Financial Reports: United Stationers, Blair Corp.

United Stationers Grows Annual Income 32%
Fourth-quarter sales for Des Plaines, IL-based office supplies merchant United Stationers rose nearly 4%, to $1.11 billion for the three months ended Dec. 31, compared with $1.07 billion the previous year. Net income soared 43%, to $33.6 million from $23.5 million.

For fiscal 2006, United Stationers recorded sales of $4.5 billion, a 6% rise from $4.3 billionfor 2005. Net income received a 32% boost, to $132.2 million, up from $97.5 million. CEO Richard W. Gochnauer said the company made “considerable progress” in many areas: “A workforce reduction was the first step in lowering our cost structure. We now are shifting our focus to process improvement activities that will help us increase efficiency throughout the business and improve customer satisfaction. Our goal is to remove $100 million in annual costs within five years. These actions will support United’s long-term financial objective of achieving 12%-15% annual growth in earnings per share.”

Blair’s Income Plunges
Fourth-quarter net sales for apparel and home goods cataloger Blair Corp. fell 8%, to $119.2 million for the three months ended Dec. 31. The company attributed the decline to a 4.5% decrease in average selling prices along with a 4.1% reduction in unit volume.

Making matters worse, fourth-quarter net income sunk 75%, to $5.9 million from $23.4 million in 2005.

Net sales for the year slipped nearly 7%, to $426.4 million from $456.6 million for 2005. In 2006, officials said, “Blair’s merchandising program included an assortment that was not as balanced with the historical variety of fashions, styles, and price points that our customers were accustomed to expect. This imbalance reduced response rates and adversely impacted 2006 sales and profitability. 2006 sales were also adversely impacted by lower proprietary credit sales and the midyear termination of Blair’s traditional letter-mailing channel.”

Net income plunged to $216,000 from $31.5 million in fiscal 2005. Officials cited a 5.7% rise in advertising costs for much of the decline.

Warren, PA-based Blair’s e-commerce channel generated $19.9 million and $93.7 million in net sales for the fourth quarter and full year, respectively, compared with $21.9 million and $86.1 million for the fourth quarter and full year of 2005. Website traffic in 2006 increased nearly 19% over 2005, while Website conversion rates and average order values remained steady.

On Jan. 23, Appleseed’s Topco, a subsidiary of Golden Gate Capital, entered into a definitive agreement to buy Blair for $173.6 million. (See “Golden Gate Subsidiary to Buy Blair.”) Appleseed’s is a Beverly, MA-based cataloger/retailer of women’s apparel. The transaction is expected to close in the spring.

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