A Fallow First Quarter

Given the Obvious Economic Pressures, the first quarter was fairly weak for most of the publicly traded consumer merchants tracked by Multichannel Merchant. Revenue was down for four of the nine merchants tracked, while net income shrank for three of the companies.

As oil and energy costs continue to rise, companies have also dealt with increased shipping, occupancy and inventory costs, says Stuart Rose, managing director of Wellesley, MA-based investment bank Tully & Holland.

Bottom line way up at 1-800-Flowers.com

Quarter ended: March 30 The facts: Sales for 1-800-Flowers.com increased 3%, to $219.6 million, compared with $213.8 million for the same quarter last year. But the real news is the multititle mailer saw its net income jump 212%, to $3.3 million, up from $1.05 million last year. But Rose says the massive net income figure must be taken with a grain of salt. The company admits that the primary driver of growth was the Easter holiday falling during its third fiscal quarter, rather than during the fourth, as occurred in the prior year. The skinny: Rose says company officials have decided not to pursue direct-to-consumer business growth. Rather, they’ll focus on reducing operating expenses.

Not so shiny Penney

Quarter ended: May 3 The facts: First-quarter financial results for J.C. Penney Co. were a solid sign of the trying times. For the period ended May 3, the general merchant’s net sales fell 5.1%, to $4.12 billion, from $4.35 billion a year ago. What’s more, net income for the quarter sank nearly 50%, to $120 million, from $238 million for the same period last year. But Internet sales rose 8.7%. The retailer blames lower mall traffic, higher discounts to clear unsold merchandise, and tough economic conditions for the poor quarterly results. The skinny: J.C. Penney aims to reduce future merchandise commitments “in hopes of better balancing inventory with sales to improve margins and cut expenses,” Rose says.

Tough quarter for Williams-Sonoma

Quarter ended: May 4 The facts: Home decor and furnishings merchant Williams-Sonoma saw its first-quarter sales fall 4%, to $781.8 million, from $816.1 million last year. Retail sales decreased 4.4%, to $433.6 million, from $453.4 million last year. Direct sales slipped 4.0%, to $348.2 million, compared to $362.7 million last year, largely due to lower catalog sales. To top it off, net income plummeted 42%, to $10.4 million, compared to $18.1 million for the same quarter last year. Williams-Sonoma’s Internet revenue in the quarter increased 8.7%, to $251.5 million, up from $231.5 million last year. The skinny: “Williams-Sonoma had nothing short of a depressing first quarter,” Rose says, as home-goods retailers have been hit hard across the board as tighter credit and higher fuel and food costs have hampered consumer spending.

REVENUE NET INCOME (LOSS)
Company 12 months prior Current quarter Increase (decrease) 12 months prior Current quarter Increase (decrease)
($000) ($000)
1-800-Flowers.com 213,779 219,567 3% 1,053 3,290 212%
Coldwater Creek 281,292 271,105 (4%) 12,030 (9,240) NM
Sport Supply Group 63,235 65,821 4% 1,738 3,376 94%
Delia’s 57,807 63,537 10% -3,265 (3,949) NM
Gaiam 58,458 65,173 11% 1,752 2,213 26%
J.C. Penney Co. 4,350,000 4,127,000 (5%) 238,000 120,000 (50%)
Jos. A. Bank 129,533 145,404 12% 8,358 9,831 18%
Talbots 573,556 542,438 (5%) 5,240 1,642 (69%)
Williams-Sonoma 816,051 781,784 (4%) 18,150 10,447 (42%)
Source: Tully & Holland

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