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Lynn Tilton

Lynn Tilton

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By Beina XuPatriarch Partners LLC isn't the first buyout firm to think it can turn retailer Spiegel Brands Inc.

around.In fact, it's the third in the last five years.

Golden Gate Capital bought the firm out of bankruptcy for $31 million in July 2004, shuffled it around in its portfolio some, and shuffled it out late last year to Granite Creek Capital.

Shortly thereafter, the company fell into the hands of its lenders, a person familiar with the matter said.

Patriarch, which acquired Spiegel for an undisclosed but presumably bargain basement price, has no illusions about the difficulty of this investment.

Chief Executive Lynn Tilton said that Spiegel lost about 30% of its top-line sales in the economic downturn, and added that there is little prospect of a turnaround soon.

"I don't expect to see any pickup in the economy for at least a couple years, so we're buying with the notion that we have to rationalize the company, make sure it's not bleeding cash, and be prepared for when the consumer environment does pick up," Tilton said.

The firm plans to spend that time orienting Spiegel away from its catalog business - which has been around since 1905 - and even more towards the Web, which currently generates around 65% of revenue.

"In this market, many more people are going to be shopping at home - I buy from infomercials in the middle of the night when I can't sleep - things I don't even need," Tilton said.

The firm also hopes the deal will provide a boost to some of its other portfolio companies, which can sell their products on Spiegel's Web site and in its catalog.

Stila Cosmetics, for instance, will be available through Spiegel by next week, while plans for earwarmers from 180s Inc.

and bed and bath products from Croscill are also in the works."We see it as a glue that will brand much of our direct consumer business," she said.



http://blogs.wsj.com/privateequity/2009/06/18/patriarchs-plans-for-spiegel-include-much-midnight-shopping/
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