Damark International, Inc., Minneapolis, MN, will outsource its catalog merchandising and marketing activities and separate its membership and e-services operations.
Approximately 100 salaried and 50 hourly jobs will be eliminated, principally in catalog marketing and merchandising and the Brooklyn Center call center, which will be closed.
Damark’s chairman and CEO, Mark A. Cohn, attributed the outsourcing to financial and strategic reasons.
“First of all, we see no compelling reason to continue funding operating losses in our retail segment of the magnitude recently experienced and expected for the foreseeable future,” Cohn said in a statement. “Secondly, we can discern no long-term competitive advantage for us as a direct retailer of discount durable goods in tomorrow’s crowded marketplace.”
Cohn added that the order capture, product fulfillment and customer service competencies, developed over the last 13 years to serve its catalog customers, “are ideally suited for deployment in the e-services marketplace and we look forward to becoming a major participant in this growth industry.”
In addition, the membership business is performing at record at levels and is ready to be operated on a stand-alone basis, Cohn said. The business is to be re-named Insyte Inc.
The wind-down is expected to be completed by the end of second quarter 2000 and will consist principally of liquidation of current assets and satisfaction of current liabilities associated with the company’s catalog activities.
The company will take a one-time charge to earnings during first quarter 2000, primarily for costs associated with the call center closing and severance payments.
Its e-services business will be placed in a newly formed subsidiary named ClickShip Direct Inc. George S. Richards, Damark’s president and COO, will become CEO of Insyte and Cohn will serve as CEO of ClickShip Direct.
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