BLUESTEM BRANDS, INC.

Formerly Fingerhut Direct Marketing, Bluestem Brands offers private-label and brand-name merchandise, including apparel, appliances, electronics, furniture, health and beauty items, jewelry, kitchenware, sporting goods, tools, and toys through its Fingerhut catalog and e-commerce site and via Gettington.com. It offers credit in partnership with Santander Consumer USA and WebBank through 2020. Bluestem also owns PayCheck Direct, an employee purchase plan whereby employers offer high-ticket items to employees, who pay for them interest-free via payroll deductions. Bluestem Brands has agreed to be acquired by Capmark Financial Group for $565 million in cash. 

Ownership

Bluestem Brands' investment firm owners, Bain Capital, Battery Ventures, and Brookside Capital Investors, have agreed to sell the company to Capmark Financial for $565 million. The sale follows a failed attempt at an IPO (filed in 2011 and withdrawn in 2012). The sale is expected to close by the end of 2014.

Geographic Reach

Minnesota-based Bluestem's business is supported by its 1.35 million sq. ft. of distribution space in St. Cloud and other locations.

Operations

The Fingerhut and Gettington.com sites are operated by Bluestem Sales, Inc. PayCheck Direct is a brand of Bluestem Enterprises. Both companies are wholly-owned subsidiaries of Bluestem Brands, Inc.

Fingerhut has grown to become the third-largest ecommerce retail site in the Twin Cities, behind behemoths BestBuy.com and Target.com.

Sales and Marketing

Across Bluestem's three brands, the retailer counts more than two million customers nationwide. In 2013, specifically, the company handled more than 14.5 million phone calls and mailed an average of 100-plus million catalogs. It launched a new national TV campaign in 2014.

Financial Performance

Despite slower consumer spending amid the economic downturn, the company saw its revenue increase from almost $425 million in fiscal 2009 to more than $520 million in fiscal 2011, about a 20% gain. During the same period, Bluestem had also been a profit-maker, until a charge for early debt extinguishment and mounting losses in its own equity pushed the company to post a net loss of $11 million in 2011. Interest expenses on Bluestem's credit lines have also been eroding its earnings.

Bluestem aims to reach $1 billion in annual sales within a few years.

Strategy

To move its bottom line back into positive territory, the company is building its brand among its target demographic of low- and middle-income Americans (about one-third of the US population). Bluestem has been boosting its Internet marketing and prospecting efforts, as online shopping becomes more the norm. Its Gettington.com site, launched in 2009, is helping to attract a slightly younger, more Web-centric audience, as well. Indeed, as Bluestem's customers make more of their purchases online, the firm has been reducing its expenses for catalog mailings and printed marketing materials.

Developing new credit programs are also key to growth. Bluestem inked a private label credit program in 2013 with Santander Consumer USA (SCUSA) and WebBank for its two brands that extends through 2020. As part of the deal, SCUSA purchases new and existing revolving credit receivables from Bluestem while WebBank continues to make installment and revolving credit accounts available to Bluestem customers for financing merchandise. In 2010, Bluestem also launched Fingerhut FreshStart, which allows customers to pay for their purchases in installments if they cannot qualify for a revolving credit account. In 2011, it rolled out PayCheck Direct, an employee purchase plan whereby employers can offer high-ticket items such as furniture and electronics to employees, who pay for them interest-free via payroll deductions.

Company Background

The company changed its name to Bluestem Brands in 2010 to reflect its evolution from a catalog retailer to a multi-brand, multi-channel merchant. The business was established in 2002 when it bought the assets of Fingerhut Companies (mainly inventory and intellectual property), which had been disposed of by Federated Department Stores (now named Macy's). Fingerhut Companies' own roots reach back to 1948, when founder William Fingerhut started making automobile upholstery.

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BLUESTEM BRANDS, INC.


6509 Flying Cloud Dr
Eden Prairie, MN 55344-3307
Phone: 1 (952) 656-3700
www.bluestembrands.com

STATS


  • Employer Type: Private
  • Chairman and CEO: Brian Smith
  • Chairman and CEO: Brian Smith
  • Executive Vice President Merchandising: Gina Sprenger

Major Office Locations

  • Eden Prairie, MN

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