How Spiegel Recovered

By Paul Miller

Fueled with fresh capital, CEO Geralynn Madonna & co. have revived, repositioned and run Spiegel into profitability.

Just three years ago, the industry, the financiers and the media (including this writer) had all written off the Spiegel catalog as a soon-to-be goner. The mere notion that it would turn a profit again or even mail again seemed a pipe dream. But having emerged a couple of years ago from near liquidation along with its sister title Newport News, Spiegel now is thriving, having nudged its way into the black a little less than a year ago.

"The big story was the repositioning of the Spiegel brand," says Spiegel Brands President/CEO Geralynn Madonna. "Starting in March 2003, we realized that there was a disconnect with the [then-] current positioning and immediately began studying what Spiegel was, and relaunched it in spring 2004."

In conjunction with Spiegel/Newport News management, Spiegel Brands now is owned by Golden Gate Capital, which over the past two years also has invested in the Norm Thompson, Appleseed's and Draper's & Damon's catalogs. Principals from the deep-pocketed private equity firm ($2.5 billion worth of capital to play with) say it aims to buy up more catalog titles soon.

To get an idea of how far it has come, consider where Spiegel has been the past few years:

1. Within the course of one week in March 2003, The Spiegel Group, which then owned and operated the two catalogs as well as the Eddie Bauer catalog and retail business, liquidated its First Consumers National Bank private label and credit card business, and filed for Chapter 11. The credit unit had piled up $69.3 million in losses during Spiegel Group's fiscal year 2001, and had become a drain on the whole company.

2. Spiegel Group then began a series of cost-cutting measures, including the shuttering of its Hampton, Va., call center, layoffs and a cost restructuring to take Eddie Bauer out of the picture.