August 9, 2005, 12:00 AM

What Harry & David’s IPO papers say about its e-commerce base

E-commerce accounted for 17% of Harry & David’s direct marketing sales in fiscal 2005, the company says in its IPO papers filed with the Securities and Exchange Commission. The web also accounts for about 40% of all direct marketing orders.

E-commerce accounted for 17%, or about $59 million, of Harry & David’s direct marketing sales in fiscal 2005, the company says in its initial public stock offering papers filed with the Securities and Exchange Commission.

The IPO papers also note that the Internet is a rapidly growing sales channel for Harry & David, accounting for about 40% of all direct marketing orders. “The Internet provides a growing and complementary channel to our catalog business that improves customer access and convenience and enhances our market share of last minute gift-giving sales,” the company says in its S1 filing document. “We are also able to cost effectively test and evaluate new product categories.”

With the IPO proceeds, Harry & David, a part of Bear Creek Corp., which ranks as No. 81 in the Internet Retailer Top 400 Guide to Retail Web Sites, intends to aggressively pursue e-commerce. For instance the company recently invested $7 million in information technology, which includes updates to its e-commerce platform and a new web-enabled point-of-sale system. “Through our Internet channel, we intend to increase our market share of last minute gift-giving sales and enhance our brand awareness,” the company says in its S1 papers. “We intend to expand our Internet joint marketing agreements with strategic online partners to acquire new customers and to continue to leverage email communications to increase sales to existing customers. We also intend to continue to leverage the Internet channel to cost effectively manage inventory and to test and evaluate new product categories.”

In its SI filing, Harry & David notes that the company is well positioned for growth across multiple retail channels. In the last year, the company mailed approximately 93 million catalogs. Harry & David’s online marketing channels include airline loyalty programs, affiliate site referrals and advertising relationships with Oprah.com, CitySearch, Morningstar, Google and Yahoo. “Our highly recognizable brand name has enabled us to develop partnerships with strategic, online partners with high traffic web sites, such as Amazon and MSN,” the company says in its S1 filing. “We also have revenue sharing agreements with partner websites such as Upromise and certain airline frequent flyer programs, advertising placement on websites such as Oprah.com, CitySearch and Morningstar and key word search placement on websites such as Google and Yahoo.”

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