All but two of the 12 publicly traded consumer catalogers and cataloger/retailers tracked by Catalog Age — or 83% — boosted their second-quarter this year. That’s a sharp improvement from a year ago, when only 47% of those tracked reported increases for the quarter.
But for several of the catalogers, the sales increases took their toll on the bottom line. “It is costing more to get the increased sales levels via more prospecting,” says Jim Adams, managing director of Tully & Holland, the Wellesley, MA-based investment bank that tracks the catalogers for Catalog Age.
Whether they’re mailing more catalogs (as was the case with Blair Corp. and Brookstone) or opening new stores (as did Talbots and Brookstone again), the marketers are spending money to make money. Six of the 12 companies, or 50%, suffered a decline in profit or a widening loss.
CATALOG AGE SPOTLIGHT ON SECOND-QUARTER FINANCIALS
Sales, Income Cooking at Williams-Sonoma
Quarter ended: Aug. 3
The facts: Home decor and kitchenware cataloger/retailer Williams-Sonoma enjoyed a 17% rise in total second-quarter sales, to $580.4 million. And the San Francisco-based company’s net income increased 26%, to $17.8 million from $14.1 million.
Catalog and Internet sales were up 16%, to $206.3 million from $177.1 million for the second quarter of last year. Sales from the Internet alone increased 55%, to $69.3 million from $44.7 million. The Pottery Barn, Pottery Barn Kids, Williams-Sonoma, and Hold Everything brands generated most of the increase, with newer catalogs Pottery Barn Teen and West Elm bringing in incremental sales. Its upscale linens catalog, Chambers, saw a year-over-year sales decline, however.
The skinny: Williams-Sonoma intends to continue to increase circulation for the remainder of the year.
Coldwater Creek Lessens Loss
Quarter ended: Aug. 2
The facts: Women’s apparel cataloger/retailer Coldwater Creek reduced its second-quarter net loss from $2.1 million last year to $1.4 million this year. Net sales for the Sandpoint, ID-based company increased 5%, to $96.7 million from $92.1 million. Catalog net sales dropped 9%, however, to $32.4 million from $35.8 million last year. And e-commerce net sales decreased 16%, to $23.6 million from $28.2 million.
The skinny: Coldwater Creek is relying less on its direct business. Net sales from the segment accounted for 58% of the company’s total sales in the second quarter, compared with 69% a year ago.
Income Level Drops at Blair
Quarter ended: June 30
The facts: Increases in the cost of goods sold and advertising expenses ate into second-quarter net income at Warren, PA-based Blair Corp. The apparel and home goods cataloger enjoyed a 5% boost in revenue, to $154.3 million. But income nonetheless fell 42%, to $4.1 million from $7.0 million a year ago.
The skinny: The multititle mailer, whose catalogs include women’s apparel book Crossing Pointe, increased catalog circulation to prospects as well as to its house file. As a result, ad expenses as a percentage of net sales rose to 26.9% from 25.0%.
Expenses Nick Alloy
Quarter ended: July 31
The facts: New York-based multichannel marketer Alloy posted a $321,000 net loss for the quarter ended July 31, compared with net income of $538,000 last year, due to higher operating expenses and the costs of acquiring rival teen marketer Delia’s. Total revenue for the quarter increased 55%, to $80.5 million, compared with $52.0 million last year. The company’s marketing services division accounted for the growth, however. Merchandise revenue from Alloy’s Websites and catalogs, which include sports gear titles CCS and Dan’s Comp and teen girls’ apparel catalog Girlfriends L.A., fell 5%, to $30.0 million from $31.5 million last year. The decline followed a reduction in mailings to prospects and nonbuyers with its database.
The skinny: Selling and marketing expenses increased a whopping 40%, to $31.5 million.
Catalog Sales Climb at Brookstone on Circ Hike
Quarter ended: Aug. 2.
The facts: Second-quarter direct marketing sales increased 11% at gadgets and tools marketer Brookstone. But the Nashua, NH-based cataloger/retailer had to increase circulation 13% to get them. Sales from the Brookstone, Gardeners Eden, and Hard-to-Find Tools catalogs and Websites totaled $14.0 million. Overall second-quarter sales increased 13%, to $80.5 million from $71.2 million last year. Same-store sales climbed 8%. For the quarter, Brookstone lost $2.3 million, compared with $2.2 million a year ago. The most recent quarter’s loss included $1.1 million for the settlement of certain outstanding legal matters, including an overtime-compensation class-action lawsuit in California.
The skinny: The company plans to more than double the circulation of the Brookstone catalog in the fourth quarter to target “high-value customers who use the catalogs as a call-to-action” to buy products through the catalog, the Internet, or a store.
Catalog Sales Rise at Talbots
Quarter ended: Aug. 2
The facts: Second-quarter catalog sales at apparel marketer The Talbots increased 6%, to $50.2 million. Total net sales for the Hingham, MA-based cataloger/retailer increased 5%, to $389.6 million from $370.4 million for the second quarter of last year. Retail sales rose 5% as well, to $339.4 million. Comparable-store sales dipped 2%, which was less of a decline than expected. Net income declined 8%, to $18.5 million from $20.0 million a year ago.
The skinny: Talbots reported strong regular-price sales of its “transitional and early fall merchandise,” beginning in mid-June.
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 9/5/03) | ||
| CONSUMER CATALOGERS AND CATALOGER/RETAILERS | |||||||||
| Alloy | $51,973 | $80,501 | 55% | $538 | ($321) | NM | 7/31/03 | 15.53 | |
| Blair Corp. | 147,513 | 154,345 | 5% | 7,033 | 4,101 | (42%) | 6/30/03 | 15.33 | |
| Brookstone | 71,231 | 80,474 | 13% | (2,247) | (2,315) | NM | 8/2/03 | 19.79 | |
| Coldwater Creek | 92,144 | 96,654 | 5% | (2,135) | (1,423) | NM | 8/2/03 | 36.02 | |
| Geerlings & Wade | 6,208 | 6,032 | (3%) | (2,331) | (1,364) | NM | 6/30/03 | N/A | |
| Hanover Direct | 113,852 | 105,765 | (7%) | 1,816 | 690 | (62%) | 6/28/03 | N/A | |
| J.C. Penney Co. | 7,198,000 | 7,313,000 | 2% | (6,000) | 0 | NM | 7/26/03 | 18.49 | |
| J. Jill Group | 86,355 | 97,365 | 13% | 6,415 | 6,098 | (5%) | 6/28/03 | 19.51 | |
| Jos. A. Bank | 51,868 | 64,442 | 24% | 942 | 1,986 | 111% | 8/2/03 | 26.44 | |
| Sharper Image | 102,408 | 127,880 | 25% | (617) | 807 | NM | 7/31/03 | 21.32 | |
| Talbots | 370,407 | 389,624 | 5% | 20,034 | 18,519 | (8%) | 8/2/03 | 18.23 | |
| Williams-Sonoma | 495,593 | 580,423 | 17% | 14,141 | 17,824 | 26% | 8/3/03 | 29.57 | |
| MARKET INDIES | |||||||||
| 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 |
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| Source: Tully & Holland | |||||||||