swiss Colony.

But what’s a little scary in today’s market is that you might expect DMSI to be the one rescuing struggling companies now, rather than needing a lifeline itself.

You could say the same about the now-defunct BlueSky Brands. But when industry icons such as Lillian Vernon and Sharper Image need saving, nothing should come as a surprise.

On a more upbeat note, check out the profiles of the 2008 Multichannel Merchant Award winners, begining on page 23. Times may be tough, but excellence and innovation is not dead, as these winning catalogers and Web merchants illustrate. Congratulations to them — and to all of the finalists as well.