Upscale cataloger/retailer Neiman Marcus Group could be ready to cut the apron strings to its Chef’s Catalog title. The Dallas-based company announced May 26 that it is exploring “strategic alternatives” for the $75 million kitchenware catalog. New York-based investment bank Elixir Advisors is advising Neiman Marcus on the move, which could lead to a sale, merger, or joint venture.
Founded in 1979 by Marshall Marcovitz, Chef’s Catalog was acquired by Neiman Marcus in 1998. Since then, the kitchenware market has become increasingly competitive, says a source close to the company.
In addition, the source says that Chef’s Catalog’s has lower margins than the company’s other titles, home decor book Horchow and the flagship apparel and decor catalog. In recent years, Chef’s Catalog tried to sell more private-label tabletop items and giftware, which typically carry higher margins, the source says, but customers did not respond to the offerings.
Neiman Marcus did not return calls for comment, but in its 2003 annual report the company admits that sales at Chef’s Catalog were “disappointing.” Meanwhile, fiscal 2003 revenue for Neiman Marcus Direct was $494 million, an 11% rise from the previous year; operating earnings had doubled to reach $46 million.
For certain, more catalogers “are focusing on their core businesses,” observes Craig Battle, managing director of Princeton, NJ-based investment bank Tucker Alexander. If a unit is not central to their flagship business, marketers are more apt to consider selling it for a good price. “This is something you’re going to see more and more,” he says.