Former Fingerhut CEO Ted Deikel may be trying to buy his old company, but it sounds like he's not quite sure what he'll do with it.
Deikel, who signed a non-binding letter of intent earlier this week with Federated Department Stores Inc., Cincinnati, wants only certain parts of Fingerhut's assets: the distribution center and other facilities in St. Cloud, MN; the cataloger's Minnetonka, MN, corporate headquarters; the data center in Plymouth, MN; the distribution center in Piney Flats, TN; as well as the Fingerhut name, Web site and existing inventory along with other property and equipment.
Deikel is looking to make the purchase with wholesaler Tom Petters. Though Petters' spokeswoman Mary Pernula did not return a call seeking comment, the Associated Press reported that Deikel and Petters will attempt to integrate the company's catalog activities into their existing e-commerce and wholesaling businesses.
“Three years ago, we had a company that was doing $1.7 billion [in sales],” Deikel told the AP while mentioning that Fingerhut sold $810 million worth of products last year. “It's going to be a long time before we see those kind of figures. A lot of this we are doing on the fly. We have to look at if Fingerhut can be restarted as a catalog company. We just don't know yet.”
The deal is subject to the negotiation of a definitive purchase agreement. Federated will suspend ongoing liquidation activities pending the negotiation of a final agreement. It has been four months since Fingerhut mailed its last catalog, and the company ceased taking orders earlier this month.
“We have some catalogs that were near completion [months ago] and we had some people back to finish up those projects, [but] they were not sent,” Fingerhut spokesman Ben Saukko said. “The letter of intent is non-binding and subject to further negotiation. If they come up with a purchase agreement, then it will be for [the buyers] to decide to restart the catalog operation. I don't know what Deikel's intentions are. As far as the liquidation of merchandise, we're receiving bids, but Deikel has indicated an interest in the merchandise.”
Bill Dean, founding partner of catalog consultancy W.A. Dean & Associates, San Francisco, believes Deikel could restart the catalog.
“A lot of catalogs have been restarted after six or seven months,” Dean said. “It's not like everybody is sitting there waiting for the catalog. If you don't get one for six or seven months, you just think you were off the mailing list. That's assuming the consumer even thinks about the issue at all. But because of all the publicity, and the way Federated has handled this, people may be more aware of it.”
If Deikel does this, it will be the third time he owns Fingerhut.
“He knows that company, and they've always had an outstanding staff,” Dean said. “If you wanted to understand how to be a marketer in cataloging, you could do a lot worse than having Fingerhut on your resume.”
Dean described Fingerhut as being as much a financial company as it is a cataloger.
“There's still a need for that,” he said. “They've historically given credit to people who have had a hard time getting credit. There are millions of people who fit that description, and he's going to get the Fingerhut mailing list.”
While it has been reported that financing is in place, Deikel said it will take two weeks to work out the remaining details.
“We're close,” Deikel told AP. “We're either going to have this done in a couple of weeks, or it's not going to happen.”
It remained unclear how many jobs would be retained or the number of employees who could be called back.
The St. Paul Pioneer Press speculated that the sale price is “likely less than $500 million” since the accounts receivable, “estimated to be worth about $1 billion,” are not part of the deal.
