First-quarter results from publicly traded consumer catalogers suggest that the economy may have hit bottom and is poised for a turnaround.
Among the 15 consumer catalogers and cataloger/retailers tracked for Catalog Age by investment bank Tulley & Holland, four, or 27%, suffered a decline in first-quarter revenue. And six of the companies, or 40%, saw their net income decline or their net loss grow.
Why is that encouraging? Because in the previous first quarter, sales dropped for nearly the same percentage of catalogers (28%) — and the bottom line had deteriorated for 72% of the catalogers tracked.
But Jim Adams, managing director of Wellesley, MA-based Tulley & Holland, warns against breaking out the bubbly just yet. “It’s not likely” that we’re already in recovery mode, he says, “but at least the news is fairly positive. When a turnaround does occur, many of these companies will be well positioned to take advantage.”
CATALOG AGE SPOTLIGHT ON FIRST-QUARTER FINANCIALS
J. Jill’s top-notch bottom line
Quarter ended: March 30
Women’s apparel cataloger/retailer J. Jill Group enjoyed a 16% boost in first-quarter revenue — and a fantastic 239% leap in net income. The Quincy, MA-based marketer reported net income of $2.7 million on net sales of $73.4 million. For the first quarter of 2001, net income had been $796,000 on sales of $63.3 million. Catalog and Internet sales decreased 3%, to $51.2 million, mainly as a result of lower promotional activity. But retail sales more than doubled, mostly due to new store openings.
The skinny: J. Jill gets high marks for savvy inventory management. The company says it reduced inventory balances 28% for the quarter by ordering merchandise more conservatively and timing receipts closer to need.
More good news for Lands’ End
Quarter ended: May 3
Apparel and home goods cataloger Lands’ End more than doubled its first-quarter net income, to $16.5 million from $5.9 million last year. At the same time, revenue rose 10%, to $341.2 million from $311.1 million. Web sales jumped 46%, to $79 million from $54 million, while international sales rose nearly 13%, to $32 million from $28 million. But sales from the Dodgeville, WI-based company’s specialty books, which include its Kids and Home catalogs, slid 1%, to $85 million, as the Corporate Sales catalog felt the pinch of budget cutting among companies nationwide.
The skinny: In case you’ve been living under a rock, Lands’ End was acquired by Sears, Roebuck & Co. in June, for the equivalent of 27 times earnings.
Williams-Sonoma celebrates record first-quarter income
Quarter ended: May 5
San Francisco-based Williams-Sonoma credited “significant operational improvements,” along with a 15% rise in revenue, for its record first-quarter profit. For the three months ended May 5, the multititle cataloger/retailer posted net earnings of $15.4 million, a dramatic improvement from the $492,000 in income it recorded for the first quarter of fiscal 2001. Total net revenue for the quarter was $478.4 million, up from $417.6 million a year ago. First-quarter catalog and Internet sales rose a more modest 6%, to $178.3 million from $167.7 million, with the Pottery Barn and Pottery Barn Kids home decor brands driving the growth. (Williams-Sonoma’s other brands include the flagship kitchenware catalog and retail chain, storage products cataloger/retailer Hold Everything, and upscale bedding catalog Chambers.) Retail sales increased 20%, to $267.6 million, and comparable store sales rose 6%.
The skinny: Williams-Sonoma hopes to turn new catalog West Elm, which launched this spring, into a lower-priced Pottery Barn.
Lower sales, higher profits for Delia’s
Quarter ended: May 4
First-quarter net sales at teen girls apparel cataloger/retailer Delia’s decreased 21%, to $28.8 million from $36.2 million, due to catalog circulation cuts. But those cuts may also have contributed to the New York-based company’s bottom-line boost. The net loss before the cumulative effect of a change in accounting principle was $4.3 million, compared with its first-quarter loss of $8.3 million last year. And after the positive effect of a change in accounting principle, Delia’s actually reported a profit of $11.1 million.
The skinny: Delia’s shaved more than $5 million from its general and administrative costs, from $24.7 million in the first quarter of fiscal 2001 to $17.6 million.
Blair’s in the black
Quarter ended: March 31
Apparel and home goods cataloger Blair Corp. reported a 2% rise in first-quarter net sales, to $135.3 million from $133.1 million last year. Even better, the Warren, PA-based company turned around last year’s first-quarter net loss of $231,946 to post net income of $5.6 million. Last year’s results had included a one-time $2.5 million cost associated with a “voluntary separation program,” in which Blair moved an operations center that employed about 50 workers who chose to leave the firm rather than relocate.
The skinny: Operating costs for the first quarter, which include advertising and general, administrative and interest expenses, decreased 10%.
| REVENUE $000 | NET INCOME $000 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 12 months prior | Current quarter | Improvement (decline) | 12 months prior | Current quarter | Improvement (decline) | Info as of quarter ended | P/E (as of 6/18/02) | ||
| CONSUMER CATALOGERS | Blair Corp. | 133,055 | 135,261 | 2% | (232) | 5,601 | NM | 3/31/02 | 12.08 |
| Coldwater Creek | 138,992 | 116,601 | (16%) | 772 | (2,451) | NM | 3/2/02 | 114.65 | |
| Concepts Direct | 12,092 | 13,933 | 15% | (1,166) | (2,087) | NM | 3/31/02 | N/A | |
| Delia’s | 36,231 | 28,770 | (21%) | (8,299) | 11,114 | NM | 5/4/02 | N/A | |
| Geerlings & Wade | 7,153 | 7,364 | 3% | (174) | (741) | NM | 3/31/02 | N/A | |
| Hanover Direct | 144,294 | 109,511 | (24%) | (7,642) | (1,810) | NM | 3/30/02 | N/A | |
| J. Jill Group | 63,332 | 73,357 | 16% | 796 | 2,696 | 239% | 3/30/02 | 29.39 | |
| Lands’ End | 311,120 | 341,175 | 10% | 5,858 | 16,496 | 182% | 5/3/02 | 24.12 | |
| Lillian Vernon Corp. | 95,159 | 96,091 | 1% | (2,877) | (4,343) | NM | 2/23/02 | N/A | |
| CATALOGER/RETAILERS | Brookstone | 54,997 | 56,633 | 3% | (5,193) | (6,519) | NM | 5/4/02 | 35.55 |
| J.C. Penney Co. | 7,522,000 | 7,728,000 | 3% | 41,000 | 86,000 | 110% | 4/27/02 | 48.85 | |
| Jos. A. Bank | 47,406 | 55,760 | 18% | 506 | 1,731 | 242% | 5/4/02 | 14.30 | |
| Sharper Image | 69,759 | 92,836 | 33% | (2,756) | (260) | NM | 4/30/02 | 64.00 | |
| Talbots | 401,072 | 391,328 | (2%) | 40,113 | 34,983 | (13%) | 5/4/02 | 19.97 | |
| Williams-Sonoma | 417,572 | 478,379 | 15% | 492 | 15,353 | 3,021% | 5/5/02 | 77.51 | |
| MARKET INDICES | Dow Jones Industrial Average | 25.69 | |||||||
| Standard & Poor’s 500 Index | 40.8 | ||||||||
| Notes: Price-to-earnings ratios are from various sources NM = not meaningful NA = not available Source: Tulley & Holland |
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