Financial Update: Consumer Catalogers Seeing Red in the First Quarter

Consumer catalogers and cataloger/retailers took it on the chin in the first quarter. Of the 18 publicly traded companies tracked by Boston-based investment bank Ulin & Holland for Catalog Age, 13 or 72% posted a loss for the quarter or a decline in net income from the previous first quarter.

There’s no denying that the decline in consumer confidence and spending has hurt catalogers. But keep in mind that even during the first quarter of 2000, when the economy was thriving, 58% of the consumer catalogers and cataloger/retailers tracked were in the red or had suffered income declines. What’s more, while 28% of the companies reported a drop in first-quarter revenue this year, so had 26% of those tracked last year.

CATALOG AGE’S SPOTLIGHT ON FIRST-QUARTER FINANCIALS

Lands’ End Wins Most Improved’ Award

After reporting a modest net income of $292,000 for the first quarter of 2001, Dodgeville, WI-based Lands’ End has made quite a comeback. For its fiscal first quarter of 2002, the apparel and home goods cataloger posted net income of nearly $5.9 million. That’s a 1,906% improvement, making Lands’ End the “most improved” cataloger of the quarter. First-quarter revenue rose as well, albeit a less dramatic 9%, to $311.1 million from $285.8 million. Shifting the timing of a clearance catalog and adding another Kids catalog mailing accounted for about two-thirds of the sales growth.

The Skinny: Web sales shot up 40%, to $54 million.

One-Time Charge Sinks Blair

Lower-than-expected response in the face of the slowing economy led Warren, PA-based multititle general merchandiser Blair Corp. to post just a 2% growth in sales for the three months ended March 31. Sales totaled $133.1 million, compared with $130.1 million for the first quarter of 2000. At the same time, Blair was whacked with a one-time $2.5 million charge associated with the relocation of its returns operation. That charge, along with increased Web spending and costs related to its recently launched Scandia Woods catalog, contributed to its net loss of $231,946 for the quarter, compared with net income of $6.9 million the year prior.

The Skinny: Without the one-time charge, Blair would have netted $1.2 million in the quarter.

Double-Digit Income, Sales Growth for J. Jill

Quincy, MA-based women’s apparel cataloger/retailer J. Jill doesn’t seem to be feeling the economic pinch yet. Its first-quarter sales rose 30%, while net income grew 47%. For the three months ended March 31, J. Jill posted net income of $796,000 on sales of $63.3 million. For the first quarter of last year, net income was $541,000 on net sales of $48.6 million. Though the retail division enjoyed the largest growth, catalog and Internet sales rose nearly 11%, to $53.0 million.

The Skinny: Most, if not all, of J. Jill’s direct sales growth came from the Web; the company says catalog circulation and productivity per catalog mailed were about equal to last year’s.

Penney Down on Catalogs for the Quarter

Overall first-quarter sales for cataloger/retailer J.C. Penney fell less than 1%. But within the catalog division, the news was more gloomy: Sales plummeted nearly 12%. And in a statement, the Plano, TX-based general merchant said that it expects the division’s performance to weaken further. Nonetheless, Penney managed to turn around last year’s first-quarter loss, posting net income of $41 million for the three months ended April 28.

The Skinny: Penney’s Eckerd drugstore chain prevented the top-line figures from looking even worse; discounting Eckerd, sales from the Penney department stores and catalog fell 3%, to $4.06 billion from $4.20 billion.

Sales Up, but Earnings Way Down at Williams-Sonoma

A 14% rise in net revenue, to $417.6 million from $365.3 million, wasn’t enough to prevent damage to Williams-Sonoma’s bottom line. The San Francisco-based housewares and home decor cataloger/retailer posted just $500,000 in first-quarter net earnings, down from $4.8 million a year ago. The company attributed the losses to increased shipping charges and higher occupancy costs driven primarily by increased depreciation and property taxes for capital spending projects that were initiated after the first quarter of 2000.

The Skinny: Led by the Pottery Barn Kids catalog and the Williams-Sonoma and Pottery Barn Web divisions, direct-to-customer sales increased 14%, to $167.7 million.

Hanover Boosts Sales, Cuts Loss for 1Q

A 4% boost in circulation contributed to an 11% jump in first-quarter sales for multititle mailer Hanover Direct. For the quarter ended March 31, net revenue was $144.3 million, up from $130.1 million the previous year. The Weehawken, NJ-based cataloger also slashed its net loss 43%, to $7.6 million from $13.4 million last year.

The Skinny: Hanover’s Domestications, The Company Store, Improvements, and Silhouettes catalogs accounted for most of its sales growth. Nonetheless, Hanover sold Improvements to home shopping television network HSN in June to better concentrate on the home products niche.

FINANCIAL REPORT

REVENUE $000

NET INCOME $000

12 Months
Prior

Current
Quarter

Improvement
(Decline)

12 Months
Prior

Current
Quarter

Improvement
(Decline)

Info as of
Quarter Ended

P/E (as of
6/13/01)

CONSUMER CATALOGERS

Blair Corp.

130,064

133,055

2%

6,938

(232)

NM

3/31/01

9.10

Coldwater Creek

112,652

138,992

23%

5,968

772

(87%)

3/3/01

21.61

Concepts Direct

12,743

12,092

(5%)

(1,755)

(1,166)

34%

3/31/01

N/A

Delia’s

49,057

36,231

(26%)

(8,746)

(8,299)

5%

5/5/01

10.90

J. Jill Group

48,591

63,332

30%

541

796

47%

3/31/01

14.99

Geerlings & Wade

8,529

7,153

(16%)

(413)

(174)

58%

3/31/01

N/A

Hanover Direct

130,150

144,294

11%

(13,448)

(7,642)

43%

3/31/01

N/A

Lands’ End

285,840

311,120

9%

292

5,858

1,906%

4/27/01

28.11

Lillian Vernon Corp.

83,344

95,159

14%

881

(2,877)

NM

2/24/01

N/A

Specialty Catalog Corp.

16,075

16,542

3%

(39)

394

NM

3/31/01

9.86

Spiegel

770,371

749,551

(3%)

16,140

(12,242)

NM

3/31/01

31.41

Successories

12,319

11,086

(10%)

(361)

(1,562)

(333%)

5/5/01

N/A

CATALOGER/RETAILERS

Brookstone

51,077

54,997

8%

(4,990)

(5,193)

(4%)

5/5/01

9.20

J.C. Penney Co.

7,528,000

7,522,000

0%

(118,000)

41,000

NM

4/28/01

N/A

Jos. A. Bank

46,408

47,406

2%

1,081

506

(53%)

5/5/01

7.94

Sharper Image

60,862

69,759

15%

105

(2,756)

NM

4/30/01

11.07

Talbots

363,498

401,072

10%

32,653

40,113

23%

5/5/01

20.13

Williams-Sonoma

365,300

417,600

14%

4,800

500

(90%)

4/29/01

36.86

MARKET INDICES

Dow Jones Industrial Average

22.64

Standard & Poor’s 500 Index

26.57

Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Ulin & Holland

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