Cautious Optimism

For most of us, “back to school” evokes memories of blackboards, football games, and fresh, pristine notebooks. For consumer marketers, it also heralds the unofficial start of the fourth quarter, the make-or-break quarter for most of them.

As L.L. Bean spokesperson Rich Donaldson says, “The back-to-school season is a great harbinger of fall demand.” Judging from the back-to-school results of most catalogers contacted by Catalog Age, marketers have cause for cautious optimism.

For instance, August back-to-school sales at $900.0 million Freeport, ME-based L.L. Bean increased 7% on flat circulation, says Donaldson. Bean’s book packs — which range in price from $15 to $89 — sold so well that during one sales spike the apparel and outdoor gear cataloger was selling a book pack every three seconds.

At Plano, TX-based general merchandiser J.C. Penney Co., catalog/Internet sales for the four weeks ended Aug. 28 totaled $194 million, up 6% from the previous August. And Indianapolis-based The Finish Line, which sells name-brand athletic footwear and apparel, reported a 15% rise in total sales, to $312.2 million from $270.8 million last year. The company said that Internet sales, which were included as part of comparable store sales for the first time this year, added a percentage point to its 6% comp store sales increase.

Clothes call

Apparel has long been one of the biggest product categories for back-to-school. To take advantage of that, four-year-old Ontario, CA-based cataloger/retailer Active Mailorder increased the circulation of its fall catalog of clothing and accessories for male teens 25%, to 405,000. The company this season also launched a spin-off of apparel for females, Girls Active Mailorder, of which it mailed 30,000 copies beginning in mid-July. All told, the company’s back-to-school sales increased 15% from last year.

Portland, OR-based Hanna Andersson specializes in apparel for a younger audience: babies, toddlers, and preteens. The cataloger also enjoyed an increase in back-to-school revenue, though “parents are buying closer to need,” says president Phil Iosca. More parents are buying their children’s school clothes in late August or early September rather than in midsummer, he says.

For that reason, Hanna mailed its fall book the last week of August. “We like to mail it, generally, a week before Labor Day. That way kids can see what others are wearing and decide what they want to buy,” Iosca says. Although the company was still tallying its back-to-school sales as of early September, he expects revenue to be up in the high single digits on flat circulation.

As its name indicates, Broomfield, CO-based eBags sells bags — purses, backpacks, suitcases, and everything in between. Its back-to-school sales rose 40% this year on flat circulation, says Peter Cobb, cofounder/ vice president of merchandising and marketing. He credits search engine optimization and affiliate marketing for much of the increase. The most popular products have been messenger flap-over bags and backpacks for laptops. For example, eBags sells a Daytripper backpack — complete with room for a CD/MP3 player — for $49.99.

Computers, calculators, and crayons

The popularity of items to tote and store computers and other electronics gear goes hand in hand with increased spending on the electronics themselves. At consumer electronics cataloger Crutchfield Corp., Apple’s iPod, a portable player of stored musical files, is “the hottest thing since fire,” says senior director of merchandising David Weisman. Charlottesville, VA-based Crutchfield also saw brisk sales of digital cameras, perhaps because it offered a free memory card with each digital camera purchase.

Crutchfield’s sales were up in the double digits despite a 15% slash in circulation. The circ cut, says Michele Rick, director of catalog marketing and advertising, is part of the company’s changing contact strategy. Crutchfield will mail more catalogs in the fourth quarter this year than it did last year, but annual circulation will be less than that of 2003. The company is benefiting from a more productive e-mail marketing program, Rick says, thanks in part to better targeting among its e-house file.

Printers, routers, and calculators were among the electronics products featured on the back-to-school section of Staples.com. Framingham, MA-based office products cataloger/retailer Staples started its back-to-school promotional push in late summer with television commercials encouraging parents and children to visit its Website and more than 1,500 stores. Back-to-school Web sales for the $3.7 billion company were up 10%-20% from last year, according to Peter Howard, vice president of marketing for Staples Business Delivery. Overall Staples.com Web traffic soared 40%.

Staples.com’s Back to School Center sorted school products by grade levels. The company also encouraged teachers to register their school-supply lists on the Website. Parents could then log on before school started to find out exactly what products the teachers would be requiring their students to have before school started — and ideally they’d buy the products from Staples. “We focus on making it easier for customers with an all-inclusive, one-stop shop for back-to-school,” says Howard.

Hold the applause

The back-to-school business is “just about right on plan,” reports Mike Hayden, senior vice president of brokerage for Peterborough, NH-based list firm Millard Group. By that he means single-digit sales gains based on single-digit circulation increases — not quite a stellar performance, especially given last year’s lackluster sales.

“We did see some weakness in June and July from quite a few mailers,” Hayden says. “Some plans were conservative based on where things were last year, which was fairly soft. But they did better during the late July-August time frame.”

Alexandria, IN-based RAM Graphics, which mails cheerleading catalog SpiritWear, has experienced flat back-to-school sales. The company, whose 15 titles include the USMC Devil Dog catalog of Marine Corp.-related items, drops 80,000 copies of the SpiritWear book once a year. It also mails 3,000-6,000 copies every 60 days to cheerleaders, coaches, and gymnastic centers.

The flat sales, says sales manager Rachel Robinson, are primarily because the funding of cheerleading outfits and accessories — the majority of which used to be purchased by the school athletic departments — has increasingly fallen to the parents. “We might get a purchase order from an athletic director, but a lot of the equipment [purchasing] has now shifted to the parents,” she explains. “And with everything else parents have to buy for back-to-school, the parents are conservative in what they buy.” That has led to a drop in the average order size, to about $50 from about $70 last year. — Additional reporting by Heather Retzlaff and Paul Miller

How Retailers Fared

The back-to-school season means intense pressure for publicly traded consumer marketers. Here’s how a handful of them performed in August.
Company Sales for August 2004 Sales for August 2003 % change
Abercrombie & Fitch $212.1 million $190.4 million 11%
American Eagle Outfitters $208.4 million $155.6 million 34%
Children’s Place $86.5 million $66.7 million 30%
Federated Department Stores $1.047 billion $1.077 billion (3%)
Gap $1.23 billion $1.22 billion 1%
Pacific Sunwear $155.2 million $136.7 million 14%
Sears, Roebuck & Co. $1.9 billion $2.1 billion (6%)
Wal-Mart $14.3 billion $13.4 billion 7%
Wet Seal $39.5 million $48.4 million (18%)

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