Fingerhut Companies Inc., Minneapolis, reported net revenue for its fourth quarter of $659.8 million, up 18% from $560.3 million in the same period last year. Net revenue for the full year was $1.61 billion, up 6% from net revenue of $1.52 billion for the related period in 1997. The quarter and the year ended Dec. 25.
But costs related to its acquisitions flattened its net earnings. For the quarter, the company had net earnings of $42.3 million, down slightly from fourth-quarter 1997 earnings of $43.9 million. For the year, the earnings drop was more palpable: In fiscal 1997 the company made $69.3 million. In 1998 Fingerhut’s net earnings had dropped to $45.3 million.
During the quarter, Fingerhut purchased Popular Club Plan Inc., a direct marketer of general merchandise and apparel. In addition, the company acquired 19.9% of the Zone Network, parent of MountainZone.com, a community-based Web site for mountain sports information and merchandise, and 19.9% of Freeshop.com, a hub for online shopping. Fingerhut also announced that it would acquire direct marketer Bedford Fair, which added approximately 500,000 net new customers. Fingerhut completed the Bedford Fair transaction Jan. 6, 1999.
Fingerhut’s Internet sales on its two flagship sites, www.fingerhut.com, and www.andysgarage.com, increased 500% over fourth quarter 1997.
Net sales from Fingerhut’s existing customers totaled $437.9 million, up 2% from fourth quarter 1997, primarily the result of higher sales per mailing on fewer, more targeted mailings. As a result of the company’s strategy to focus on acquiring new customers through the acquisition of direct marketing companies, net sales from Fingerhut’s new customer acquisition programs were $50.1 million, down 20% compared to fourth quarter 1997, despite a 38% reduction in mailings.
Fourth quarter 1998 net revenue from the company’s other subsidiaries was $166.7 million compared to net revenue of $83.5 million in the fourth quarter 1997, The increase was attributed primarily to the acquisitions of Arizona Mail Order and Popular Club Plan.
Fingerhut Companies, Inc. is a database marketing company that offers products and services through catalogs, direct marketing and the Internet.
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