First-quarter results from publicly traded consumer catalogers suggest that the economy may have hit bottom and is poised for a turnaround.
Among the 15 consumer catalogers and cataloger/retailers tracked for Catalog Age by investment bank Tulley & Holland, four, or 27%, suffered a decline in first-quarter revenue. And six of the companies, or 40%, saw their net income decline or their net loss grow.
Why is that encouraging? Because in the previous first quarter, sales dropped for nearly the same percentage of catalogers (28%) — and the bottom line had deteriorated for 72% of the catalogers tracked.
But Jim Adams, managing director of Wellesley, MA-based Tulley & Holland, warns against breaking out the bubbly just yet. “It’s not likely” that we’re already in recovery mode, he says, “but at least the news is fairly positive. When a turnaround does occur, many of these companies will be well positioned to take advantage.”
CATALOG AGE SPOTLIGHT ON FIRST-QUARTER FINANCIALS
J. Jill’s top-notch bottom line
Quarter ended: March 30
Women’s apparel cataloger/retailer J. Jill Group enjoyed a 16% boost in first-quarter revenue — and a fantastic 239% leap in net income. The Quincy, MA-based marketer reported net income of $2.7 million on net sales of $73.4 million. For the first quarter of 2001, net income had been $796,000 on sales of $63.3 million. Catalog and Internet sales decreased 3%, to $51.2 million, mainly as a result of lower promotional activity. But retail sales more than doubled, mostly due to new store openings.
The skinny: J. Jill gets high marks for savvy inventory management. The company says it reduced inventory balances 28% for the quarter by ordering merchandise more conservatively and timing receipts closer to need.
More good news for Lands’ End
Quarter ended: May 3
Apparel and home goods cataloger Lands’ End more than doubled its first-quarter net income, to $16.5 million from $5.9 million last year. At the same time, revenue rose 10%, to $341.2 million from $311.1 million. Web sales jumped 46%, to $79 million from $54 million, while international sales rose nearly 13%, to $32 million from $28 million. But sales from the Dodgeville, WI-based company’s specialty books, which include its Kids and Home catalogs, slid 1%, to $85 million, as the Corporate Sales catalog felt the pinch of budget cutting among companies nationwide.
The skinny: In case you’ve been living under a rock, Lands’ End was acquired by Sears, Roebuck & Co. in June, for the equivalent of 27 times earnings.
Williams-Sonoma celebrates record first-quarter income
Quarter ended: May 5
San Francisco-based Williams-Sonoma credited “significant operational improvements,” along with a 15% rise in revenue, for its record first-quarter profit. For the three months ended May 5, the multititle cataloger/retailer posted net earnings of $15.4 million, a dramatic improvement from the $492,000 in income it recorded for the first quarter of fiscal 2001. Total net revenue for the quarter was $478.4 million, up from $417.6 million a year ago. First-quarter catalog and Internet sales rose a more modest 6%, to $178.3 million from $167.7 million, with the Pottery Barn and Pottery Barn Kids home decor brands driving the growth. (Williams-Sonoma’s other brands include the flagship kitchenware catalog and retail chain, storage products cataloger/retailer Hold Everything, and upscale bedding catalog Chambers.) Retail sales increased 20%, to $267.6 million, and comparable store sales rose 6%.
The skinny: Williams-Sonoma hopes to turn new catalog West Elm, which launched this spring, into a lower-priced Pottery Barn.
Lower sales, higher profits for Delia’s
Quarter ended: May 4
First-quarter net sales at teen girls apparel cataloger/retailer Delia’s decreased 21%, to $28.8 million from $36.2 million, due to catalog circulation cuts. But those cuts may also have contributed to the New York-based company’s bottom-line boost. The net loss before the cumulative effect of a change in accounting principle was $4.3 million, compared with its first-quarter loss of $8.3 million last year. And after the positive effect of a change in accounting principle, Delia’s actually reported a profit of $11.1 million.
The skinny: Delia’s shaved more than $5 million from its general and administrative costs, from $24.7 million in the first quarter of fiscal 2001 to $17.6 million.
Blair’s in the black
Quarter ended: March 31
Apparel and home goods cataloger Blair Corp. reported a 2% rise in first-quarter net sales, to $135.3 million from $133.1 million last year. Even better, the Warren, PA-based company turned around last year’s first-quarter net loss of $231,946 to post net income of $5.6 million. Last year’s results had included a one-time $2.5 million cost associated with a “voluntary separation program,” in which Blair moved an operations center that employed about 50 workers who chose to leave the firm rather than relocate.
The skinny: Operating costs for the first quarter, which include advertising and general, administrative and interest expenses, decreased 10%.
|REVENUE $000||NET INCOME $000|
|12 months prior||Current quarter||Improvement (decline)||12 months prior||Current quarter||Improvement (decline)||Info as of quarter ended||P/E (as of 6/18/02)|
|CONSUMER CATALOGERS||Blair Corp.||133,055||135,261||2%||(232)||5,601||NM||3/31/02||12.08|
|Geerlings & Wade||7,153||7,364||3%||(174)||(741)||NM||3/31/02||N/A|
|J. Jill Group||63,332||73,357||16%||796||2,696||239%||3/30/02||29.39|
|Lillian Vernon Corp.||95,159||96,091||1%||(2,877)||(4,343)||NM||2/23/02||N/A|
|J.C. Penney Co.||7,522,000||7,728,000||3%||41,000||86,000||110%||4/27/02||48.85|
|Jos. A. Bank||47,406||55,760||18%||506||1,731||242%||5/4/02||14.30|
|MARKET INDICES||Dow Jones Industrial Average||25.69|
|Standard & Poor’s 500 Index||40.8|
|Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Tulley & Holland
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