IAC/Cornerstone deal is the shape of retailing to come, some analysts say
Last week’s announced acquisition of Cornerstone Brands Inc. by IAC/InterActive Corp. is a harbinger of the shape of retailing, observers say. “Because they can be so nimble, we believe middle market retailers will be in a good position to take a leadership role in channel transparency,” says Donny Askin, CEO of CommercialWare Inc., which provides software that allows retailers to manage retailing across channels and counts Cornerstone among its customers. “The IAC/Cornerstone acquisition speaks to that.”
IAC announced last week that it intends to acquire Cornerstone Brands, which run e-commerce and catalog operations for Ballard Designs, Frontgate, Garnet Hill, Smith + Noble, The Territory Ahead and TravelSmith. It has annual revenue of over $700 million. IAC paid $720 million for the company. 37% of its sales, $266.4 million, occur online. The company also operates a few stores.
Thomas J. McInerney, executive vice president and CFO of IAC and CEO of IAC Electronic Retailing, said IAC is embracing the multi-channel model. “Catalog shoppers have been the fastest retail shoppers to migrate online and aligning the promotional power of TV and the catalog, together with the convenience and dynamic experience of the Internet, will provide compelling shopping experiences for current and new customers,” he said. He added that the company expects to quickly grow Cornerstone’s online revenue beyond the 37% it experiences today.
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