The third quarter of 2004 was strong for most of the publicly traded consumer merchants tracked by Catalog Age. All but two of the 15 companies, or 87%, showed increases in year-over-year sales, up slightly from 81% the previous third quarter.
What’s more, 67% of the marketers showed bottom-line improvements. That’s up from the third quarter of the previous year, when half of the mailers tracked had seen year-over-year declines.
The strong sales growth and the somewhat less significant profitability improvements reflect increased marketing efforts and higher marketing costs, says Jim Adams, managing director of Wellesley, MA-based investment bank Tully & Holland, which tracks the companies for Catalog Age. “Marketers were aggressive and pushing their product through additional catalog mailings or Web enhancements,” he says.
1-800-Flowers.com stems its losses
Quarter ended: Sept. 26 The facts: Westbury, NY-based 1-800 Flowers.com, whose catalogs include country products title Plow & Hearth, toys catalog HearthSong, and food gifts book Popcorn Factory, reduced its net loss on slightly higher sales. Total revenue increased 2%, to $97.5 million. Online revenue grew 9%, to $53.1 million. Telephone sales tumbled 7%, however, to $37.6 million. On the other side of the ledger, the company managed to chop its net loss 47%, to $2.7 million. The skinny: The bottom-line reduction included a $2.0 million income tax benefit recorded during the quarter, which artificially inflated earnings.
Operating profit rises at J.C. Penney
Quarter ended: Oct. 30 The facts: Plano, TX-based cataloger/retailer J.C. Penney’s 86% jump in quarterly earnings included $47 million in one-time charges associated with early debt retirements. Third-quarter operating profit increased 66%, to $346 million. Combined net sales for Penney’s department stores and catalog/Internet segment increased 3%, to $4.46 billion, while catalog/Internet sales rose 4%. Comparable department store sales increased 3%. The skinny: The general merchandiser ended the quarter with $14.9 billion in assets — down 22% from the previous third quarter. But that’s because it had carried some $7.0 billion in “discontinued operations” in 2003.
Bearish quarter for Vermont Teddy Bear
Quarter ended: Sept. 30 The facts: Shelburne, VT-based Vermont Teddy Bear Co. reported a 23% increase in net revenue, to $6.1 million, thanks primarily to a $1.5 million increase from its Calyx & Corolla fresh-flowers title. Revenue from the PajamaGram and TastyGram gift brands also increased, though corporate/wholesale revenue and retail sales declined. Nonetheless, the gifts merchant was able to whittle down its net loss 12%, to $173,000, The skinny: During the quarter, Vermont Teddy Bear added 60,400 sq. ft. to its Shelburne, VT, distribution center.
Williams Sonoma keeps cooking
Quarter ended: Oct. 31 The facts: San Francisco-based multichannel merchant Williams-Sonoma — whose properties include the Pottery Barn titles, Hold Everything, West Elm, and Williams-Sonoma Home — posted a 19% net earnings increase, to $28.5 million. Third-quarter net revenue, including shipping fees, increased 14%, to $722.8 million. Direct-to-customer net sales increased 18%, to $281.5 million, and Web sales rose 44%, to $118.3 million. The skinny: Despite the strong results it reported for the first nine months of 2004, the company pulled back some on reporting guidance for the remainder of the year, projecting direct-to-customer net sales in the range of $1.152 billion-$1.162 billion, compared with previous guidance of $1.155 billion-$1.170 billion.
|Company||3Q REVENUE||3Q NET INCOME (LOSS)|
|12 months prior||Current quarter||Increase (decrease)||12 months prior||Current quarter||Increase (decrease)|
|J.C. Penney Co.||4,332,000||4,461,000||3%||80,000||149,000||86%|
|J. Jill Group||82,325||94,933||15%||(2,851)||(2,608)||9%|
|Jos. A. Bank||72,011||82,634||15%||2,863||3,414||19%|
|Sharper Image Corp.||128,121||153,623||20%||985||(3,336)||NM|
|The Sportsman’s Guide||41,213||56,554||37%||710||1,069||51%|
|Vermont Teddy Bear Co.||4,980||6,138||23%||(138)||(122)||12%|
|Notes: Price-to-earnings ratios are from various sources||NM = not meaningful||Source: Tully & Holland|