Hardly an Auspicious Start

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.

FINANCIAL REPORT

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
Coldwater Creek 106,241 115,204 8% 1,414 1,914 35% 5/3/03 24.83
Delia’s 28,770 29,453 2% 11,114 (7,307) NM 5/3/03 N/A
Geerlings & Wade 7,364 5,037 (32%) (740) (985) NM 3/31/03 N/A
Hanover Direct 109,511 102,474 (6%) (1,810) 192 NM 3/29/03 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
CATALOGER/RETAILERS Brookstone $56,633 $60,957 8% ($6,519) ($6,411) NM 5/3/03 13.11
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
Sharper Image 94,086 119,798 27% 149 682 358% 4/30/03 N/A
Talbots 391,328 394,991 1% 34,983 29,400 (16%) 5/3/03 14.67
Williams-Sonoma 478,379 536,840 12% 15,353 13,395 (13%) 5/4/03 28.48
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

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.