CONSUMER CATALOGS: Fourth-quarter blues

Several big players suffer drop in holiday sales

As we all know, the fourth quarter, which includes Christmas, is the make-or-break season for consumer catalogers. So it’s somewhat disturbing that five of the 12 consumer mailers tracked by Catalog Age suffered fourth-quarter sales declines.

Cards and gifts marketer cataloger Concepts Direct, women’s apparel marketer J. Jill Group, and wigs and accessories mailer Specialty Catalog Corp. were among those that saw sales drop from the previous fourth quarter. And of those catalogers with sales gains, only Delia’s and Spiegel posted double-digit increases.

Yet according to New York-based investment bank Goldman Sachs, December retail sales were up 6.1% year-over-year, retail’s strongest growth since 1992. And the six cataloger/retailers tracked all enjoyed solid sales gains. So why did catalogers suffer?

“Some of these catalog companies cut back on circulation to their less profitable segments and devoted those resources to the Internet,” says Jim Adams, managing director of Boston-based investment firm Ulin & Holland. “Companies like Lands’ End and Damark cut circulation, which reduced sales, but it also helped their bottom lines.”

Indeed, following a 15% cut in circulation of its core catalog, fourth-quarter sales at Dodgeville, WI-based apparel marketer Lands’ End tumbled 17%, from $541.2 million to $449.6 million. But earnings climbed 10%, from $25.7 million to $28.3 million.

Sadly, there was no bottom-line payoff for Concepts Direct, whose catalogs include Linda Anderson and Colorful Images. The Longmont, CO-based company’s fourth-quarter revenue plunged 39%, to $20.7 million from $33.9 million, and it posted a net loss of $1.7 million, compared to income of $424,000 the previous fourth quarter. The net loss resulted from a $2.2 million write-off to reduce excess inventory.

Nor were the holidays merry for Hingham, MA-based J. Jill Group, which suffered a 10% drop in sales, to $61.2 million from $68.0 million. As for income, charges related to the folding of its $40 million Nicole Summers catalog contributed to a net loss of $1.5 million for the quarter, compared to net income of $2.8 million in ’98.

“Response for the core J. Jill catalog fell during the fall,” says Olga Conley, chief financial officer of the women’s apparel marketer. But during the year, the cataloger opened its first two stores – in Natick, MA, and Providence, RI – and launched its e-commerce site. It expects to open three more stores, in Chicago, Minneapolis, and Seattle, this spring.

Cataloger/retailers on a roll

On the whole, the cataloger/retailers fared better than their catalog counterparts. Hingham, MA-based cataloger/retailer The Talbots, buoyed by enthusiastic response to its classic-look women’s apparel, nearly doubled its net income from $8.1 million to $15.3 million. The company’s total net sales for the quarter rose 12%, to $375.6 million. Catalog sales rose a more modest 6%, to $54.7 million for the quarter.

At gadgets cataloger/retailer Brookstone, which mails The Brookstone Gifts Collection, Hard-to-Find Tools, and Gardeners Eden books, a 60% rise in catalog sales, to $25.2 million, and a 980% jump in its Internet sales, to $3.9 million, led the company to a 17% rise in overall revenue for the quarter. The Nashua, NH-based company attributes much of its strong performance to proprietary merchandise, which accounted for 60% of sales and has higher margins than its other products.

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