FINGERHUT TO BUY ARIZONA MAIL ORDER, LAUNCHES YOUTH CATALOG Fingerhut, whose $1.5 billion catalog business sells predominately electronics, housewares, and other hard goods to budget-conscious customers, is committing itself to the apparel market with its asset purchase of $140 million apparel cataloger Arizona Mail Order for $120 million in cash. At press time, the deal was expected to close by the end of August. With the acquisition, Fingerhut gains five titles-Old Pueblo Traders, Regalia, Intimate Appeal, Unique Petite, and Coward Shoe-and a 1.6 million-name database. “We think scale is what lets you target products to specific customers,” says Fingerhut president/chief operating officer Will Lansing. “The more names you work with, the more likely you can get a good match among product, mailing, and customer.” Lansing expects Fingerhut will make other deals before the end of this year. Fingerhut is also in a launch mode; in August it debuted thehut.com, a Website and a print catalog targeted at 18- to 24-year-olds. Fingerhut mailed 300,000 thehut.com catalogs, half to names from its database, the other half primarily to names rented from youth-oriented magazines and catalogs. Plans call for Fingerhut to mail another 200,000 thehut.com books in September. “It’s part of the Fingerhut life cycle,” Lansing says. “We want to catch potential customers when they’re young, growing up and leaving their homes to set up apartments or dormitory rooms. We’ll provide entry-level credit to these kids who have no credit history and therefore no ability to get Mastercards or Visa cards.”
GENESIS DIRECT BUYS THE EDGE CO. On Aug. 12, just days after agreeing to buy multititle cataloger Carol Wright Gifts (see p. 5), Genesis Direct acquired $28 million gadget cataloger The Edge Co. The purchase “puts us on track to meet our goal of $240 million in acquisition revenue for fiscal ’98,” Genesis president/CEO Warren Struhl said in a statement. Genesis now operates nearly three dozen catalog titles.
MACY’S LAUNCHES MAIL ORDER BUSINESS Aided by the deep pockets of $15.6 billion parent firm Federated Department Stores, Macy’s By Mail debuted in mid-August. Most of the 2 million recipients of the 120-page catalog were Federated Department Stores credit cardholders plucked from Federated’s 58 million-name database. Federated also owns Bloomingdale’s, Rich’s Department Stores, and Burdines, among other retail properties. Macy’s plans to mail 10 million catalogs this year and “a lot more” next year, according to catalog president Ron Ramseyer, a former executive with the Sears and Talbots catalogs. The new book, which sells apparel, domestics, and some hard goods from the Macy’s private- label brands as well as name brands such as Tommy Hilfiger and Ralph Lauren, isn’t targeting any specific demographic, says Ramseyer, whose plan calls for at least $250 million in sales within five years. “The Macy’s customer is extremely wide open,” he says. “Demographics are interesting but not that useful for us.” Macy’s will fulfill catalog orders out of the Cheshire, CT, warehouse of sister cataloger Bloomingdale’s By Mail.
DIRECT MARKETING TRANSACTIONS JUMP 59% FOR HALF-YEAR The reported value of direct marketing transactions for the first half of 1998 totaled $23 billion, up 59% from $14.4 billion for the same period last year, according to New York-based investment banking firm Gruppo, Levey & Cappell (GLC). Likewise, the number of deals rose 52%, to 991 from 651 for the same period last year. Public offerings by direct marketing companies increased 171%, to 46 from 17, GLC reports. Joint venture and strategic alliance activity also rose 93%, to 282 deals from 146 deals. There were only 15 bankruptcies and closings, down from 22. But new direct marketing ventures for the six months dropped 11%, to 205 from 228 last year.