Fall Shortfalls

Nov 01, 1998 10:30 PM  By

The stock market has become a manic roller coaster ride. Wall Street firms have begun mass layoffs. The President could soon be impeached. And as of September, consumer confidence was down for the third month in a row, according to research group The Conference Board.

It’s little wonder, then, that “everyone I talk to in the consumer catalog business is crying the blues,” notes Peter Canzone, president/CEO of multititle apparel/home cataloger Brylane.

Indeed, with consumers distracted by stock market volatility and political scandal, many catalogers are reporting that fall sales are off to a painfully slow start.

“For the hard goods and gifts catalogers we surveyed in early October,” says Howard Kupfer, senior vice president of Hackensack, NJ, list firm Mokrynski & Associates, “60% were flat or below plan for fall; 40% were above.” Even worse, “about 70% of apparel mailers were flat or below projections.”

John Van Horn, president of the catalog division at printer World Color, says the slowdown in sales “started in mid-September, from what I hear.” General merchant J.C. Penney, for instance, reported a 5.9% drop in September catalog sales. The Plano, TX-based cataloger/retailer warned that its third- and fourth-quarter profits would be at the low end of analysts’ expectations.

At $476 million multititle cataloger Foster & Gallagher, “it’s a mixed bag,” says Dick Hodgson, a member of the Peoria, IL-based firm’s board and president of catalog consultancy Sargeant House. “One-half of the catalogs are above plan; half are below.”

The situation is similar at Brylane. “Sales are relatively flat overall, but it varies by business,” Canzone says. Roaman’s and King-Size [which sell specialty-size apparel] are best, at about 10% ahead of last year and 5%-6% above plan. But [specialty-size women's apparel book] Lane Bryant and [off-price women's clothing title] Chadwick’s are struggling.”

In fact, sales have been erratic not only from title to title but also from week to week. “Mailers are seeing softness for a week or two, then it picks up again,” says Michael Hayden, vice president of Peterborough, NH-based list firm Millard Group.

Charlie White, director of catalog marketing for Manchester, VT, outdoor goods and apparel marketer Orvis, which has also been suffering schizophrenic sales, feels that the unpredictability mimics that of the stock market. “The volatility tends to make people conservative relative to their own spending because their jobs can often be impacted.”

A few fall winners But the volatile market hasn’t affected all consumer mailers. The $50 million women’s apparel cataloger Lew Magram, for instance, is outperforming plan by about 20%, says Warren Golden, executive vice president/COO for parent firm Diplomat Corp. Fall sales at $40 million Brownstone Studio, another Diplomat apparel title, are also up about 5%.

Gift book Charles Keath, one of three titles owned by Boca Raton, FL-based The Mark Group, is “almost 20% ahead of plan,” says vice president of marketing/creative director Skip Hartzell. Sales for the company’s apparel books, Mark, Fore & Strike and Boston Proper, are within plan.

For Seattle cooking tools marketer Sur La Table, fall sales are 16% ahead of last year, despite flat circulation, says vice president/general manager Carol Couture. And replicas cataloger Design Toscano has seen fall sales rise 5%-10%, says president/ owner Michael Stopka. Then again, the $20.2 million Arlington Heights, IL-based company had hoped for a 15%-20% boost in sales, he adds, given that pages went from 80 to 88.

Many are clutching to the hope that the holiday will still be profitable. “Hopefully, things will settle down, and everyone will feel good about the economy,” says Mike Smith, president/CEO of $1.26 billion Lands’ End, whose core apparel catalog has been struggling in recent months.

But if the financial turmoil continues, catalogers that have survived an economic downturn know the drill. “Keep your inventory clean, watch your costs, correct what you need to, and don’t panic,” says Brylane’s Canzone.