CONSUMER CATALOGS: `No discernible trend’

40% of mailers suffered sagging bottom lines – but 60% enjoyed growth

Results for the second quarter of 1999 were mixed for the publicly traded consumer catalogers and cataloger/retailers tracked by Catalog Age, with eight of the 20 companies – 40% – suffering from a drop in net income or a growth in their net loss.

Even on the sales side, “there was no discernible trend for the second quarter,” says Nick Holland of Boston-based investment bank Ulin & Holland. “Some catalogers’ sales slowed somewhat, but on the other hand, some apparel catalogers, such as Delia’s and J. Jill, managed to grow sales considerably during the quarter.”

This sales growth – more than 26% for Delia’s and nearly 32% for The J. Jill Group – came even though the second quarter is traditionally the slowest time of year for consumer mailers in terms of building sales. New titles and stores drove the sales jump at teen apparel marketer Delia’s, which the New York-based company said was partially offset by lower sales at the company’s TSI Soccer unit following last year’s boost from the 1998 World Cup season.

General merchandiser Spiegel also enjoyed sales gains during the quarter. Revenue at the Downers Grove, IL-based company, which includes Newport News and Eddie Bauer, was up 10%, to $752 million from $684 million. More impressive was its bottom-line turnaround: The general merchant posted net income of $16.5 million, compared to a net loss of $10.9 million last year. Spiegel attributed its strong showing to solid customer response to increased pages circulated for the Spiegel and Newport News books. Eddie Bauer catalog sales were down, however, following a decrease in pages circulated.

While nine of the 14 consumer catalogers increased their second-quarter revenue, five mailers saw sales drop from last year. But at least for all but one of the five, the declines were less than 10%.

Longmont, CO-based gifts cataloger Concepts Direct, which saw sales plummet 30% for the quarter, was the exception. The decrease in net revenue, from $15.9 million to $11.1 million, followed a 35% drop in the number of catalogs mailed. But while the circulation cuts were intended to reduce losses, response to Concept Direct’s prospect mailings in particular was weak, contributing to a 281% jump in the company’s second-quarter net loss, to $736,000 from $193,000.

Cataloger/retailers gain

The quarter was rosier for the cataloger/retailers tracked by Catalog Age: Every one of them enjoyed revenue growth, and only Hampstead, MD-based Jos. A. Bank suffered a drop in earnings. The men’s apparel marketer’s catalog sales were 16% higher than this time last year, but that was in response to a 16% bump in circulation. Total company sales rose only 5% for the quarter, to $44.2 million from $41.9 million. Meanwhile, the company posted a loss of $802,000 for the quarter, compared to net income of $597,000 last year, due an unsuccessful retail sales promotion in March.

Women’s apparel cataloger/retailer Talbots increased its total revenue almost 14%, to $305 million from $267.7 million. But the real story for the Hingham, MA-based company was on the earnings side. Net income skyrocketed to $3.8 million from $1.3 million during last year’s second quarter. “Our regular-priced business was very strong during the second quarter,” says spokeswoman Marjorie Myers. “Our catalog sales were up 27%, which speaks to our merchandise and catalog offerings.”

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