GOOD TIMES-FOR NOW

Apr 01, 1999 10:30 PM  By

Judging by early spring sales results, most catalogers continue to benefit from the still-strong economy. Multititle gifts mailer Good Catalog Co., apparel marketers Barrie Pace and Children’s Wear Digest, and seed cataloger Territorial Seed Co. all report double-digit sales increases over plan. And among the giant general merchandise catalogers, Downers Grove, IL-based Spiegel boasted an 8% rise in sales for the first eight weeks of the year, while February catalog sales at Plano, TX-based J.C. Penney rose 8.9%.again, a number of mailers are reporting softer-than-expected sales, in what may be a foreshadowing of leaner times.

Apparel claims a turnaround Looking at catalog segment performance, Howard Kupfer, senior vice president of Hackensack, NJ-based list firm Mokrynski and Associates, says that general merchandise catalogers such as Good Catalog “are doing slightly better than apparel catalogers,” due to the late arrival of warmer spring weather in much of the country. In fact, in the Northeast, early March was colder than the rest of the winter, which hasn’t spurred shoppers to buy spring clothing.

But the apparel catalogers contacted by CATALOG AGE claim that despite any reports to the contrary, their spring sales are doing just fine, thank you. “Our early spring books are tracking on plan,” says Margy Myers, a spokeswoman for Hingham, MA-based women’s apparel cataloger/retailer Talbots.

DM Management, the ñ140 million-plus parent company of the women’s apparel catalogs J. Jill and Nicole Summers, has had “favorable returns compared to our own internal financial plans,” says CEO Gordon Cooke. Cooke adds that he’s confident that the Hingham, MA-based firm will meet Wall Street’s estimates of a 25%-30% rise in first-quarter results compared to last year. “And remember, we are up against an 83% sales increase for the first quarter of last year,” he adds.

Upscale women’s apparel cataloger Barrie Pace is also pleased with spring results so far. “Sales are up 33% over last year,” says marketing manager Gina Valentino. The Chicago-based cataloger’s jump in revenue comes despite catalog delivery problems, she adds. “Less than 50% of the decoys for our early January mailing met the in-home dates” due to winter storms, she notes.

Without citing specifics, Valentino credits some of her company’s sales growth to improved merchandising. So does Jim Klaus, president of Richmond, VA-based Children’s Wear Digest. The children’s clothing cataloger tripled the number of matching mother-daughter outfits it carries, which has helped boost the average order size 15%. “Our merchandise selection is more appealing this year,” Klaus says. “We have more runaway best sellers.” CWD’s total sales are up 25% over last year on a 16% rise in circulation, and revenue is roughly 10% over plan. The cataloger hopes to hit ñ24 million-

ñ25 million in sales this year, up from ñ22 million last year. But Klaus hesitates to predict that sales will continue to grow throughout the year. “People have been buying later into the season, closer to need, so we suspect that as we get closer to summer, sales should only improve. But for fall, we don’t know,” he says, recalling how last August’s unexpected stock market slide caused back-to-school sales to come in 5% below plan.

“We’re planning for a good summer, but fall is way to early to call,” agrees Barbara Todd, president of Portland, OR-based home decor/ gifts mailer Good Catalog Co. “The marketplace now is good for us.”

Ominous signs How long will these good times roll? Unfortunately, there are indications that a slowdown could be around the corner. Consider the growth of the U.S. economy as a whole: After 3.9% growth in 1998, the National Association for Business Economics predicts that this year, the economy will grow a more modest 3%. And while household spending in January rose, it was a scant 0.1%, according to the Department of Commerce.

Moreover, although the Conference Board, a nonprofit economic forecasting group, notes that its February confidence index jumped more than 5 points, to a record 178.4, its expectations index rose less than 2 points, to 101.2, creating the largest gap between the two indexes since the group began tracking the components in 1977. Such a large gap signals that consumers may cut down on spending to prepare for rockier times ahead.

Feeling the pinch Indeed, some catalogers are already experiencing the economic slowdown. “Our early spring sales are about 8% below expectations,” says Karen Park Jennings, vice president of marketing for ñ40 million-plus Park Seed Co. Nonetheless, she adds, sales levels remain close to last year’s, despite a 3% cut in circulation.

Likewise, at Burlington, VT-based Gardener’s Supply Co., early spring sales “have been probably 5%-10% below what we’d planned,” says Will Raap, president of the ñ35 million horticultural catalog. “But we’re still about 5% ahead of last year.” The cataloger boosted circulation 10% but saw a 5%-10% drop inresponse.

Raap blames the disappointing response on the fact that gardening orders are coming in later. “Customers are buying closer to the time when they can go out and actually work their soil. When we started 15 years ago, the first quarter used to be the most important. Now it’s the second.”

Without disclosing his circulation plans for the rest of the year, Raap says, “We’re being a little cautious because of the softening this spring, and because we think the Y2K issue will distract some people” and make them fearful of its impact on the general economy.

By contrast, Tom Johns, owner of Cottage Grove, OR-based Territorial Seed Co., credits the potential Y2K crisis with much of his company’s 26% rise in early spring sales. To capitalize on the fears of some that the “millennium bug” will cause computers to crash globally, to the point where retailers will be unable to conduct business and the food supply will be disrupted, Johns is featuring in his catalog a “millennium garden” collection of seeds so that consumers can grow their own staples.

“This product has outsold any we’ve ever carried,” Johns says. “We’re selling it to some people who have never gardened or have gardened very little, so it’s allowed us to reach a whole new market. Who knows whether the Y2K crisis is fact or fiction, but if this product helps people become more self-sufficient and discover the joys of gardening, I’d say it’s a positive result for the consumer”-and certainly, for Territorial Seed.

The big-ticket effect For her part, Park Seed’s Jennings blames her company’s disappointing sales not on Y2K, but on what she describes as a “slightly stressed” economy that’s causing consumers to invest in big-ticket items now, while times are still good. “Consumers are putting money in cars, the stock market, computers, and stuff like that,” she says.

Indeed, Good Catalog Co.’s Todd says her firm is “selling more big, expensive furniture items this spring.” The catalog is also doing well with rugs, wall decor, and occasional furniture . The ñ30 million mailer, which increased its spring circulation 33%, saw a double-digit sales increase over plan for January and February. And the average order size has increased 10% over last spring. Still, Todd notes, “we’ve been hearing mixed results [about spring sales] from fellow catalogers.”