Fourth Quarter Shows Slight Movement

WHAT A DIFFERENCE A YEAR MAKES. Just ask Williams-Sonoma. The high-end kitchen and home goods merchant’s fourth-quarter revenue a year ago fell 26.7%, to $1.008 billion. Its net income plunged 90%, to $12.19 million, from $124.56 million.

Then there’s the fourth quarter of 2009, in which Williams-Sonoma’s revenue rose 8%, to $1.09 billion, and its net income soared 625%, to $88.4 million.

Were all of the publicly traded business-to-consumer merchants tracked by Multichannel Merchant as lucky as Williams-Sonoma? Not quite, but it was a much better quarter overall.

Of the eight companies followed, four posted sales gains; the revenue drops ranged from 1% to 5%. Last year, fourth-quarter revenue fell by an average of 10% for the profiled companies.

Better, but not great

“The current quarter shows uneven performance across the consumer companies,” says Stuart Rose, managing director for investment firm Tully & Holland.

For instance, Delia’s fourth-quarter revenue decreased 1%, to $66.3 million, due to “higher expenses and increased promotional activity in its direct segment,” Rose says.

The teen apparel merchant anticipates lower direct segment sales during the first half of the year on a smaller amount of clearance inventory, Rose says.

Delia’s is also looking to cut costs and limit capital expenditures. The cataloger/retailer plans to open fewer stores this year than in 2009.

Several marketers, including, Gaiam and Coldwater Creek saw vastly improved results from terrible results last year., which divested its Home and Children’s businesses in January to focus on floral and food gifts, saw its revenue slip 5%, to $238.4 million.

Revenue in its floral segment fell 4.7% as prices dropped about 4%. Nevertheless, Rose says, “This is a great improvement from prior quarters.” seems to have stabilized, Rose says, but this year’s holiday will be the true indicator if the company is back on a growth track. This is true for many gift mailers. Hopefully by holiday 2010, he notes, “the economy will have picked up enough to make gift giving fashionable again.” Rose expects continued unevenness for the remainder of spring, “or until the economic and unemployment picture improves.”

The housing market is another big question mark. No doubt some of the sales increases were in part due to the slightly improved housing market, Rose says.

“While the home market has shown stabilization, it is too soon to give a complete sigh of relief,” he says. “There is still the possibility of a double dip due to continued foreclosures and weak employment figures.”

Furthermore, recent home sales were fueled by the tax credit for home buyers. Once the program runs dry, the real estate may weaken, Rose says, and that will certainly affect consumer spending.

Company 12 months prior Current quarter Increase (decrease) 12 months prior Current quarter Increase (decrease)
($000) ($000) 251,571 238,454 (5%) (5,111) 15,303 NM
Coldwater Creek 283,229 318,364 12% (18,553) (9,678) NM
Delia’s 67,213 66,301 (1%) 22,573 (791) NM
Gaiam 74,497 87,636 18% (30,302) 4,030 NM
J.C. Penney Co. 5,759,000 5,550,000 (4%) 211,000 200,000 (5%)
Jos. A. Bank 248,500 279,347 12% 30,400 35,460 17%
Talbots 327,912 315,925 (3.7%) (361,533) (555,659) NM
Williams-Sonoma 1,008,015 1,089,678 8% 12,191 88,421 625%

Source: Tully & Holland

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