Not as much business as usual

Apr 01, 1999 10:30 PM  By

Only 55% of the publicly traded business-to-business and computer catalogers tracked by Catalog Age and Boston investment bank Ulin & Holland reported double-digit fourth-quarter sales growth.

While that percentage might not seem too disappointing-especially when you consider that only two of the 20 catalogers tracked suffered a decline in sales-it’s a big drop from last year: For the fourth quarter ’97, 88% of business and computer mailers had enjoyed double-digit sales growth.

Both Transmation, a ñ78.5 million manufacturer/cataloger of test, measurement, and calibration equipment, and New Britain, CT-based medical supplies mailer Moore Medical Corp. suffered fourth-quarter revenue declines. Rochester, NY-based Transmation blamed the weak Asian economy for its 15% drop in sales, to ñ16.8 million. And ñ288.5 million Moore says its 54% plummet in fourth-quarter sales, to ñ27.3 million, reflects its decision last year to exit the highly competitive and low-margin wholesale drug industry.

But both Transmation and Moore managed to improve their bottom lines. The former credits improved cost efficiencies with much of its 140% jump in net income, to ñ382,000; the latter turned around last year’s ñ4.2 million loss to post a ñ640,000 profit-largely by getting rid of the wholesale drug division.

But 25% of the catalogers suffered a drop in net income or an increased net loss. JLK Direct Distribution, a ñ364.5 million industrial tools marketer based in Latrobe, PA, blamed its 25% tumble in net income on “continued weak demand in the higher-margin mail order business, weak demand in the oil and gas field service industry, and general weakness in factory orders in North America,” chairman/CEO Richard J. Orwig said in a statement.

Torrance, CA-based Creative Computer, the lone computer cataloger reporting a weaker bottom line, attributed its ñ5.6 million net loss to its 80.1% investment in online auctioneer uBid. “Right now uBid is investing heavily in advertising and brand awareness,” says Ted Sanders, Creative Computer’s chief financial officer. Discounting the uBid investment, he says, the ñ546.1 million company would have shown a fourth-quarter profit of 15 cents per share, compared to 10 cents per share during fourth quarter ’97.

Overall, 40% of the catalogers tracked benefited from double-digit growth on both sides of the ledger. For instance, Groton, MA-based New England Business Service (NEBS), a cataloger of business forms and related supplies, increased its revenue 56%, to a total of ñ127.3 million, while growing net income 22%, to ñ7.9 million.

The ñ356 million cataloger’s acquisitions of ñ80 million RapidForms in December 1997 and ñ63 million McBee Systems in July 1998 were the catalysts, says spokesman Tim Althof. “Those two acquisitions account for a significant amount of our revenue during the quarter. Both companies offer great opportunity in keeping our focus on the small-business customer as we try to sell them more products.”–MDF