Given the economy, what’s news isn’t that first-quarter sales came up short for a number of catalogers. Rather, it’s that a fair number of marketers met or beat expectations.
About half of the mailers contacted by Catalog Age, including Yankee Candle, Magellan’s, Godiva Chocolatier, McFeely’s Square Drive Screws, TechnoBrands, and Venus Swimwear, met or beat early spring plans. And those that fell short aren’t pinning all the blame on the roller-coaster stock market, the feeble consumer confidence, and the rising unemployment rate.
For instance, Softspots Comfort Corner places some of the blame on the perennial scapegoat of apparel marketers: the weather. As if the lagging economy weren’t bad enough, lingering nasty winter weather throughout much of the country delayed many consumers’ spring purchases, says Bob Morrison, vice president/general manager of the Hudson, NH-based shoes and apparel cataloger.
Softspots missed its plan, which called for a 5% sales increase over first-quarter 2000. Instead, sales were flat with last year’s.
“Our apparel got off to a much slower start than we expected,” Morrison says. “Spring weather continued to be very cold and winterlike.”
At the same time, Softspots’ average order size fell nearly 5%, from $71 to $68. “But that’s the result of a planned move on our part to lower our price points from an average of $42 to $40,” Morrison explains. “We lowered our prices after seeing the downward direction the economy was headed. And we’re making some of it up in volume.”
The seemingly never-ending winter no doubt contributed to the soft sales at Spiegel. (Although Spiegel is a general merchant, apparel accounts for the majority of its sales). Spiegel’s February revenue was down 4% from the previous year, while sales within its sister division, apparel cataloger/retailer Eddie Bauer, dropped 3% during the same time period. (On the other hand, the company’s Newport News group, which sells lower-priced apparel, enjoyed a 14% jump in February sales.)
General merchandise mailer Miles Kimball blames neither the weather nor the economy for its slow winter sales. President Mike Muoio says the disappointing performance of its February mailing resulted from the decision to close the call center at 9 p.m., rather than accepting phone orders until midnight EST. “We thought we’d be able to channel more orders to our Website,” he explains. “But we were wrong, and this book came in 3%-5% below plan.” The $140 million Oshkosh, WI-based cataloger has since returned to staffing the call center until midnight.
But $100 million New Pig Corp., based in Tipton, PA, does say its sluggish first-quarter response is a direct result of the economic slowdown. “We began to feel the effects in the fourth quarter of last year,” says Doug Hershey, executive vice president for the manufacturer/marketer of industrial cleanup and waste containment supplies. “And economic measures such as factory orders, U.S. industrial production, and the purchasing managers index have all indicated an industry slowdown,” which has affected the cataloger. While Hershey won’t give specific sales figures, he notes that the average order size has suffered a single-digit decrease.
A silver lining for some
The weak economy might actually have helped Lynchburg, VA-based hardware cataloger McFeely’s Square Drive Screws beat its expectations. Rather than going out, says owner/president Jim Ray, more people are staying home and doing woodworking and similar projects. The company mailed 5.5% more books this spring than last; sales were approaching double-digit gains, he says.
Crafts catalogs Annie’s Attic and House of White Birches may be reaping similar benefits as well. Since many consumers stay in during the winter months, “January is usually our biggest month,” says George Hague, catalog marketing manager for Berne, IN-based parent company Dynamic Resource Group. “But we had a slow start. Response really picked up as the season went on, though, and we did catch up with our [low double-digit increase] projections, based on 15% circulation gains.”
Some catalogers insist that they’re immune to the economic ills. Darryl Scott, president of Jacksonville, FL-based Venus Swimwear, says that his company enjoyed a 20% sales gain, which is on plan and in line with its circulation increase. Venus, which increased its page count from 80 to 100 pages, “hasn’t seen any effect from the recession that we’re said to be in,” Scott says. In fact, he expects business to only get better. The cold winter weather may have slowed sales, “so when it finally does turn warm, that will have a positive impact on our sales,” he says.
On the business-to-business side, $53 million Farmington Hills, MI-based Nailco Salon Marketplace, which budgeted for 15%-19% sales gains on flat circulation of 300,000 for the first half of the year, has enjoyed a 16% sales increase for the first quarter, according to president/founder Larry Gaynor. “We’re as recession-resistant as you can get,” Gaynor says, “because people still have to get their hair and nails done. Salons still have to buy our products.”
Nonetheless, some catalogers that started off strong are keeping their expectations in check. For instance, while $1.3 billion Lands’ End’s early first-quarter revenue rose 19%, spokesperson Charlotte LaComb says that more than half of the increase resulted from a shift in the mailing of the Dodgeville, WI-based company’s clearance catalog from early to late January. She cautions that the rest of the year may not be as rosy for the apparel mailer: “We’re taking a conservative approach to our business in light of the economic uncertainty, and expect only single-digit sales increases overall.”