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, Frontgate, Garnet Hill, Improvements, Smith+Noble, The Territory Ahead (once owned by Lands' End), and TravelSmith. The operations sell mainly private label home and outdoor leisure goods and casual apparel through catalogs and various e-commerce sites. Targeting affluent, well-educated consumers ages 35 to 60, Cornerstone Brands distributes more than 275 million catalogs annually and runs some 20 retail and outlet stores. It is owned by interactive multi-channel retailer HSN, and generates about 30% of its parent's sales.
The economic downturn in the US hurt apparel and home goods sales, and took a significant toll on Cornerstone's business. To stand out in the crowded catalog market, Cornerstone Brands offers primarily proprietary private label products as well as secures exclusive distribution rights for certain merchandise. Its websites aim to further consumer loyalty by providing decorating tips, gift registries, travel centers, online design centers, and measuring and installation advice.
Nonetheless, weak consumer demand for luxury and outdoor goods in 2009 contributed to a 14% decline in year-over-year sales and an operating loss. The decline was also tied to a decision to cut catalog distribution by 24% from 2008, and rely more on online retail sales (which traditionally account for more than half of Cornerstone's revenue). Rebounding in 2010, Cornerstone spurred revenues and profits through a series of merchandising and marketing efforts and increased catalog distribution for its three largest brands: Garnet Hill, Ballard Designs, and Frontgate. The uptick was modestly offset by an increase in shipping and fulfillment costs.
Leading the turnaround, Mark Ethier, former COO of parent HSN, was named chief executive in fall 2009. The catalog and e-commerce retailer had been without a CEO since Roxane Al-Fayez left in 2008 after almost a year with the company. Al-Fayez's departure fell shortly after former parent IAC/InterActiveCorp had completed its spinoff of five subsidiaries, each into publicly traded companies. Cornerstone's catalogs, acquired by IAC/InterActiveCorp for approximately $720 million in 2005, remained with HSN as part of the deal.
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