Top 500 chain Brookstone looks to another mall retailer for salvation
March 27, 2014 03:10 PM
Brookstone Inc., a multichannel retailer of specialty products and electronics, wants to sell itself to Spencer Spirit Holdings, which owns mall retail chain Spencer’s and costume retailer Spirit. Brookstone says it might file for Chapter 11 bankruptcy to facilitate the sale, which would combine two retailers in the Internet Retailer Top 1000. The companies did not disclose terms.
Brookstone, No. 193 in the Internet Retailer 2013 Top 500 Guide, posted a 7.6% year-over-year revenue decline in the third quarter of 2013, according to its most recent earnings report. E-commerce in the third quarter increased 13.4% year over year, to $14.6 million (that figure includes sales initiated through its paper catalog). According to preliminary data from the forthcoming edition of the 2014 Top 500 Guide, Brookstone’s e-commerce sales increased about 8.9% in 2013 over the prior year to an Internet Retailer-estimated $114.8 million.
Brookstone operates 240 stores in malls and airports. That’s down from 282 in the third quarter of 2012.
"Today marks a new chapter in Brookstone's history," says Jim Speltz, Brookstone’s president and CEO. "While we have implemented various successful cost-cutting initiatives, the search for a strong strategic partner who shares our vision and passion was a natural progression. We think we have found that in Spencer Spirit and are excited about the opportunity to begin leveraging the resources of the two companies and popularity of the Spencer, Spirit and Brookstone brands.”
Spencer Gifts LLC holds the No. 724 spot in Internet Retailer’s Second 500 Guide, with Internet Retailer-estimated sales of nearly $8.3 million in 2012, up 13% from the previous year. The company operates 644 Spencer stores in the United States and Canada that sell specialty and novelty gifts and are mainly located in malls.
Neither company gave a timeline for the deal, with Brookstone saying only that it is “working toward an agreement” with Spencer. Upon completion of the deal, the Brookstone brand would remain, with employees still working at their stores, the retailer says.
“Brookstone is a well-recognized brand with a long history of selling a unique assortment of innovative consumer products,” says Steven Silverstein, Spencer Spirit’s CEO. “We see many similarities between the Spencer Spirit and Brookstone business models and are excited to begin sharing knowledge and building a strong future together.”
Data from Top500Guide.com shows ample differences between the brands, however. Spencer has a conversion rate of 2.0% compared with 4.0% for Brookstone. The average web purchase for a Spencer online shopper stands at $40, lower than the $120 for Brookstone. Brookstone also attracts more monthly unique visitors: an estimated 1.5 million compared with about 740,000 for Spencer.