Financial Reports: Cabela’s, J. Jill

Direct Revenue Flat for Cabela’s
Although outdoor sporting gear merchant Cabela’s (NYSE: CAB) grew its third-quarter sales 12%, the Sidney, NE-based company reported a slight decline in net income.

For the three months ended Oct. 1, Cabela’s netted $16.3 million on sales of $429.8 million. For the comparable quarter of 2004, it had posted net income of $16.5 million on sales of $383.8 million. Direct revenue was flat at $220.2 million. Total retail revenue increased 23%, to $173.0 million, but same store sales fell 9%. The company blamed higher fuel prices, the recent hurricanes, and additional store preopening expenses for its lackluster results.

Jill’s Loss Widens
Gordon Cooke, president/CEO of Quincy, MA-based J. Jill Group (Nasdaq: JILL), didn’t mince words in describing the company’s third-quarter results. “Our overall business continues to be disappointing,” he said in a statement

Net sales for the women’s apparel merchant increased 9%, to $103.0 million for the three months ended Sept. 24, compared with $94.9 million reported in year. But that increase was primarily a result of additional store openings. While retail net sales per weighted average square foot increased 5%, as did comparable store sales, direct sales fell 12%, to $37.2 million.

“Our year-to-date sales productivity per 1,000 sq. in. circulated is virtually unchanged from last year despite circulation reductions in excess of 20%,” Cooke said. “Simply put, our modest top-line growth is insufficient to support desired levels of profitability–the increases in costs associated with supporting a larger infrastructure are currently outpacing our sales growth. This situation is being further exacerbated by the fact that our less profitable retail business is growing while our more profitable direct business is declining.”

J. Jill generated an operating loss for the quarter totaling $4.9 million, compared with a $4.4 million operating loss for the third quarter of last year. The net loss for the quarter of $2.7 million, equal to last year’s.

“Unfortunately our merchandising transition is taking longer than we previously expected,” Cooke said, “but as difficult as our current business is I believe that it is very important for us to stay the course. Consequently, we remain focused on improving the profitability of our retail segment by driving better sales productivity while we take steps to stabilize our direct business. Although we are undertaking many initiatives throughout the organization to get our results back on track, the single most important factor in attaining our goals is delivering an improved merchandise assortment tailored to each business.”

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