Two Catalogers Lose Top Executives

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Two catalogers that have weathered a few difficult years both just lost a key executive instrumental in their turnarounds.


Peter Michielutti, chief operating officer of Fingerhut Companies Inc., who improved profitability at the cataloger and led an effort to switch customers from a coupon payment system to a revolving charge account, left the company June 25.


James M. Beltrame, who was elected CEO of Successories, Aurora, IL, in May 1997, left the company June 27. Company chairman and founder Mac Anderson credited Beltrame with instituting a turnaround at the cataloger/retailer of motivational items, though results of the first quarter ended May 2 showed the company's net loss continued to grow despite an increase in revenues.


Both men had been with their respective companies three years and began as chief financial officers before moving into more management roles.


Fingerhut, Minnetonka, MN, had seen its stock fall in 1994 from close to $30 a share to less than $20 a share, where it remained until last summer. The company's stock closed at 34 1/4 on July 1. Although several factors contributed to the stock's steady rise over the past year, the cataloger's earnings improvement can't be overlooked. Its total earnings last year, including the catalog business and a financial services subsidiary, were $69.3 million, up 73 percent from $40.2 million last year. In the catalog division, earnings rose 79 percent to $37.7 million, compared with $21.1 million last year. The earnings increase was particularly significant considering earnings in 1996 were down 21 percent from $50.9 million in 1995.


The company controlled costs through better inventory management and other techniques and reined in delinquency rates by using more external and internal scoring to eliminate high-risk customers. Last year, Fingerhut encouraged 130,000 customers to switch from its traditional coupon payment system to a revolving charge account, exceeding its goal of 75,000.


Michielutti said his decision to leave partially reflected his feeling that his responsibilities and opportunities at the company would be reduced as a result of the hiring of Bill Lansing as president in May.


"I think I have the ability to run a company of that size -- and with Bill there, I didn't think it was necessary to have both of us," he said. "He's very capable and I'm sure he'll do a fine job, but it lessens the responsibilities and challenge and I decided to seek something with the type of personal challenge I want."


In an internal memo, Fingerhut noted that Michielutti's decision to leave was voluntary and touted his contributions to the company.


"Under Pete's leadership, the company achieved greater cost control and profitability," the memo said. "Many of the initiatives Pete championed -- from revolving charge to the introduction of business teams -- will make the company more competitive in the years ahead."


Michielutti will spend the summer with his family and then look for management positions in the Twin Cities area.


At Successories, the company credits its direct marketing operations with driving its 4.3 percent revenue growth for the first quarter this year. Catalog sales were up 10 percent with no corresponding increase in related advertising expense. The increase was realized despite six fewer company-owned retail stores at the end of the quarter as compared to the same period the previous year. Same-store sales for company-owned stores were up by 2.5 percent for the quarter compared to the same period a year ago.


For fiscal 1997 ended Jan. 31, however, sales were stagnant, rising just 1.4 percent to $56.8 million from $56 million. The company's net income had dropped 66.8 percent last year to $87,000 compared with $262,000 the prior year. For first-quarter 1998, a net loss of $1.4 million was reported, compared with a loss of $1.1 million the prior year.


Nevertheless, Anderson congratulated Beltrame on putting the company back on its feet.


"Jim Beltrame did an excellent job in his turnaround role," Anderson said in a prepared statement. "However, we have come to realize that the financial skills needed to turn the company around are different from those needed to grow it. Our infrastructure and balance sheet are solid, and now we need a results-oriented president with a strong marketing background and a growth track record to take us to the next level."


Officials at Successories could not be reached for additional comment.
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