Consumer Catalogers: Ending the Year on a Down Note

Considering that most of the publicly traded consumer catalogers and cataloger/retailers tracked by Catalog Age do the bulk of their business in the final three months of the year, it’s not a good sign that just 31% of them had higher sales for the fourth quarter of 2001 than for the comparable period of 2000. In comparison, in 2000, 76% of the catalogers tracked enjoyed higher sales than they had the previous fourth quarter.

Given the slumping economy and the aftermath of Sept. 11, the lackluster results are no surprise. “A number of mailers had huge drops going out in September — some right on Sept. 11,” says Jim Adams, managing director of Wellesley, MA-based investment bank Tulley & Holland, which tracks the catalogs for Catalog Age.

But the recession that preceded the fall’s terrorist attacks may actually have helped many marketers ride out the quarter. A number of catalogers had reined in prospecting and cut other costs prior to September, leaving them in a somewhat better position to handle the sharp decline in consumer spending. In fact, 50% of the catalogers tracked ended the quarter with a stronger bottom line than they’d had the previous fourth quarter.

CATALOG AGE SPOTLIGHT ON FOURTH-QUARTER FINANCIALS

Sales and earnings take a tumble at Lillian Vernon

Quarter ended: Nov. 24

Circulation cuts led to a 16% decline in quarterly sales for Rye, NY-based multi-title gifts cataloger Lillian Vernon Corp. For the three months ended Nov. 24, sales were $87.0 million, compared with $104.1 million a year earlier. More troubling, net income was sliced nearly in half, to $2.6 million from $5.1 million.

The skinny: Lillian Vernon dropped its November catalogs later than it had the previous year, hoping to shift some of that revenue to its next quarter, which ended in late February. Stay tuned to see if the strategy worked.

Nesting trend benefits Williams-Sonoma

Quarter ended: Feb. 2

Consumer nesting — a renewed emphasis on hearth and home — fueled a 17% rise in net revenue at San Francisco-based cataloger/retailer Williams-Sonoma. Total sales for the company rose 17%, to $787.4 million from $673.2 million. In addition to the eponymous kitchen products brand, the company mails the home decor titles Pottery Barn, Pottery Barn Kids, Pottery Barn Bed & Bath, Hold Everything, and Chambers. Catalog and Web sales rose 6%, to $238.9 million from $226.0 million — despite reduced circulation for Hold Everything and Chambers.

More glad tidings: Fourth-quarter net income rose 58%, to $70.4 million from $44.5 million the previous year.

The skinny: Williams-Sonoma took more than $38.5 million in shipping fees from customers during the fourth quarter.

Credit woes drag down Spiegel

Quarter ended: Dec. 29

Private-label credit-card woes hampered general merchandiser Spiegel, which mails the Newport News, Eddie Bauer, and Spiegel catalogs. Earnings from continuing operations fell 19%, to $18.1 million from $22.4 million (before the cumulative effect of an accounting change) from the same period of 2000. Worse, the Downers Grove, IL-based company reported a total loss from discontinued operations of $396.3 million, compared to earnings from discontinued operations of $42.9 million the previous year. Revenue for the quarter declined 13%, to $1.01 billion from $1.16 billion, due to lower customer response.

The skinny: In boom times, interest from Spiegel’s private-label credit-card business filled company coffers. But with the economic downturn, rising default rates from the cards are proving costly.

Double-digit sales and profit growth for Lands’ End

Quarter ended: Feb. 1

Fourth-quarter income at Dodgeville, WI-based Lands’ End increased 44%, to $45.9 million from $31.8 million in 2000. Total sales climbed 11%, to $596.0 million from $538.6 million. A 17% increase in women’s apparel sales and a 7% increase in coed clothing helped the core business segment increase sales 11%, to $353 million, though men’s apparel sales for the quarter slipped 3%.

In the specialty business segment, Lands’ End Home sales grew 12%; Lands’ End Kids sales, 7%. International sales increased 9%, to $52 million, led by the German and U.K. businesses. Web sales ballooned 40%, to $120 million from $86 million. But sales for the Business Outfitters division, formerly Corporate Sales, were down 7%.

The skinny: Lands’ End’s impressive quarter capped a strong year in which net income skyrocketed 93%, to $66.9 million.

Northcountry crimps Coldwater Creek

Quarter ended: Dec. 1

Sandpoint, ID-based Coldwater Creek blamed lower-than-anticipated response to the apparel in its Northcountry fall catalog — and the tough economy — for its 78% plummet in fourth-quarter net income, to $1.6 million from $7.1 million. Total net sales increased 4%, however, to $141.7 million from $136.6 million.

The skinny: Sales from catalogs and the Web decreased less than 1%, to $124.6 million from $125.6 million — but Coldwater’s Web sales in and of themselves rose nearly 27%, to $45.3 million from $35.8 million. Net sales from its retail stores totaled $17.1 million, up from $11.0 million last year, largely due to new store openings.

FINANCIAL REPORT
REVENUE $000 NET INCOME $000
12 Months Prior Current Quarter Improvement (Decline) 12 Months Prior Current Quarter Improvement (Decline) Info as of Quarter Ended P/E (as of 3/18/02)
CONSUMER CATALOGERS Blair Corp. 172,285 160,533 (7%) 6,653 7,359 11% 12/31/01 15.85
Coldwater Creek 136,604 141,707 4% 7,064 1,578 (78%) 12/1/01 49.44
Concepts Direct 20,140 22,655 12% 3,727 344 (91%) 12/31/01 N/A
Delia’s 76,381 49,039 (36%) (17,805) 310 NM 2/2/02 N/A
Geerlings & Wade 12,009 10,772 (10%) 509 (910) NM 12/31/01 N/A
Hanover Direct 603,000 532,000 (12%) (80,800) (5,800) 1,293% 12/29/01 N/A
J. Jill Group 88,372 91,710 4% 6,693 7,015 5% 12/29/01 22.23
Lands’ End 538,557 596,006 11% 31,803 45,878 44% 2/1/02 20.71
Lillian Vernon Corp. 104,137 87,022 (16%) 5,122 2,584 (50%) 11/24/01 N/A
Spiegel 1,163,656 1,011,547 (13%) 65,367 (378,137) NM 12/29/01 N/A
CATALOGER/RETAILERS Brookstone 180,948 169,785 (6%) 25,222 22,273 (12%) 2/2/02 14.95
J.C. Penney Co. 9,573,000 9,542,000 0% (580,000) 95,000 NM 1/26/02 69.16
Jos. A. Bank 70,983 67,274 (5%) 2,925 4,408 51% 2/2/02 10.24
Sharper Image 176,727 166,639 (6%) 13,055 11,561 (11%) 1/31/02 166.70
Talbots 473,110 433,180 (8%) 33,022 32,514 (2%) 2/2/02 17.85
Williams-Sonoma 673,168 787,412 17% 44,541 70,409 58% 2/3/02 36.44
MARKET INDICES Dow Jones Industrial Average 28.67
Standard & Poor’s 500 Index 30.16
Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Tulley & Holland

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