Cornerstone Brands' foundation is underpinned by more than a half-dozen direct market businesses. Formed in 1995, it is a holding company for consumer goods shopping brands: Ballard Designs, Chasing Fireflies, Frontgate, Garnet Hill, Grandin Road, Improvements, and TravelSmith. The operations sell mainly private label home and outdoor leisure goods and casual apparel through catalogs and related e-commerce sites. Targeting affluent, well-educated consumers ages 35 to 60, Cornerstone Brands distributes approximately 320 million catalogs annually and runs about a dozen retail and outlet stores. It is owned by interactive multi-channel retailer HSN, and generates about a third of its parent's sales.
Cornerstone's 2013 sales increased 9% over 2012, to $1.1 billion, after posting a 10% increase in the previous annual comparison. The increase was driven by sales growth in the home brands. Digital sales grew 11% and returns declined, due primarily to changes in the product mix. Catalog circulation increased 5% in 2013 versus 2012. The company's home brands (Ballard Designs, Frontgate, Grandin Road, and Improvements) have grown to account for nearly 75% of Cornerstone's total sales, while the contribution from apparel brands has shrunk.
Cornerstone's gross profit increased 9% in 2013, to $433.1 million, compared to the prior year, after posting an 11% gain in the previous annual comparison. A favorable product mix and selective price increases contributed to the rise in profits.
Cornerstone Brands seeks to maximize its sales and profits by shuffling its portfolio of home and apparel brands. To that end, it acquired a new title in 2012 and disposed of two others. It also looks to secure exclusive distribution rights for certain products by employing in-house designers and partnering with leading manufacturers to aid in the development of a unique, exclusive assortment of merchandise. As smartphones become ubiquitous and popular shopping devices, Cornerstone Brands has seen an increase in customers using mobile devices to shop its brands.
Mergers and Acquisitions
Adding to its portfolio of apparel brands, Cornerstone acquired Chasing Fireflies in April 2013 for about $23 million. Chasing Fireflies is a direct-to-consumer children's and family lifestyle brand. Also in 2012, Cornerstone sold The Territory Ahead in July and Smith+Noble in May. (Smith+Noble sold window treatments, while The Territory Ahead sold men's and women's casual apparel).