The growth-by-acquisition strategy resumes at multi-title cataloger Potpourri Group Inc., which announced the purchase of the Young Explorers educational toy catalog March 30.
Terms of the agreement were not disclosed.
Jack Rosenfeld, CEO of Potpourri Group, Chelmsford, MA, said the deal had been in the works for “about four or five” months.
“It's part of our strategy of growing the company by internal growth and by acquisitions,” he said. “That's been the history of the company. We had been holding off on acquisitions for six to nine months due to a capacity issue that's being solved by the expansion of an existing warehouse from 100,000 to 200,000 square feet. The infrastructure for 10 titles will now handle 11 titles.”
Gift titles published by Potpourri Group prior to the acquisition included Potpourri, Expressions, Back in the Saddle, In the Company of Dogs, NorthStyle, Serengeti, Catalog Favorites, Nature's Jewelry and Pyramid Collection. It also produces a craft title, The Stitchery.
Eight of the 11 were acquired in the past five years. The three originals are Potpourri, Expressions and The Stitchery.
“[This is] a moderate-level acquisition compared to the others,” Rosenfeld said. “Our goal is to complete another acquisition in the next three to four months.”
His hopes for the book are anything but modest.
“I'd like to … double its size in [terms of] profits and sales,” he said. “We'll have lower costs since we're a multi-title company. As your costs are lower, you can prospect deeper since your break-evens are lower. Increased prospecting will be part of [the strategy].”
Recent turmoil in the toy sector didn't scare Rosenfeld.
“This is a niche catalog, and the niche is educational toys,” he said. “I've been told it's the only growing segment of the toy business. We don't hope to compete head to head with Toys 'R' Us and Wal-Mart.”
The book's house file includes 422,709 names. In its history it has been published either once or twice annually. Its fall edition mails from July through December with cover changes.
“[In] some years they mailed a spring book,” he said. “This year it will not.”
The target audience consists mainly of mothers and grandmothers. About 80 percent of recipients are female with an average household income of $50,000-plus. Its educational toys are for children ages 4-10.
Young Explorers has produced a second title in the past: Giggles and Gizmos. It was published last year, and Potpourri is deciding whether to publish it in 2004.
“It [contained] fun and unique children's products as opposed to educational toys,” Rosenfeld said. “We may combine it with the Young Explorers title. [It] was just started in 2000.”
The Young Explorers catalog dates to 1993. Its next edition will be published in July.
“[This] helps us in product extension since we sell some of this type of product in our other catalogs,” he said.
Young Explorers' operations will relocate from Loveland, CO, and along with warehousing will include marketing and merchandising. Rosenfeld estimated that about “half a dozen to a dozen” employees will lose their positions in Loveland as part of the move to Massachusetts.
George McMahon, formerly president of Young Explorers, will stay in Loveland as a consultant and help produce the fall 2004 edition.
Potpourri Group generated gross sales of $150 million for 2003. Its collective 12-month-buyer file totaled 2 million before the current acquisition.