Second Quarter Stinks for Consumer Mailers: Financials for Consumer Merchants

For Most of the Publicly Traded Consumer Merchants tracked by Multichannel Merchant, the second quarter was one to forget, with scarce exceptions.

Stuart Rose, managing director for Tully & Holland, the Wellesley, MA-based investment bank that tracks marketers for Multichannel Merchant, notes that “half the companies saw sales decreases, albeit single-digit declines.”

Earnings, however, were slammed, Rose notes. Five firms saw large profit decreases of 29% or more (including Talbots, which saw its loss widen). Sport Supply Group saw a swing to profitability, Jos. A. Bank saw a modest increase in profits, and Gaiam saw a narrower loss and came close to breakeven. “The business climate is clearly affecting these retail brands,” he says. “I can hardly wait for the third quarter results.”

Sonoma results slide

Quarter ended: Aug. 3 The facts: Williams-Sonoma’s direct-to-consumer sales fell 4.3%, to $356.4 million in the second quarter. Same-store sales sank 14%. Net revenue for the quarter decreased 5%, to $819.6 million, compared to $859.4 million for the 13-week second quarter of fiscal year 2007. But Internet revenue rose 11.7%, to $265.1 million, compared to? $237.4 million in second quarter of 2007. Net income fell 29%, to $18.4 million, compared to $26.0 million in the second quarter last year. The skinny: The company’s reaction to its performance “has been to scale back the size of its books by 30% and the circulation by 25%,” Rose says. Net income numbers put chill in Coldwater

Quarter ended: Aug. 3 The facts: Net sales for women’s apparel cataloger/retailer Coldwater Creek slipped 5%, to $241.4 million, compared to $253.5 million in the second quarter of 2007. Worse yet, net income for the period fell 64% to $3.1 million, compared with $8.7 million for 2007. Retail segment sales were $189.4 million vs. $177.7 million in the fiscal 2007 second quarter. Comparable store sales declined 13.7% in the second quarter compared to the same period of fiscal 2007. Direct sales (phone and Internet) were $52.1 million, compared to $75.8 million in the same period last year. The skinny: The women’s apparel market’s abysmal outlook has prompted Coldwater Creek to aggressively cut inventory per square foot by 24%, Rose says. The company also reduced promotional transactions from 44% to 15% of transactions.

Bank a second-quarter bright spot

Quarter ended: Aug. 4 The facts: Men’s apparel cataloger/retailer Jos. A. Bank Clothiers recorded a 10.2% increase in second-quarter catalog and Internet sales. Total revenue rose 14%, to $152.7 million for the three months ended Aug. 4, up from $134.3 million a year ago. Net income climbed 8%, to $8.8 million from $8.2 million last year. The skinny: The grim economy may be good for Bank. Not only has Jos. A. Bank been performing well in a tough market, the company hopes to add about 150 stores to its 444-store base in the next three to four years.

Source: Tully & Holland

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