On the surface, the third quarter of 2002 was a hale and hardy one for consumer catalogers. Of the 15 publicly traded catalogers and cataloger/retailers tracked by investment back Tully & Holland for Catalog Age, 73% had improved their bottom line. What’s more, 53% posted gains in net sales from the previous third quarter.
But bear in mind just how dismal the third quarter of 2001 had been: only 47% had increased their net income or reduced their net loss, and only 41% had increased revenue.
The cataloger/retailers saw most of the quarter’s growth, says Jim Adams, managing director at Wellesley, MA-based Tully & Holland. At those that rely primarily, if not exclusively, on catalog sales, “bottom-line improvements from Blair, Geerlings & Wade, Hanover Direct, and Successories have come as a result of circulation cutbacks, as each had sales declines,” he notes.
CATALOG AGE’S SPOTLIGHT ON THIRD-QUARTER FINANCIALS
Stores lead sales growth at J. Jill
Quarter ended: Sept. 28
The numbers: Women’s apparel marketer J. Jill Group enjoyed a 22% increase in third-quarter sales and a 31% rise in net income for the three months ended Sept. 28. The company reported net income of $3.6 million on sales of $80.0 million. For the third quarter of fiscal 2001, J. Jill had netted $2.8 million on $65.8 million in revenue. Retail accounted for most of the growth: Catalog and Web sales increased a modest 5%, to $50.4 million from $47.8 million the previous year, due to higher circulation. Retail sales increased 64%, to $29.8 million from $18.2 million, primarily from new store openings.
The skinny: During the quarter, J. Jill incurred a $1 million one-time charge for costs related to a potential strategic acquisition that it abandoned. The company would not divulge details.
Circulation cuts trim Brookstone’s 3Q loss
Quarter ended: Nov. 2
The numbers: Nashua, NH-based cataloger/retailer Brookstone, which mails the Brookstone, Hard-to-Find Tools, and Gardeners Eden titles, posted a net loss of $6.7 million. But that’s actually good news: For the third quarter of 2001, Brookstone had lost $9.0 million. Total third-quarter sales increased 7%, to $62.8 million from $58.5 million last year. Catalog and Internet sales fell 7%, however, to $12.5 million. Same-store sales increased 7%.
The skinny: The 7% decline in direct sales looks good, given that Brookstone cut its catalog circulation 24%.
Blair shakes off the red ink
Quarter ended: Sept. 30
The numbers: Though net sales dropped 4%, Warren, PA-based Blair Corp. ended the third quarter in the black. Net income totaled $279,386, compared with a net loss of $3.3 million for the third quarter of 2001. Sales fell to $117.8 million from $123.0 million a year ago. The apparel and home goods cataloger attributes the improved bottom line to a significant reduction in the cost of goods sold, resulting in part from lower inventory liquidation costs.
The skinny: Blair lowered its advertising, general, and administrative costs and interest expenses 5% for the quarter.
Bottom-line surges at Penney
Quarter ended: Oct. 26
The numbers: Third-quarter catalog sales at general merchandiser J.C. Penney Co. were down 21% — but so what? The big news is that net income for the quarter shot up 297%, to $123 million from $31 million a year earlier. Total sales for the quarter rose 2%, to $7.87 billion. Combined revenue from the Penney catalog, Website, and department stores fell 1%, to $4.3 billion from $4.4 billion. (Penney also owns the Eckerd drugstore chain.) But comparable store sales rose 4%.
The skinny: Penney says its department stores and catalog gross margin increased by 130 basis points as a percent of sales. Improved gross margin is principally the result of the effects of centralization and catalog inventory management.
Tasty quarter for Williams-Sonoma
Quarter ended: Nov. 3
The numbers: Cataloger/retailer Williams-Sonoma, whose titles include Pottery Barn, Hold Everything, Chambers, and West Elm, has plenty to brag about. Its third-quarter net earnings jumped 293% while net revenue, including shipping fees, increased 14%. All told, Williams-Sonoma netted $15.1 million on revenue of $527.9 million. Catalog and Internet sales increased 7%, to $187.7 million from $176.2 million last year. The company attributes its strong show to growth in the Pottery Barn, Williams-Sonoma, and Pottery Barn Kids brands and incremental sales from the West Elm catalog, which launched in the first quarter of 2002.
The skinny: The impressive results come despite a decline in sales from its Hold Everything brand. The San Francisco-based company attributes the dip to introductory discounts given to customers who signed up for Hold Everything’s new private-label credit card.
Talbots catalog sales slip 9%
Quarter ended: Nov. 2
The numbers: Third-quarter sales at Hingham, MA-based apparel cataloger/retailer The Talbots increased just 2%, to $401.8 million from $394.0 million last year. Net income increased a scant 2% as well, to $37.4 million. Catalog sales decreased 9%, to $62.1 million from $68.2 million last year. Retail store sales increased 4%, to $339.7 million, but comparable store sales decreased 3%.
The skinny: A recent company study showed that “purchases by less frequent customers dropped off significantly” as part of the overall softer retail climate, says spokesperson Margery Myers.
|REVENUE $000||NET INCOME (LOSS) $000|
|12 months prior||Current quarter||Improvement (decline)||12 months prior||Current quarter||Improvement (decline)||Info as of quarter ended||P/E (as of 12/11/02)|
|CONSUMER CATALOGERS||Blair Corp.||$123,019||$117,830||(4%)||($3,314)||$279||NM||9/30/02||9.39|
|Geerlings & Wade||6,901||6,033||(13%)||(293)||1||NM||9/30/02||N/A|
|J. Jill Group||65,808||80,012||22%||2,755||3,621||31%||9/28/02||14.16|
|Lillian Vernon Corp.||36,828||36,056||(2%)||(3,428)||(6,080)||(77%)||8/24/02||N/A|
|J.C. Penney Co.||7,729,000||7,872,000||2%||31,000||123,000||297%||10/26/02||26.25|
|Jos. A. Bank||50,243||57,866||15%||1,316||1,864||42%||11/2/02||16.90|
|Sharper Image Corp.||77,004||106,109||38%||(3,815)||(493)||87%||10/31/02||22.97|
|MARKET INDICES||Dow Jones Industrial Average||21.93|
|Standard & Poor’s 500 Index||29.32|
|Notes: Price-to-earnings ratios are from various sources
NM = not meaningful
NA = not available
|Source: Tully & Holland|