On the surface, the third quarter of 2002 was a hale and hardy one for consumer catalogers. Of the 15 publicly traded catalogers and cataloger/retailers tracked by investment back Tully & Holland for Catalog Age, 73% had improved their bottom line. What’s more, 53% posted gains in net sales from the previous third quarter.
But bear in mind just how dismal the third quarter of 2001 had been: only 47% had increased their net income or reduced their net loss, and only 41% had increased revenue.
The cataloger/retailers saw most of the quarter’s growth, says Jim Adams, managing director at Wellesley, MA-based Tully & Holland. At those that rely primarily, if not exclusively, on catalog sales, “bottom-line improvements from Blair, Geerlings & Wade, Hanover Direct, and Successories have come as a result of circulation cutbacks, as each had sales declines,” he notes.
CATALOG AGE’S SPOTLIGHT ON THIRD-QUARTER FINANCIALS
Stores lead sales growth at J. Jill
Quarter ended: Sept. 28
The numbers: Women’s apparel marketer J. Jill Group enjoyed a 22% increase in third-quarter sales and a 31% rise in net income for the three months ended Sept. 28. The company reported net income of $3.6 million on sales of $80.0 million. For the third quarter of fiscal 2001, J. Jill had netted $2.8 million on $65.8 million in revenue. Retail accounted for most of the growth: Catalog and Web sales increased a modest 5%, to $50.4 million from $47.8 million the previous year, due to higher circulation. Retail sales increased 64%, to $29.8 million from $18.2 million, primarily from new store openings.
The skinny: During the quarter, J. Jill incurred a $1 million one-time charge for costs related to a potential strategic acquisition that it abandoned. The company would not divulge details.
Circulation cuts trim Brookstone’s 3Q loss
Quarter ended: Nov. 2
The numbers: Nashua, NH-based cataloger/retailer Brookstone, which mails the Brookstone, Hard-to-Find Tools, and Gardeners Eden titles, posted a net loss of $6.7 million. But that’s actually good news: For the third quarter of 2001, Brookstone had lost $9.0 million. Total third-quarter sales increased 7%, to $62.8 million from $58.5 million last year. Catalog and Internet sales fell 7%, however, to $12.5 million. Same-store sales increased 7%.
The skinny: The 7% decline in direct sales looks good, given that Brookstone cut its catalog circulation 24%.
Blair shakes off the red ink
Quarter ended: Sept. 30
The numbers: Though net sales dropped 4%, Warren, PA-based Blair Corp. ended the third quarter in the black. Net income totaled $279,386, compared with a net loss of $3.3 million for the third quarter of 2001. Sales fell to $117.8 million from $123.0 million a year ago. The apparel and home goods cataloger attributes the improved bottom line to a significant reduction in the cost of goods sold, resulting in part from lower inventory liquidation costs.
The skinny: Blair lowered its advertising, general, and administrative costs and interest expenses 5% for the quarter.
Bottom-line surges at Penney
Quarter ended: Oct. 26
The numbers: Third-quarter catalog sales at general merchandiser J.C. Penney Co. were down 21% — but so what? The big news is that net income for the quarter shot up 297%, to $123 million from $31 million a year earlier. Total sales for the quarter rose 2%, to $7.87 billion. Combined revenue from the Penney catalog, Website, and department stores fell 1%, to $4.3 billion from $4.4 billion. (Penney also owns the Eckerd drugstore chain.) But comparable store sales rose 4%.
The skinny: Penney says its department stores and catalog gross margin increased by 130 basis points as a percent of sales. Improved gross margin is principally the result of the effects of centralization and catalog inventory management.
Tasty quarter for Williams-Sonoma
Quarter ended: Nov. 3
The numbers: Cataloger/retailer Williams-Sonoma, whose titles include Pottery Barn, Hold Everything, Chambers, and West Elm, has plenty to brag about. Its third-quarter net earnings jumped 293% while net revenue, including shipping fees, increased 14%. All told, Williams-Sonoma netted $15.1 million on revenue of $527.9 million. Catalog and Internet sales increased 7%, to $187.7 million from $176.2 million last year. The company attributes its strong show to growth in the Pottery Barn, Williams-Sonoma, and Pottery Barn Kids brands and incremental sales from the West Elm catalog, which launched in the first quarter of 2002.
The skinny: The impressive results come despite a decline in sales from its Hold Everything brand. The San Francisco-based company attributes the dip to introductory discounts given to customers who signed up for Hold Everything’s new private-label credit card.
Talbots catalog sales slip 9%
Quarter ended: Nov. 2
The numbers: Third-quarter sales at Hingham, MA-based apparel cataloger/retailer The Talbots increased just 2%, to $401.8 million from $394.0 million last year. Net income increased a scant 2% as well, to $37.4 million. Catalog sales decreased 9%, to $62.1 million from $68.2 million last year. Retail store sales increased 4%, to $339.7 million, but comparable store sales decreased 3%.
The skinny: A recent company study showed that “purchases by less frequent customers dropped off significantly” as part of the overall softer retail climate, says spokesperson Margery Myers.
| 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 12/11/02) | ||
| CONSUMER CATALOGERS | Blair Corp. | $123,019 | $117,830 | (4%) | ($3,314) | $279 | NM | 9/30/02 | 9.39 |
| Coldwater Creek | 92,848 | 92,794 | 0 | 1,296 | (650) | NM | 8/31/02 | 129.17 | |
| Concepts Direct | 11,248 | 10,562 | (6%) | (856) | (2,499) | (192%) | 9/30/02 | N/A | |
| Delia’s | 32,503 | 32,904 | 1% | (3,151) | (10,687) | (239%) | 11/2/02 | N/A | |
| Geerlings & Wade | 6,901 | 6,033 | (13%) | (293) | 1 | NM | 9/30/02 | N/A | |
| Hanover Direct | 117,431 | 106,030 | (10%) | (6,806) | (4,212) | 38% | 9/28/02 | N/A | |
| J. Jill Group | 65,808 | 80,012 | 22% | 2,755 | 3,621 | 31% | 9/28/02 | 14.16 | |
| Lillian Vernon Corp. | 36,828 | 36,056 | (2%) | (3,428) | (6,080) | (77%) | 8/24/02 | N/A | |
| Successories | 8,058 | 7,163 | (11%) | (2,833) | (2,280) | 20% | 8/3/02 | N/A | |
| CATALOGER/RETAILERS | Brookstone | 58,523 | 62,843 | 7% | (8,987) | (6,672) | 26% | 11/2/02 | 18.45 |
| J.C. Penney Co. | 7,729,000 | 7,872,000 | 2% | 31,000 | 123,000 | 297% | 10/26/02 | 26.25 | |
| Jos. A. Bank | 50,243 | 57,866 | 15% | 1,316 | 1,864 | 42% | 11/2/02 | 16.90 | |
| Sharper Image Corp. | 77,004 | 106,109 | 38% | (3,815) | (493) | 87% | 10/31/02 | 22.97 | |
| Talbots | 393,966 | 401,789 | 2% | 36,558 | 37,407 | 2% | 11/2/02 | 13.94 | |
| Williams-Sonoma | 462,096 | 527,894 | 14% | 3,853 | 15,137 | 293% | 11/3/02 | 27.81 | |
| 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 |
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| Source: Tully & Holland | |||||||||