Hanover will unload non-core businesses
May 19, 2003-- Home Textiles Today,
Weehawken, NJ — Renewing its focus on strong home brands, Hanover Direct will parcel off its non-core businesses of Silhouettes, International Male (including the Undergear brand) and Gumps, once the mergers and acquisitions market recovers, the company said at its annual meeting here last week.
"We're recognizing that [The Company Store group] is our mother ship," Tom Shull, president and ceo, told shareholders. "It's where most of our energy goes." Late last year, Hanover combined The Company Store and Domestications brands — which together account for 60 percent of the company's sales and most of its profits. The group also includes Scandia Down, its high-end brand.
The soft M&A market is the reason why the company took Gump's and International Male off the market earlier this year. The brands have been problematic in the past, but the firm previously said it is pleased with the progress, and that Gump's is one year away from profitability.
During the meeting Shull said that the company has met with many potential buyers for these non-core units, but because of the soft M&A market, it had not received what it believes were worthwhile offers. Shull told HTT after the meeting that he believes the M&A market will improve by the fourth quarter, if not the first quarter of next year.
In response to a shareholder as to the possibility of the total company being sold, Shull said that it has been in such discussions in the past and will always "continue to seek opportunities to maximize value," but the current market prevents that at the moment. When Sears purchased Land's End a year ago, the "climate was much better than it is today. Today, companies are being purchased for a fraction of profits, like Lillian Vernon."
During an impromptu interview following the meeting, Shull said that the next step in the home push will be to broaden the core customer base, and that includes 15 tests currently under way to lure consumers on-line. A page in The Company Store catalog, for example, advertises the Company Kids brand, giving consumers its Web site address as well as a 10 percent discount. It's a strategy that's working, Shull said. "We're trying to encourage her to go online," he said, and that the customer is more comfortable in doing so.
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