Most — 81% — of the publicly traded consumer catalogers tracked by Catalog Age showed top-line improvement during the second quarter, about the same as last year. But for this year’s quarter, 69% bettered their bottom lines, compared with 50% last year.
“Last year companies were coming out of the economic doldrums,” notes Jim Adams, managing director of Wellesley, MA-based investment bank Tully & Holland, which tracks the publicly traded marketers for Catalog Age. But investments in prospecting are beginning to pay off, “and catalogers are spending more to make more.”
Of course, there are exceptions. Warren, PA-based Blair Corp. and Edgewater, NJ-based Hanover Direct trimmed catalog circulation, and both suffered sales declines. Broomfield, CO-based healthy-living products manufacturer/marketer Gaiam blamed its 16% revenue shortfall on lower wholesale revenue from retailers Target, Wal-Mart, and Costco.
CATALOG AGE SPOTLIGHT ON SECOND-QUARTER FINANCIALS
Happy Days at Vermont Teddy Bear
Quarter ended: June 30
The facts: Its August 2003 acquisition of fresh-flowers mailer Calyx & Corolla helped lead Shelburne, VT-based Vermont Teddy Bear to increased sales and earnings. Calyx & Corolla added “live product” to Vermont Teddy Bear’s gifts line and contributed about $16 million in revenue. (The company doesn’t break out its business units.) Total revenue increased 52%, to $17.4 million from $11.4 million last year. What’s more, Vermont Teddy Bear posted a net income of $211,000 for the quarter, an 8% gain from $195,000 last year.
The skinny: The company has introduced 20 new bears for the fourth quarter, says spokesperson Nicole L’Huillier, its largest merchandise rollout ever.
Loss Widens at Alloy
Quarter ended: July 31
The facts: Although its overall revenue increased 8%, New York-based marketing services/cataloger Alloy posted higher losses due to higher operating expenses and increased legal and financial administration costs. The net loss for the quarter ballooned to $11.2 million from $1.0 million last year. Revenue rose to $86.6 million from $80.5 million 12 months prior.
Revenue from its merchandise business (which includes the Delia’s, Dan’s Comp, and CCS teen apparel and sports gear catalogs) increased 46%, to $43.7 million from $30.0 million for the previous second quarter. The company says the gains came from its July 2003 acquisition of Delia’s, which offset sales declines at Alloy’s other catalogs. Sponsorship and other revenue fell 15%, to $42.9 million from $50.5 million.
The skinny: Alloy is considering spinning off its merchandise business and its sponsorship business into separate companies. Chief technology officer Robert Bell says the change would make it easier for Wall Street analysts to better understand — and more accurately valuate — the two companies.
Double-Digit Delight for Williams-Sonoma
Quarter ended: Aug. 1
The facts: San Francisco-based multititle cataloger/retailer Williams-Sonoma, which mails the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, Hold Everything, and West Elm titles, posted handsome gains on both sides of the ledger. Net earnings increased 55%, to $27.6 million for the quarter ended Aug. 1, compared with $17.8 million for the second quarter of fiscal 2003. Net revenue, including shipping fees, increased 19% to $689.6 million, compared with $580.4 million last year.
Direct-to-customer revenue increased 27%, to $262.0 million from $206.3 million a year ago, driven by the Pottery Barn brands. Internet sales increased 60%, to $111.0 million from $69.3 million. Direct-to-customer shipping fees rose 21%, to $44.8 million from $36.9 million last year.
Retail net sales increased 14%, to $380.7 million from $335.3 million last year, primarily driven by the addition of 33 stores. Comparable store sales rose 5%.
The skinny: Williams-Sonoma upped its forecast for third-quarter direct-to-customer sales: It expects direct sales of $286.0 million-$291.0 million, compared with previous guidance of $276.0 million-$281.0 million — a projected increase of 20%-22%.
Blair Sales Down on Reduced Mailings
Quarter ended: June 30
The facts: Warren, PA-based apparel and home goods mailer Blair Corp. reported lower sales but higher earnings. Net sales fell 18%, to $127.0 million from $154.3 million a year ago, based on the elimination of unprofitable mailings and a reduction in Crossing Pointe catalogs. (Blair is shutting the title in early 2005 but may continue it as an online-only brand.) The number of catalogs circulated during the second quarter fell 12%. The number of prospect mailings fell by 3.3 million, or 17%. On the flip side, net income grew 22%, to $5.0 million from $4.1 million last year.
The skinny: The number of second-quarter orders shipped fell 17%, and the average order value dipped 2%.
Sportsman’s Guide Gains on Web Sales
Quarter ended: June 30
The facts: South St. Paul, MN-based Sportsman’s Guide set a company record for Web-related sales as a percentage of direct sales, which translated to net income gains. Internet sales at the outdoor gear marketer accounted for 43% of total direct sales, compared to about 37% last year. Total revenue increased 2%, to $38.9 million from $38.0 million for the second quarter of last year. Net earnings increased 23%, to $797,000 from $646,000. Sportsman’s Guide, which mailed eight catalog editions during the quarter compared with seven during the comparable period of 2003, mailed 7% more catalogs overall, with circulation for the quarter of 9.9 million catalogs.
The skinny: Sportsman’s Guide ended the quarter with total assets of $53.5 million, 16% higher than the $46.0 million in total assets a year ago.
| 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 9/14/04) | |
| 1-800-Flowers.com | $154,843 | $161,567 | 4% | $8,262 | $30,429 | 268% | 6/27/04 | 13.90 |
| Alloy | 80,501 | 86,565 | 8% | (1,000) | (11,155) | NM | 7/31/04 | N/A |
| Blair Corp. | 154,345 | 126,993 | (18%) | 4,101 | 5,011 | 22% | 6/30/04 | 15.25 |
| Brookstone | 80,474 | 98,316 | 22% | (2,315) | (465) | NM | 7/31/04 | 16.73 |
| Coldwater Creek | 96,654 | 111,215 | 15% | (1,423) | 3,406 | NM | 7/31/04 | 38.66 |
| Gaiam | 20,352 | 17,031 | (16%) | (759) | (2,215) | NM | 6/30/04 | N/A |
| Hanover Direct | 105,883 | 96,482 | (9%) | 715 | 563 | (21%) | 6/26/04 | N/A |
| J.C. Penney Co. | 7,356,000 | 7,890,000 | 7% | 61,000 | 42,000 | (31%) | 7/31/04 | 20.73 |
| J. Jill Group | 97,365 | 120,561 | 24% | 6,098 | 6,525 | 7% | 6/26/04 | 44.45 |
| Jos. A. Bank | 64,442 | 81,994 | 27% | 1,986 | 3,529 | 78% | 7/31/04 | 19.97 |
| Red Envelope | 17,721 | 21,131 | 19% | (1,217) | (952) | NM | 6/27/04 | N/A |
| Sharper Image Corp. | 124,699 | 148,963 | 19% | 808 | 676 | (16%) | 7/31/04 | 12.29 |
| The Sportsman’s Guide | 38,041 | 38,861 | 2% | 646 | 797 | 23% | 6/30/04 | 17.30 |
| Talbots | 389,624 | 409,385 | 5% | 18,519 | 19,416 | 5% | 7/31/04 | 15.75 |
| Vermont Teddy Bear | 11,374 | 17,359 | 53% | 195 | 211 | 8% | 6/30/04 | 17.31 |
| Williams-Sonoma | 580,423 | 689,621 | 19% | 17,824 | 27,629 | 55% | 8/1/04 | 25.08 |
| Dow Jones Industrial Average | 18.02 | |||||||
| Standard & Poor’s 500 Index | 20.01 | |||||||
| Notes: Price-to-earnings ratios are from various sources NM = not meaningful NA = not available |
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| Source: Tully & Holland | ||||||||