The third quarter of 2004 was strong for most of the publicly traded consumer merchants tracked by Catalog Age. All but two of the 15 companies, or 87%, showed increases in year-over-year sales, up slightly from 81% the previous third quarter.
What’s more, 67% of the marketers showed bottom-line improvements. That’s up from the third quarter of the previous year, when half of the mailers tracked had seen year-over-year declines.
The strong sales growth and the somewhat less significant profitability improvements reflect increased marketing efforts and higher marketing costs, says Jim Adams, managing director of Wellesley, MA-based investment bank Tully & Holland, which tracks the companies for Catalog Age. “Marketers were aggressive and pushing their product through additional catalog mailings or Web enhancements,” he says.
1-800-Flowers.com stems its losses
Quarter ended: Sept. 26 The facts: Westbury, NY-based 1-800 Flowers.com, whose catalogs include country products title Plow & Hearth, toys catalog HearthSong, and food gifts book Popcorn Factory, reduced its net loss on slightly higher sales. Total revenue increased 2%, to $97.5 million. Online revenue grew 9%, to $53.1 million. Telephone sales tumbled 7%, however, to $37.6 million. On the other side of the ledger, the company managed to chop its net loss 47%, to $2.7 million. The skinny: The bottom-line reduction included a $2.0 million income tax benefit recorded during the quarter, which artificially inflated earnings.
Operating profit rises at J.C. Penney
Quarter ended: Oct. 30 The facts: Plano, TX-based cataloger/retailer J.C. Penney’s 86% jump in quarterly earnings included $47 million in one-time charges associated with early debt retirements. Third-quarter operating profit increased 66%, to $346 million. Combined net sales for Penney’s department stores and catalog/Internet segment increased 3%, to $4.46 billion, while catalog/Internet sales rose 4%. Comparable department store sales increased 3%. The skinny: The general merchandiser ended the quarter with $14.9 billion in assets — down 22% from the previous third quarter. But that’s because it had carried some $7.0 billion in “discontinued operations” in 2003.
Bearish quarter for Vermont Teddy Bear
Quarter ended: Sept. 30 The facts: Shelburne, VT-based Vermont Teddy Bear Co. reported a 23% increase in net revenue, to $6.1 million, thanks primarily to a $1.5 million increase from its Calyx & Corolla fresh-flowers title. Revenue from the PajamaGram and TastyGram gift brands also increased, though corporate/wholesale revenue and retail sales declined. Nonetheless, the gifts merchant was able to whittle down its net loss 12%, to $173,000, The skinny: During the quarter, Vermont Teddy Bear added 60,400 sq. ft. to its Shelburne, VT, distribution center.
Williams Sonoma keeps cooking
Quarter ended: Oct. 31 The facts: San Francisco-based multichannel merchant Williams-Sonoma — whose properties include the Pottery Barn titles, Hold Everything, West Elm, and Williams-Sonoma Home — posted a 19% net earnings increase, to $28.5 million. Third-quarter net revenue, including shipping fees, increased 14%, to $722.8 million. Direct-to-customer net sales increased 18%, to $281.5 million, and Web sales rose 44%, to $118.3 million. The skinny: Despite the strong results it reported for the first nine months of 2004, the company pulled back some on reporting guidance for the remainder of the year, projecting direct-to-customer net sales in the range of $1.152 billion-$1.162 billion, compared with previous guidance of $1.155 billion-$1.170 billion.
| Company | 3Q REVENUE | 3Q NET INCOME (LOSS) | ||||
|---|---|---|---|---|---|---|
| 12 months prior | Current quarter | Increase (decrease) | 12 months prior | Current quarter | Increase (decrease) | |
| (000) | (000) | |||||
| 1-800-Flowers.com | $95,160 | $97,514 | 2% | ($5,146) | ($2,710) | 47% |
| Alloy | 105,751 | 110,003 | 4% | (6,818) | 1,966 | NM |
| Blair Corp. | 124,100 | 107,074 | (14%) | 793 | 2,941 | 271% |
| Brookstone | 73,657 | 85,355 | 16% | (5,865) | (6,679) | (14%) |
| Coldwater Creek | 138,152 | 150,504 | 9% | 5,603 | 9,419 | 68% |
| Gaiam | 23,533 | 21,023 | (11%) | (201) | (1,530) | (661%) |
| J.C. Penney Co. | 4,332,000 | 4,461,000 | 3% | 80,000 | 149,000 | 86% |
| J. Jill Group | 82,325 | 94,933 | 15% | (2,851) | (2,608) | 9% |
| Jos. A. Bank | 72,011 | 82,634 | 15% | 2,863 | 3,414 | 19% |
| RedEnvelope | 8,329 | 10,574 | 27% | (2,826) | (3,887) | (38%) |
| Sharper Image Corp. | 128,121 | 153,623 | 20% | 985 | (3,336) | NM |
| The Sportsman’s Guide | 41,213 | 56,554 | 37% | 710 | 1,069 | 51% |
| The Talbots | 408,148 | 421,170 | 3% | 34,794 | 27,606 | (21%) |
| Vermont Teddy Bear Co. | 4,980 | 6,138 | 23% | (138) | (122) | 12% |
| Williams-Sonoma | 632,824 | 722,761 | 14% | 23,876 | 28,467 | 19% |
| Notes: Price-to-earnings ratios are from various sources | NM = not meaningful | Source: Tully & Holland | ||||