Contact: Brian Satterfield
In a move that underscores the continuing importance of e-commerce sales to brick-and-mortar retail chains, Target Brands has made its first foray into tech M&A by buying two online retailers.
Target announced on Thursday that it will acquire CHEFS Catalog and Cooking.com, two companies that sell kitchenware and cookware online. In its most recent earnings call, Target – which is slightly larger than Amazon, but garners only about one-third the valuation of the Web retailer – indicated that its online revenue growth was above the industry average.
Clearly, the 110-year-old retailer bought the two Internet properties to continue that progress. (We estimate that CHEFS Catalog and Cooking.com collectively generated about $150m in sales.) However, we might note that Target’s purchases come after a number of fellow brick-and-mortar retailers have already consolidated online retailers. In the past two years alone, we’ve seen similar purchases by retail heavyweights such as Wal-Mart, Lowe’s, Barnes & Noble and Walgreen.
CHEFS Catalog, which was founded in 1979 as a mail-order retailer, was previously owned by private equity firm JH Partners and brings 100 employees to Target. Meanwhile, southern California-based Cooking.com has a headcount of 50 and has collected a whopping $115m in venture funding over its 15-year lifespan, most of it during the bubble era.