Most experts agree that consumers are beginning to feel optimistic about an economic recovery. But you wouldn’t know it from first-quarter results of the publicly traded consumer marketers tracked by Catalog Age.
“There hasn’t been any overall improvement in this quarter,” says Jim Adams, managing director of Wellesley, MA-based investment bank Ulin & Holland. In fact, the numbers are slightly worse. Nine of the 13 catalogers tracked, or 69%, increased their first-quarter sales this year, compared with 73% last year. And only six, or 46%, showed bottom-line improvements, compared with 60% last year.
“It’s costing more to get new customers,” Adams says. Indeed, selling expenses as a percentage of sales have increased in recent years, as mailing lists have become less responsive.
CATALOG AGE SPOTLIGHT ON FIRST-QUARTER FINANCIALS
Net Income Jumps at Coldwater Creek
Quarter ended: May 3
The facts: Better-than-expected retail sales fueled first-quarter growth at women’s apparel marketer Coldwater Creek. Net income for the Sandpoint, ID-based company increased 35%, to $1.9 million from $1.4 million last year. Net sales increased 8%, to $115.2 million from $106.2 million last year. Catalog sales increased less than 1%, to $46.0 million from $45.9 million. And e-commerce sales actually declined, to $35.9 million from $36.1 million.
The skinny: Coldwater Creek mailed 29.9 million catalogs during the quarter, 6% fewer than the 31.7 million catalogs it mailed in the first quarter of 2002.
Blair’s 1Q Income Tumbles 91%
Quarter ended: March 31
The facts: First-quarter net sales at apparel and home goods cataloger Blair Corp. increased slightly, to $137.0 million from $135.3 million last year. That’s the good news. The not-so-good news? Net income plunged 91%, to $500,189 from $5.6 million last year. Blame it largely on a 13% rise in advertising expenses, resulting from an increase in mailings to customers and prospects.
The skinny: The expense of mailing 38% more catalogs — 52 million compared with 38 million for the first quarter of last year — ate into income without significantly boosting sales.
Sales Up, Income Down for Williams-Sonoma
Quarter ended: May 4
The facts: A 12% increase in first-quarter sales wasn’t enough to enable Williams-Sonoma to stave off a drop in income. The San Francisco-based cataloger/retailer, whose home decor and houseware brands include Pottery Barn and Hold Everything, netted $13.4 million on revenue of $536.8 million. For the first quarter of fiscal 2002, the marketer posted net income of $15.4 million on revenue of $478.4 million. Direct sales rose 11%, to $198.6 million from $178.3 million. Pottery Barn and Pottery Barn Kids accounted for most of the growth, aided by the year-old West Elm title and the PBTeen catalog, which launched this spring. The Internet accounted for $60.2 million in sales, up 58% from last year.
The skinny: A closer look into Sonoma’s direct-to-customer revenue reveals that catalog sales fell 1%, to $138.4 million from $140.2 million last year.
Sharper Image Earnings Jump 358%
Quarter ended: April 30
The facts: San Francisco-based Sharper Image continues its hot streak. First-quarter revenue for the cataloger/retailer of high-tech gifts increased 27%, to $119.8 million. Catalog sales increased 16%, to $34.3 million from last year’s $29.6 million. Total store sales increased 32%, to $65.8 million; comparable store sales increased 19%. Web sales, which accounted for nearly 15% of total sales during the quarter, increased 42%, to $16.9 million from last year’s $11.9 million. Most impressive, first-quarter net earnings increased 358%, to $682,000 from $149,000 last year.
The skinny: Selling, general, and administrative costs increased 26%, to $28.9 million, and advertising costs increased 27% to $25.6 million.
Penney’s Profit Sinks
Quarter ended: April 26
The facts: In a release, J.C. Penney characterized its most recent quarter as “disappointing.” Net income for the Plano, TX-based general merchandiser tumbled 29%, to $61 million from $86 million last year. Total Penney sales (which include revenue from the Eckerd drugstore chain) fell 3%, to $7.5 billion. Combined department stores and direct sales decreased 7%, to $3.7 billion, from $4.0 billion last year. Breaking it down further, catalog sales decreased 11%. Internet sales, however, increased more than 25%.
The skinny: Selling, general, and administrative expenses increased to 37% from 34% last year.
Deferred Gain of 2001’s Improvements Sale Propels Hanover
Quarter ended: March 29
The facts: Hanover Direct reported net income of $192,000 for the quarter, compared with a net loss of $1.8 million a year ago. But the improvement is due to a $1.9 million deferred gain related to Hanover’s June 2001 sale of the Improvements catalog; without that, the company would once again have been in the red. The Edgewater, NJ-based home decor and apparel marketer, whose titles include Domestications, The Company Store, International Male, Silhouettes, and Gump’s by Mail, reported a 6% decline in net revenue, to $102.5 million. The decrease is due to softness in demand and a 2% reduction in circulation for continuing businesses.
The skinny: C’mon! Though completely legal, for Hanover to continue “booking” portions of the Improvements sale — which happened two years ago — is a bit misleading.
|REVENUE $000||NET INCOME (LOSS) $000|
|12 months prior||Current quarter||Improvement (decline)||12 months prior||Current quarter||Improvement (decline)||Info as of quarter ended||P/E (as of 6/20/03)|
|CONSUMER CATALOGERS||Blair Corp.||$135,261||$137,014||1%||$5,601||$500||(91%)||3/31/03||12.07|
|Geerlings & Wade||7,364||5,037||(32%)||(740)||(985)||NM||3/31/03||N/A|
|J. Jill Group||73,357||82,363||12%||2,696||768||(72%)||3/29/03||19.69|
|Lillian Vernon Corp.||96,091||86,712||(10%)||(4,343)||(3,540)||NM||2/22/03||N/A|
|J.C. Penney Co.||7,728,000||7,493,000||(3%)||86,000||61,000||(29%)||4/26/03||14.91|
|Jos. A. Bank||55,760||62,272||12%||1,731||2,174||26%||5/3/03||20.20|
|MARKET INDICES||Dow Jones Industrial Average||21.93|
|Standard & Poor’s 500 Index||29.32|
|Notes: Price-to-earnings ratios are from various sources
NM = not meaningful
NA = not available
|Source: Tully & Holland|