Holiday Sales Roundup: A Wild Ride

Abbey Press president Gerald Wilhite describes holiday 2001 as “an unexpected route to an expected destination.” The $35 million cataloger of religious-themed gifts finished the season, and the year, “almost exactly on plan,” Wilhite says. That’s despite very slow business during the first few months of 2001 and a steep decline immediately following the Sept. 11 terrorist attacks, and thanks to a “wonderful” October and an “extremely good” November.

Unexpected routes could be the theme for holiday 2001 overall. The events of Sept. 11 saw many catalogers scrambling to revise their fall/winter marketing plans and curtail their holiday expectations. Yet after the last Christmas order was picked, packed, and shipped, a number of mailers found that they’d ended up close to where they’d hoped to be.

“Overall, catalogers’ results were somewhere in the middle,” says Jeff Klinefelter, senior research analyst with Minneapolis-based investment bank U.S. Bancorp Piper Jaffray. “In most cases, companies beat their internal plans. But everything has to be considered on a relative basis. Even the companies that did better than expected, their expectations were low.”

Fasten your seatbelts…

Holiday revenue for multititle mailer Knight’s Direct actually exceeded expectations. Sales at its home furnishings book Home Decorators Collection, apparel and home goods catalog Soft Surroundings, and women’s clothing title City Spirit were tracking 3%-10% ahead of plan, says president Tom Wilcher. What’s more, sales for the $180 million St. Louis-based cataloger were up 5%-15% from the previous holiday season. “We started out strong,” Wilcher says, “and built momentum from there.”

Few other catalogers rode out the year on a straight line, however. For most, the holiday season had more peaks and valleys than a bus tour through the Alps.

“The way it played out for us,” says Rich Donaldson, spokesperson for Freeport, ME-based L.L. Bean, “September was understandably disappointing, October actually had some growth over the prior year, but then November was more disappointing than we’d expected. Then December came in flat with last year.”

The $1.11 billion outdoor gear and apparel mailer ended the holiday season almost flat with the previous year. “It’s a few percentage points below the budget that we set last January,” Donaldson says, “but it exceeded our post-Sept. 11 expectations by several percentage points.”

Plow & Hearth, a $100 million cataloger of home accessories and gifts for the country lifestyle, experienced a rollercoaster sales pattern similar to Bean’s. Business was strong from October through the week before Thanksgiving, says president Peter Rice, but then sales fell off until the last 10 days before Christmas.

Rice blames some of the soft sales on the warm weather that much of the country enjoyed from mid-November to mid-December. As he puts it, “People don’t want to buy fireplaces in a warm winter.” Overall, the Madison, VA-based cataloger’s holiday sales were up 6%-9% from holiday 2000, but that was on a 12% boost in circulation. Rice says that sales were slightly below what he characterizes as an aggressive plan.

In terms of sales curves, “October and November were more unpredictable than we’d seen in the past,” notes Cindy Marshall, vice president of marketing for Cranston, RI-based marketer Ross-Simons. The jewelry, gifts, and tabletop items cataloger/retailer ended the holiday season with sales down just a few percentage points from the previous year’s, on an 11% cut in circulation.

Better late than never

The unpredictability of the past few months makes it tough to single out any customer behavior patterns. For instance, Marshall says that Ross-Simons customers bought later than they had during holidays past. The same held true at Charlottesville, VA-based Crutchfield, which sells automobile and home electronics.

“We had a very late Christmas season,” says vice president of marketing Alan Rimm-Kaufman. “But the last five days were stellar. It seems like consumer confidence really rallied at the last minute.” Crutchfield’s sales for the entire year were down in low single digits from 2000. The $208 million cataloger had originally planned for a modest sales increase.

Conversely, Mike Muoio, president/CEO/co-owner of Miles Kimball, found that his customers did their shopping earlier than in years past. For the Oshkosh, WI-based parent company of the Miles Kimball low-end gifts catalog and the Exposures photo frames title, “the season finished about a week earlier than usual — the second week of December compared with the third,” Muoio says. The $135 million company ended 2001 with sales 2% below plan.

The sales curve at Foot Traffic, a socks and stockings marketer with annual sales of less than $5 million, was also about a week ahead of last holiday season’s. The Kansas City, MO-based wholesaler/cataloger enjoyed a 7% rise in holiday sales this year. “We’d planned for a modest increase, and we were able to beat that,” notes president Charlie Barnard. Annual sales climbed about 12%.

Was the extra weekend a gift?

Catalogers also differ in opinion regarding the importance of the extra week during the 2001 holiday season, a result of the Thanksgiving holiday falling earlier than usual. For Abbey Press, the additional days allowed the Meinrad, IN-based company to drop a sixth mailing, immediately after Thanksgiving, whereas it usually sends out just five holiday mailings.

San Francisco-based gifts cataloger Red Envelope also appreciated the extra week — and the extra weekend prior to Christmas. “Business is better when Christmas falls in the beginning of the week,” declares CEO Martin McClanan. Red Envelope’s holiday sales were nearly double those of 2000, thanks in part to a 40% boost in catalog circulation.

But the extra week didn’t help all mailers. Monroe, WI-based The Swiss Colony, whose titles include gifts books Seventh Avenue, Midnight Velvet, and Ginny’s, didn’t get many sales from the extra shopping week, says president John Baumann. Nor did Portland, ME-based upscale bedding cataloger Cuddledown of Maine, reports president Chris Bradley. Swiss Colony’s holiday sales were flat with last year’s; Cuddledown of Maine’s were down, though Bradley would not say by how much.

The road ahead

Given how dire the sales scenario looked at the top of the holiday shopping season, some observers find cause for optimism in the outcome. Bill Dean, the founding partner of San Francisco-based catalog consultancy W.A. Dean & Associates, was “pleasantly surprised” by holiday sales overall — especially since he considers 2001 the worst year for business he’s seen in his 30 years in the industry. All in all, Dean says he is “encouraged” about 2002’s prospects for catalogers.

Miles Kimball’s Muoio is downright “optimistic” that business will improve in the months ahead: “Obviously Sept. 11 had a negative effect on everyone. But that’s behind us now from a consumer perspective.” Since mid-December, sales at both of his company’s books have been meeting or beating plan, he says.

Muoio has increased circulation for the first quarter of 2002 1%-3% from last year, and he’ll reassess his mailing strategy at the end of spring. “We believe that the recession will be well on its heels at the end of the third quarter. When the recession came, I knew about it 14 months ago, even though the government wasn’t talking about it,” Muoio says. “We saw it right away, but we’re seeing good signs now. Many retailers are seeing the same thing, though most of them are low-end, like Wal-Mart. But that’s an early indicator of recovery [for all sectors].”

Here too, though, there’s no consensus. At Ross-Simons, Marshall says, “we think catalog sales will be soft, especially for the first two quarters” and that “overall 2002 will be a tough year.” Baumann expects spring to be “solid” for Swiss Colony’s titles; Rice has a guarded, rather than upbeat, outlook for Plow & Hearth’s spring sales; McClanan is optimistic that spring will prove strong for Red Envelope.

No solid indicators

U.S. Bancorp’s Klinefelter is concerned that there are no solid economic indicators pointing to a turnaround anytime soon. “Consumer confidence has been building back up, but consumer debt is very high,” Klinefelter says. “Unemployment hasn’t stabilized yet or come back down yet, so I wonder how much discretionary spending adults will do. I certainly wouldn’t plan for any robust trend in the first quarter or even the second.”

That’s in line with the strategy of $246 million J. Jill Group. “We’re not anticipating at this point any improvement in the economic environment,” says Gordon Cooke, president/CEO of the Quincy, MA-based women’s apparel cataloger/retailer. “We’re planning conservatively, and if we get an improvement, that’ll only be a plus.”

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