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 more than 300 million catalogs annually and runs about a dozen retail and outlet stores. It is owned by interactive multi-channel retailer HSN, and generates about 30% of its parent's sales.
Cornerstone's 2012 sales increased 10% versus 2011, to top $1 billion. The company credited the rise to strength in its home brands, the acquisition of Chasing Fireflies in April 2012, and an increase in catalog circulation. Online sales increased 18% year over year, while the return rate fell due to changes in product mix and a heightened focus on quality. Catalog circulation increased 10%. Home brands, which includes the Ballard Designs, Frontgate, Grandin Road, and Improvements titles, accounted for 71% of sales in 2012, while apparel brands (Chasing Fireflies, Garnet Hill, and TravelSmith) brought in the rest.
Cornerstone's gross profit increased 11% in 2012, or $38.1 million, compared to the prior year. Lower inbound freight costs, lower return rates, and lower inventory reserves 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.
Mergers, Acquisitions, and Divestments
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).
Cornerstone Brands is a subsidiary of TV-and-online-shopping giant HSN Inc.