Target agreed to buy Chefs Catalog and Cooking.com, two leading e-commerce businesses focused on cooking and kitchenware, in two separate transactions.
The businesses will be combined into a new, wholly owned subsidiary of Target, and both brands will continue to operate under their current names. Terms were not disclosed.
Founded in in 1998 and based in Marina Del Rey, CA, Cooking.com offers more than 30,000 products for the kitchen as well as recipes, cookbooks, and a library of member-submitted cooking content. It also operates websites for Food Network Store, Calphalon Store, Rachael Ray Store, and Epicurious Shop.
Founded in 1979 and based in Colorado Springs, CO, Chefs Catalog is an online retailer of kitchen products. Brands sold include All-Clad, Cuisinart, KitchenAid, Le Creuset, Scanpan and Wusthof.
According to Internet Retailer's most-recent Top 500 Guide, Cooking.com had sales of about $100 million in 2011, and Chefs Catalog, $38.2 million. In Internet Retailer's Top 500 rankings for 2011, Cookings.com ranked 169 and Chefs Catalog, 311.
Chefs CEO Tim Littleton will become president of the new subsidiary while Cooking.com's CEO Tracy Randall will become a consultant to Target.
"We know consumers are increasingly looking online for cooking solutions to make their lives easier — from utensils and cookware, to recipes," said Casey Carl, president, multichannel and senior vice president, enterprise strategy at Target, in a statement. "These strategic transactions provide us a great way to address this growing opportunity and will offer expanded online options for our guests."
Some analysts speculated that Target's investment is part of an effort to balance out its emphasis on kitchen merchandise with that of apparel, which has seen some notable exclusive launches lately. The move also builds on Target's recent online investments, including the January hiring of an executive from Gilt Groupe to oversee Target.com and mobile. Target also recently launched six web-only apparel and home furnishings brands.
Citigroup analyst Deborah Weinswig said in a note, according to CBS Marketwatch, that the purchases "should give Target a significantly expanded presence in the cookware and kitchenware businesses, as well as access to valuable Web content. While small relative to overall sales, we believe this is an attractive strategic investment for Target, with the potential for increased synergies over time, such as enhanced gift registries and improved Web content."
"If you think about it, the most logical place to look for a new recipe is to go online," Paula Rosenblum, an analyst at RSR Research LLC. told Internet Retailer. "So recipe hunts beget 'stickiness,' which begets the potential of buying the cookware used to cook the stuff and, probably, the food used to make it."
How important is securing greater access to web content to Target's acquisitions of Chefs Catalog and Cooking.com?