Deluxe sells its catalogs-at last

Nearly two years after announcing its intentions to exit the catalog industry, Deluxe Corp., a financial services and check printing company, has agreed to sell PaperDirect, a specialty paper catalog aimed at small businesses, and Current Social Expressions, a consumer greeting card and gift wrap catalog, to a private investor for an undisclosed price. The direct mail check printing business of Current, however, will remain with Deluxe. The deal is expected to close by the end of June.

The two catalogs, which generated combined sales of $232.5 million in 1997, “just don’t fit into our strategic focus of offering electronic payment and information-related services to financial institutions and retailers,” says Deluxe spokesman Stu Alexander.

In March 1996, Deluxe moved PaperDirect’s operations from Secaucus, NJ, to Current Social Expressions’ Colorado facilities as a cost-cutting measure. Nonetheless, Deluxe’s catalog division wasn’t profitable, according to securities analyst Joel Krasner at New York-based First Albany Corp. “The company spent too much money marketing the catalogs without getting expected returns. They became mismanaged and too diversified in their merchandise.”

In 1997, Deluxe Direct-the direct mail division of the company-cut its annual net loss by a third, to $92.3 million from $139 million in 1996. But the ’97 loss was steeper than the unit’s $75.3 million net loss in 1995. Deluxe Direct’s net revenue fell 30% in 1997, to $232.5 million, following a 17% drop in sales the year before, from $437.8 million in 1995. Reduced catalog circulation, the elimination of unprofitable product lines, and the sale of other noncatalog businesses within the Deluxe Direct unit accounted for much of the revenue decline.

While the sale will certainly help Deluxe, the jury is still out on what the deal will do for PaperDirect and Social Expressions. Deluxe’s Alexander refused to divulge the identity of the buyer, and analysts were reluctant to speculate.