How the catalogers grandiose Net dreams turned ugly Remember Fingerhut Cos.?
When Federated Department Stores Inc. (FD) acquired the company for a lofty $1.7 billion in February, 1999, it looked like an Old Economy company on its way to becoming a New Economy darling. The savvy old catalog retailer was rapidly opening e-commerce sites and buying equity stakes in online retailers. With its expertise in filling catalog purchases, Fingerhut was offering order-fulfillment services to other Net retailers. Federated’s acquisition couldn’t have looked smarter when Fingerhut snagged order-fulfillment contracts with up-and-comer eToys Inc. (ETYS) and heavyweight Wal-Mart Stores Inc. (WMT) last year and Fortune declared Fingerhut one of the ”10 companies that get it.” These days, all Fingerhut is getting is an avalanche of trouble. The company’s Internet sales fell so far short of expectations this year that Federated is shuttering five of its eight e-commerce sites. Federated stopped investing in a sixth site, clearance retailer AndysGarage.com, and is likely to close
