Financial Update: Third Quarter’s Not the Charm

Of the 17 publicly traded consumer catalogers and cataloger/retailers tracked by investment bank Ulin & Holland for Catalog Age, 59% suffered a decline in third-quarter revenue. On the earnings side, 59% posted a net loss. The primary reason, in two words: Sept. 11.

But the third-quarter results could have been far worse, contends Jim Adams, managing director of Boston-based Ulin & Holland. If not for previously implemented cost-cutting programs, “some catalogers could have been in dire straits after Sept. 11,” he says. In fact, while 53% of the companies tracked suffered a decline in net income or an increase in their net loss during this most recent third quarter, during the third quarter of 2000, nearly as many — 44% — of the catalogers had suffered the same bottom-line erosion.

CATALOG AGE SPOTLIGHT ON THIRD-QUARTER FINANCIALS

Blair Sees Red (Again)

Warren, PA-based apparel and home goods cataloger Blair Corp. more than quadrupled its third-quarter net loss, as the company put more items on sale to move excess inventory. Blair lost $3.3 million during the three months ended Sept. 30, compared with a loss of $773,477 the previous third quarter. Net sales increased 6%, to $123.0 million from $115.2 million the previous year.

The skinny: As part of its merchandise liquidation strategy, president/CEO/director John Zawacki says, Blair mailed 25% more catalogs — 42.4 million vs. 33.9 million — during the third quarter of 2001 than during the same quarter of 2000.

Delia’s Dramatically Narrows Loss

Teen apparel cataloger/retailer Delia’s slashed its third-quarter net loss from $42.7 million last year to less than $3.2 million for the three months ended Nov. 3. At the same time, the divestitures of noncore properties such as TSI Soccer and Storybook Heirlooms led to a 38% drop in net sales, to $32.5 million from $52.3 million the previous third quarter. Still, New York-based Delia’s core catalog/online/retail sales increased 19%, to $32.5 million from $27.4 million.

The skinny: Delia’s got whacked with $20.6 million in restructuring and one-time charges during the third quarter of 2000. With the restructuring and divestitures behind it, the company can now concentrate on its solid primary business.

Lands’ End Nearly Triples Its Earnings

Dodgeville, WI-based apparel and home goods giant Lands’ End hit one of the quarter’s high notes. For the three months ended Oct. 26, its net income exceeded $12.1 million, nearly triple the earnings of $4.4 million for the comparable quarter of 2000. Revenue totaled $376.1 million, up 4% from $362.3 million the previous year. Sales within the specialty segment, which includes the Lands’ End Corporate Sales catalog, also rose 4%, to $128 million for the quarter. International sales climbed 14%, to $32 million, while Internet sales jumped 32%, to $72 million. And sales from the core catalog business inched up 2%, to $188 million.

The skinny: Merchandise tinkering and inventory cuts helped the bellwether cataloger become leaner in the second half of the year.

Talbots Tightens Its Belt

Expense and inventory controls helped cataloger/retailer The Talbots increase its third-quarter net income 5% despite a 1% decline in total sales. For the three months ended Nov. 3, the Hingham, MA-based apparel marketer posted net income of $36.6 million on sales of $394.0 million. For the comparable period of 2000, net income had been $34.9 million on sales of $397.1 million.

The skinny: Catalog sales increased 4%, to $68.2 million from $65.8 million; alas, comparable store sales fell 8%.

Jos. A. Bank Sees Improvement on Both Sides of the Ledger…

The third quarter proved to be a good fit for men’s apparel cataloger/retailer Jos. A. Bank Clothiers. For the three months ended Nov. 3, the Hampstead, MD-based marketer reported net income of $1.3 million — more than triple the $407,000 it earned for the comparable period of 2000. At the same time, net sales rose 14%, to $50.2 million from $44.0 million.

The skinny: For the quarter, combined catalog and Internet sales rose 18%. Online sales are increasing as Jos. A. Bank continues to migrate customers to the Web from the catalog. The company reduced its catalog circulation, which it says enabled both its catalog and its Internet businesses to be profitable for the quarter.

…While Brookstone Suffers Both Top- and Bottom-Line Declines

Nashua, NH-based gadgets and gifts cataloger/retailer Brookstone, which mails The Brookstone Collection, Hard-to-Find Tools, and Gardeners Eden catalogs, reported a net loss of $9.0 million for the quarter ended Nov. 3, compared with a net loss of $4.9 million for the comparable period of last year. At the same time, third-quarter net sales decreased 8%, to $58.5 million from $63.8 million a year earlier. Same-store sales for the quarter decreased 17%.

The skinny: Michael Anthony, chairman/president/CEO of the Nashua, NH-based company, said in a statement that since the terrorist attacks, “sales have been below targeted levels and have had a negative impact on earnings.”

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
12/12/01)
CONSUMER CATALOGS Blair Corp. 115,183 123,019 7% (773) (3,314) (329%) 9/30/01 19.68
Coldwater Creek 86,309 92,848 8% 1,807 1,296 (28%) 9/1/01 19.81
Concepts Direct 11,391 11,248 (1%) (2,838) (856) 70% 9/30/01 N/A
Delia’s 52,332 32,503 (38%) (42,671) (3,151) NM 11/3/01 N/A
Geerlings & Wade 7,252 6,901 (5%) (210) (293) (40%) 9/30/01 N/A
Hanover Direct 140,381 117,431 (16%) (14,799) (6,806) 54% 9/29/01 N/A
J. Jill Group 57,852 65,808 14% 3,486 2,755 (21%) 9/29/01 16.22
Lands’ End 362,261 376,115 4% 4,443 12,140 173% 10/26/01 25.1
Lillian Vernon Corp. 45,824 36,828 (20%) (1,570) (3,428) (118%) 8/25/01 N/A
Spiegel 807,544 703,752 (13%) 13,471 (12,305) NM 9/29/01 13.89
Successories 13,098 9,882 (25%) 332 (1,771) NM 11/3/01 N/A
CATALOGER/RETAILERS Brookstone 63,817 58,522 (8%) (4,889) (8,987) (84%) 11/3/01 12.78
J.C. Penney Co. 7,538,000 7,729,000 3% (30,000) 31,000 NM 10/27/01 N/A
Jos. A. Bank Clothiers 43,992 50,243 14% 407 1,316 223% 11/3/01 9.34
Sharper Image 101,085 77,004 (24%) 3,105 (3,815) NM 10/31/01 77.41
The Talbots 397,144 393,966 (1%) 34,909 36,558 5% 11/3/01 16.48
Williams-Sonoma 424,572 462,096 9% 2,340 3,853 65% 10/28/01 44.32
MARKET INDICES Dow Jones Industrial Average 27.09
Standard & Poor’s 500 Index 39.37
Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Ulin & Holland

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