Bluestem Brands, Inc.

  • Overview

You might say this company lets your fingers do the shopping. Bluestem Brands (formerly Fingerhut Direct Marketing) offers an array of private-label and brand-name merchandise, including apparel, appliances, electronics, furniture, health and beauty products, jewelry, kitchenware, luggage, sporting goods, tools, and toys through its Fingerhut catalog and e-commerce site and via the Gettington.com site. It also offers credit in partnership with MetaBank and WebBank. In addition, it also owns PayCheck Direct, an employee purchase plan whereby employers can offer high-ticket items to employees, who pay for them interest-free via payroll deductions. The company filed an IPO in 2011 but withdrew it a year later.

IPO

Initially Bluestem aimed to raise $150 million through its initial public offering, but later reduced the amount to about $135 million. Ultimately, it withdrew its IPO filing in late 2012. The retailer had planned to use the proceeds to pay down long-term debt and cut its balance under a revolving credit line. 

Operations

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

Financial Analysis

By reducing its debt load, the firm would be able to devote more resources to growing its business -- an investment that could pay off quickly, given the rising demand for Bluestem's offerings in recent years. Despite reduced 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 fiscal 2011. Interest expenses on Bluestem's credit lines have also been eroding its earnings.

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. (Online sales have increased from 25% of orders in 2005 to nearly 45% of orders in 2010.)

Developing new credit programs are also key to growth. In 2010 Bluestem launched Fingerhut FreshStart, which allows customers to pay for their purchases in installments if they cannot qualify for a revolving credit account. The next year it launched 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.

Ownership

Investment firms Bain CapitalBattery Ventures, and Brookside Capital Investors control Bluestem.

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