Fourth Quarter Financials: The Calm Before the Storm

Amid the Sturm und Drang of the first quarter of 2001, it’s easy to forget that for most catalogers, the fourth quarter of 2000 was a success. Among the 17 publicly traded catalogers and cataloger/retailers tracked by Boston-based investment bank Ulin & Holland for Catalog Age, all but three ended the quarter in the black.

And while three of the 11 consumer mailers suffered a drop in sales from the previous fourth quarter, the majority enjoyed revenue gains of more than 10%. As for the six cataloger/retailers, only Plano, TX-based general merchant J.C. Penney saw sales drop off.

CATALOG AGE’S SPOTLIGHT ON FOURTH-QUARTER FINANCIALS

Delia’s Restructures, Red Ink Flows

The Numbers:

Charges related to the merger of Delia’s with its former Internet spin-off iTurf ratcheted up the losses for the teen apparel marketer. New York-based Delia’s posted a net loss of $17.8 million, compared to a $1.8 million loss for the fourth quarter ’99. On the bright side, sales rose 12%, from $67.5 million to $76.4 million.

The Skinny:

The song says “Breaking up is hard to do.” But at least in the short run, getting back together isn’t that much easier — nor is it inexpensive.

Jos. A. Bank’s Web Cannibalizes Its Catalog

The Numbers:

The good news: Internet sales for men’s apparel marketer Jos. A. Bank increased 188%. The not-so-good news: The Hampstead, MD-based company’s catalog sales decreased 12%. Bank blames the decline on cannibalization from its Website. Overall, though, revenue increased 15%, to $71.0 million from $62.0 million in ’99. Better yet, net income jumped 51%, to $2.9 million from $1.9 million.

The Skinny:

Maybe cannibalism has gotten a bum rap.

Lands’ End Wakes Up

The Numbers:

Dodgeville, WI-based apparel cataloger Lands’ End reported fourth-quarter sales of $538.6 million, up more than 11% from $483.1 million the previous year. Net income for the quarter increased 12%, to $31.8 million from $28.3 million.

The Skinny:

Is the sleeping giant waking up? A revitalization of its core casual apparel line no doubt helped Lands’ End shake off its doldrums. Then there’s the company’s $170 million Lands’ End Corporate Sales division, which had double-digit increases throughout the year.

Geerlings & Wade Is Back in Black

The Numbers:

Canton, MA-based Geerlings & Wade returned to profitability. The wine marketer posted quarterly net income of $509,000, compared with a net loss of $1.2 million for the fourth quarter of ’99. The turnaround came despite a nearly 8% drop in fourth-quarter net sales, to $12.0 million from $13.0 million.

The Skinny:

Geerlings & Wade president David Pearce credits the improved bottom line to cost controls and improved gross margins. Pop the corks!

Sharper Image Scoots to Profit

The Numbers:

Sharper Image’s net revenue sped upward, thanks to its popular Razor Scooter. The San Francisco-based cataloger/retailer posted fourth-quarter sales of $176.7 million, up 24% from $142.5 million the previous year. Catalog sales increased 20%, to $43 million, while Internet sales jumped 66%, to $27.5 million. Fourth-quarter earnings grew 19%, to a record $13.0 million from $11.0 million. Its proprietary Sharper Image Design merchandise, including the Razor Scooter, continues to be the foundation of Sharper Image’s business, as it accounted for nearly 66% of sales in fiscal 2000, up from last year’s 50%.

The Skinny:

Proprietary products (including the Razor) accounted for nearly 66% of the high-tech gadgets marketer’s business in fiscal 2000.

Brookstone Reaps Proprietary Profit

The Numbers:

Like Sharper Image, Nashua, NH-based Brookstone, which mails the Brookstone Gift Collection, Hard-to-Find Tools, and Gardeners Eden catalogs, reaped the benefits of proprietary products. Net income for the quarter ended Feb. 3 was $25.2 million, up 13% from $22.4 million the previous year. Fourth-quarter revenue grew nearly 11%, to $180.9 million from $163.6 million.

The Skinny:

Now that it has its multichannel strategy for the flagship brand down pat, this spring Brookstone opened the first Gardeners Eden store and launched a Gardeners Eden Website.

Penney Still Seeking a Silver Lining

The Numbers:

General merchandiser J.C. Penney reported a net loss of $284.0 million for the quarter ended Jan. 27 — a huge decline from the net loss of $12.0 million suffered the previous fourth quarter. The company blamed much of the red ink on a $285 million pretax charge related to closing 47 underperforming department stores and outlet centers, consolidating its Eckerd drugstore regional offices, and reducing its work force. The company also took a $135 million charge related to inventory reduction at the department stores and Eckerd.

The news wasn’t much better on the revenue side. Catalog sales for the quarter were $5.92 billion, down 4.5% from $6.2 billion 12 months prior. Total fourth-quarter revenue fell 1%, to $9.75 billion from $9.83 billion.

The Skinny:

Penney doesn’t expect to return to profitability for another two to five years.

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 3/15/01)
CONSUMER CATALOGERS Blair Corp. 155,091 172,285 11% 8,725 6,653 (24%) 12/31/00 7.10
Coldwater Creek 101,190 123,698 22% 5,188 7,064 36% 11/25/00 11.55
Concepts Direct 20,609 20,142 (2%) (1,711) 3,709 NM 12/31/00 N/A
Delia’s 67,500 76,381 12% (1,813) (17,805) (882%) 2/3/01 N/A
Geerlings & Wade 13,029 12,009 (8%) (1,166) 509 NM 12/31/00 N/A
Hanover Direct 169,245 189,077 11% (3,608) (38,867) (977%) 12/20/00 N/A
J. Jill Group 61,198 88,372 44% (1,546) 6,693 NM 12/30/00 13.06
Lands’ End 483,129 538,557 11% 28,321 31,803 12% 1/26/01 23.33
Lillian Vernon Corp. 105,630 98,340 (7%) 9,670 6,551 (32%) 11/25/00 15.00
Specialty Catalog Corp. 13,587 14,684 8% (487) 308 NM 12/30/00 34.38
Spiegel 1,191,543 1,274,076 7% 74,669 65,367 (12%) 12/30/00 6.32
CATALOGER/RETAILERS Brookstone 163,600 180,900 11% 22,400 25,200 13% 2/3/01 9.80
J.C. Penney Co. 9,834,000 9,753,000 (1%) (12,000) (284,000) (2,267%) 1/27/01 N/A
Jos. A. Bank 61,980 70,983 15% 1,931 2,925 51% 2/3/01 8.52
Sharper Image 142,523 176,726 24% 10,990 13,037 19% 1/31/01 6.79
Talbots 380,625 473,111 24% 15,298 33,022 116% 2/3/01 24.28
Williams-Sonoma 565,839 673,168 19% 48,669 44,541 (8%) 1/28/01 29.06
MARKET INDICES Dow Jones Industrial Average 19.0
Standard & Poor’s 500 Index 22.2
Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Ulin & Holland

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