Financial Reports: Penney, Systemax, Federated, Hanover, Tiffany, and More

NBTY Sales Increased 12%, Income Drops 19%

Bohemia, NY—Despite a healthy increase in annual sales, nutritional supplements manufacturer/marketer NBTY saw net income decline 19%. For the year ended Sept. 30, NBTY reported net sales of $807 million, up 12% from $721 million the previous fiscal year. But net income was $42 million, cown from $52 million a year ago.

Annual sales within the direct response/e-commerce division, which includes the Puritan’s Pride catalog, fell 6%, to $172 million. Operations were affected by a backlog of orders not shipped by the end of the fourth quarter due to the Sept. 11 attacks. The recently acquired NatureSmart mail order operation has been fully integrated into the Puritan’s Pride operation.

Higher Operating Margins Offset Sales Declines at Penney Plano, TX–-Cataloger/retailer J.C. Penney (NYSE:JCP) turned around last year’s third-quarter loss. For the three months ended Oct. 27, the general merchant post net income of $31 million, a vast improvement from the $30 million net loss Penney suffered for the third quarter of 2000.

Total sales, including those from its Eckerd drugstore chain, were $7.73 billion, up 3% from $7.54 billion a year ago. Sales from the Penney stores and catalog decreased 1%, however, to $4.36 billion from $4.40 billion last year. Catalog sales alone dropped 18%, but the company said that the catalog nonetheless contributed to the operating profit improvement. Comparable store sales increased 5%, with most merchandise categories having sales gains. Penney was heartened by what it called “strong consumer response” to back-to-school and fall merchandise offerings combined with improved inventory productivity.

Systemax Turns a 3Q Profit Port Washington, NY—Computer, industrial, and office supplies manufacturer/marketer Systemax (NYSE:SYX) saw its third-quarter sales drop 10%. Nonetheless, the company rid itself of the red ink from last year’s third quarter. For the three months ended Sept. 30, Systemax earned $257,000 on sales of $370.6 million. For the third quarter of 2000, it had posted a net loss of $14.2 million on revenue of $409.8 million.

Fingerhut Downsizing Puts Division in the Black New York—In keeping with its downscaling of its Fingerhut Cos. business, parent company Federated Department Stores reported that Fingerhut’s third-quarter sales declined 27%, from $413 million last year to $300 million for the 13 weeks ended Nov. 3. But Fingerhut, which includes the Arizona Mail Order, Bedford Fair, and Lew Magram catalogs, posted operating income of $8,000—a turnaround from an operating loss of $109,000 a year ago.

Federated’s total net sales for the quarter were $3.78 billion, down 10% from $4.20 billion last year. Total net income was $126 million, up substantially from a net loss of $591 million for the third quarter of last year. Federated’s properties include cataloger/retailers Bloomingdale’s and Macy’s.

Williams-Sonoma Net Up 70%, Catalog Sales Flat San Francisco—Home decor and kitchenware cataloger/retailer Williams-Sonoma (NYSE: WSM), whose brands include Pottery Barn, Hold Everything, and Chambers, posted a 70% rise in net earnings for its fiscal third quarter. For the three months ended Oct. 28, earnings were $3.9 million, compared to $2.3 million last year. Net revenue grew 9%, to $462.1 million from $424.6 million last year.

Direct-to-consumer sales, which include catalog revenue, inched upward less than 1%, to $176.2 million, which Williams-Sonoma blamed on the events of Sept. 11. Growth in the Pottery Barn Kids brand barely offset the decreases in most of the other titles. Retail sales increased 15%, to $257.6 million, but comparable store sales fell 1%. Williams-Sonoma had 412 stores during the quarter, compared to 370 stores last year.

Hanover Direct Reduces Net Loss Weehawken, NJ—When is a third-quarter net loss of $6.8 million good news? When the previous year’s third-quarter net loss was $14.8 million. Such is the case for multititle mailer Hanover Direct (Amex: HNV). The cataloger reduced its net loss 54% despite—or maybe because of–a 16% drop in net revenue. For the three months ended Sept. 29, Hanover sales were $117.4 million, compared with $140.4 million for the third quarter of 2000.

The sales decline was due primarily to the sale during the past year of the Improvements catalog and the closure of the Domestications Kitchen & Garden, Kitchen & Home, and Turiya catalogs. Some of the decline, however, was also due to decreased demand within the Silhouettes catalog of apparel for plus-size women and the International Male men’s apparel title. Hanover’s other catalogs include Domestications, The Company Store, and Gump’s by Mail.

Tiffany Loses Some 3Q Sparkle New York—A 19% leap in catalog and Internet sales wasn’t enough to prevent cataloger/retailer Tiffany & Co. (NYSE: TIF) from posting a 10% drop in overall third-quarter revenue. For the three months ended Oct. 31, total net sales were $333.1 million, down from $372.1 million a year ago. Net earnings tumbled 34%, from $36.3 million a year ago to $24.0 million.

Retail sales within the U.S. fell 17%, to $152.1 million. Direct marketing sales, which includes the Business Sales division as well as the catalog and the Website, fell 3%, to $33.8 million, with corporate sales declining 20%. International retaill sales dropped 5%, to $147.2 million.

Sales Up, Loss Down at Sportsman’s Guide South St. Paul, MN—Good news all around for The Sportsman’s Guide (Nasdaq: SGDE). The outdoor gear cataloger not only enjoyed a 23% rise in third-quarter revenue, but it also slashed its net loss 82%. For the three months ended Sept. 30, Sportsman’s Guide posted a net loss of $124,000 on sales of $36.5 million. For the comparable quarter of 2000, it lost $692,000 on sales of $29.6 million. The company expects to return to profitability in the fourth quarter.

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