Multititle gifts and stationery cataloger Concepts Direct is hoping that less is more. To rid itself of red ink, the Longmont, CO-based company, whose titles include Linda Anderson, Linda Anderson’s Collectibles, and Snoopy Etc., has cut circulation by the low double digits. What’s more, in July it laid off 27% of its workforce, or about 100 employees. According to president/CEO Phil Wiland, the company is now concentrating on its most profitable title, stationery book Colorful Images.
“Business has not been robust,” Wiland admits, “and as a result, we’ll be a smaller business going forward.”
Concepts Direct’s last profitable year was 1997, when it reported net income of $1.6 million on sales of $78.5 million. For fiscal 2001, it lost $3.1 million on sales of $55.8 million. For the three months ended June 30 (its most recent quarter at press time), Concepts Direct incurred a $3.1 million net loss — more than double the $1.4 million net loss posted for the comparable quarter of last year. Gross profit margin declined to 35% from 44%, primarily due to increased inventory liquidation efforts. Sales rose 21%, to $11.8 million, based on a 21% rise in circulation.
Last year, Concepts Direct had increased circulation among its five titles 18%, to 48.7 million catalogs circulated from 41.2 million in 2000. But in August 2002, it cut circulation, in part by no longer mailing to inactive customers, Wiland says. Concepts Direct had been mailing much deeper to the inactive file, he says, “but we’re back to a more normal mailing patterns. That’s why our financials suffered.”
Given the company’s weak financial performance, it would come as no surprise if Concepts Direct sold some catalogs. The title most likely to hit the selling block first? Gifts catalog The Music Stand, say some observers.
While Wiland says that Concepts Direct has yet to hire an investment firm to facilitate a sale, he says that the company would be “open to the possibility.” Concepts Direct bought The Music Stand from now-defunct Genesis Direct in June 1999. Wiland admits that the catalog has never returned to its glory days, before its original owners sold the title to Genesis in August 1997.
Catalogs with character
Concepts Direct’s decision this summer to produce and manage the Garfield Stuff catalog may seem to contradict Wiland’s desire to run a smaller, tighter company. Albany, IN-based licensing studio Paws had created Garfield Stuff, a catalog of gifts and accessories inspired by the cartoon cat, in 1998 but stopped mailing the title last fall.
So why did Concepts Direct enter into a marketing agreement with Paws to take on Garfield Stuff? “We’ve developed an expertise for handling characters,” says Wiland, referring to the Snoopy Etc. book, which is inspired by the “Peanuts” canine, “so adding another cute, lovable character made [the deal] sensible.”
Cute lovable characters aside, Geoff Batrouney, executive vice president of New Rochelle, NY-based list and marketing company Estee Marketing Group, says that Concepts Direct is in a tough market niche. “It’s extremely difficult for a marketer selling licensed merchandise because the list of available names is so small.” And that’s assuming that the company is financially strong, he adds.
Nonetheless, the revamped Garfield Stuff catalog was relaunched in July. “We’ve freshened up the creative and brought the merchandise up to date,” Wiland says. Garfield catalog buyers may notice more new products in the catalog — items such as checkbook covers that Concepts Direct modified from the Snoopy Etc. title. The Garfield catalog mailed to names from the Snoopy Etc. and Colorful Images house files, as well as to the Garfield Stuff buyers file.