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Business Description:
Starad is a leading designer and distributor of high-end holiday ornaments, ceramics and other seasonal collectables, all marketed under the brand name Christopher Radko. The Company generates over $25 million of revenue and has a customer base of over 2,500 specialty retail and major department stores, including Bloomingdale’s, Lord & Taylor, Macy’s and Saks Fifth Avenue.
Transaction Background:
As the collectibles market and gift store channel both softened after the tech crash of 2000, Starad’s sales declined as well. This created an opportunity for Blackstreet to purchase the Company, largely from Starad’s lenders, through its seasonal goods company Rauch Industries.
Investment Thesis:
As a result of the decline in sales, the company found itself overleveraged and in need of a financial restructuring. Blackstreetbelieved that Starad could benefit from Rauch’s distribution and operations support, enabling the Company to focus on its branding, merchandising and marketing strengths. In addition, the combination eliminated the duplicative costs and challenges associated with managing a highly seasonal business. None of Starad’s 2,500 customers were served by Rauch, offering a new channel for Rauch to distribute certain of its seasonal products.
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