Internet conglomerate IAC/InterActiveCorp. expects to report a goodwill impairment of about $300 million for its Cornerstone Brands business in the second quarter, according to a Securities and Exchange Commission filing on Thursday.
IAC attributed the impairment to the deterioration of the retail environment, particularly in the home and apparel categories. Cornerstone includes a portfolio of catalogs, Web sites and retail locations that sell home, leisure and casual apparel products.
IAC said those conditions were exacerbated by execution issues and management turnover of certain catalogs within the business.
New York-based IAC is in the process of spinning off Cornerstone and the HSN home shopping network into a separate publicly traded company. IAC said it does not believe that HSN's goodwill is impaired.
Cornerstone is expected to book an operating loss for the first six months of 2008 compared with operating earnings of $13.7 million for the year-ago period. IAC also expects "significantly lower" full-year profit.
IAC is completing an impairment analysis but does not expect a material change to its $300 million estimate.
IAC shares dropped with the broader market on Thursday, losing 76 cents, or 3.7 percent, to close at $19.55. The stock has traded between $19 and $35.13 during the past 52 weeks.
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