The first quarter of 2005 proved to be a mixed bag for the publicly traded consumer mailers tracked by Multichannel Merchant.
Sales were strong for the quarter, just as they were in first quarter of 2004. In fact, all but three of the 15 publicly traded catalogers/retailers tracked bested their first-quarter sales from the previous year. (Warren, PA-based apparel and decor cataloger Blair Corp., Hingham, MA-based women’s apparel cataloger/retailer J. Jill Group, and San Francisco-based gadgets merchant Sharper Image Corp. were the exceptions.)
Says Tim Tully of Wellesley Hills, MA-based investment bank Tully & Holland, which tracks the companies for Multichannel Merchant, “The growth can largely be attributed to a focus on core business strengths combined with expansion of retail locations, complementary additions to existing product lines, strengthening of multichannel strategies, and investments made to increase catalog circulation.”
Because of such investments, profit growth proved more elusive than revenue growth. Only 53% of the companies showed a bottom-line improvement, compared with 88% a year ago.
Brookstone’s loss widens
Quarter ended: April 30 The facts: Merrimack, NH-based cataloger/retailer Brookstone lost $6.8 million for the quarter, compared with a net loss of $4.6 million for the first quarter of last year. Total sales rose 4%, however, to $80.3 million, with catalog/Internet sales up 12%, to $13.2 million. Brookstone generated $1.2 million of the increase primarily by boosting catalog circulation 36%; the Gardeners Eden brand (which the company is selling) had flat sales on a 12% decrease in catalog circulation. The skinny: Brookstone generated $300,000 shipping and handling revenue during the quarter.
Loss widens at RedEnvelope too
Quarter ended: April 3 The facts: San Francisco-based gifts merchant RedEnvelope enjoyed a 28% leap in first-quarter revenue, to $22.2 million. But that wasn’t enough to reverse its net loss — or even to keep it from growing. The net loss for the quarter was $3.8 million, compared with $2.3 million last year. The culprit: a 53% jump in cost of sales. The skinny: A protracted and expensive proxy fight for control of the company didn’t help the bottom line any.
Sharper Image takes a fall
Quarter ended: April 30 The facts: Total first-quarter revenue for the high-tech gifts and gadgets merchant fell 7%, to $144.9 million from last year’s $156.4 million. Direct marketing sales (including wholesale) tumbled 12%, to $39.7 million from $45.1 million. Even Internet sales fell — 12%, to $23.2 million. On the other side of the ledger, the company reported a net loss of $4.6 million, compared with net earnings of $1.9 million the previous first quarter. The skinny: How’s this for a comparison: During the first quarter of 2004, Sharper Image’s catalog sales had increased 40%.
Gaiam reverses its fortunes
Quarter ended: March 31 The facts: After several quarters of losses, Broomfield, CO-based manufacturer/marketer Gaiam posted net income of $116,000 for the quarter, compared with a $329,000 net loss last year. Sales for the company, which mails the Real Goods, Living Arts, and Harmony catalogs of healthy-living products, increased 11%, to $26.3 million from $23.8 million. The wholesale division accounted for much of the gain, largely as a result of increased volume generated by the shelf space expansion and additional media placements in Target stores. But direct-to-consumer revenue increased too — 10%, to $13.3 million, thanks to Web sales. The skinny: Gaiam’s direct and business-to-business units were both on the plus side of contribution margin (net sales minus cost of goods sold and direct expenses.) Direct-to-consumer contributed $166,000, compared with a $24,000 loss the previous year. The business unit kicked in $121,000, compared with a $305,000 loss a year ago.
| 1Q REVENUE | 1Q NET INCOME (LOSS) | |||||
|---|---|---|---|---|---|---|
| Company | 12 months prior | Current quarter | Increase (decrease) | 12 months prior | Current quarter | Increase (decrease) |
| (000) | (000) | |||||
| 1-800-Flowers.com | $134,069 | $157,033 | 17% | $1,943 | ($2,046) | NM |
| Alloy | 83,859 | 87,697 | 5% | (9,243) | (15,899) | NM |
| Blair Corp. | 128,642 | 107,558 | (16%) | 571 | 650 | 14% |
| Brookstone | 77,451 | 80,284 | 4% | (4,644) | (6,779) | NM |
| Coldwater Creek | 124,460 | 155,636 | 25% | 5,320 | 8,491 | 60% |
| Gaiam | 23,775 | 26,324 | 11% | (329) | 116 | NM |
| J.C. Penney Co. | 4,033,000 | 4,192,000 | 4% | 41,000 | 172,000 | 320% |
| J. Jill Group | 99,929 | 98,369 | (2%) | 2,237 | (2,708) | NM |
| Jos. A. Bank Clothiers | 79,929 | 96,575 | 21% | 5,271 | 6,737 | 28% |
| RedEnvelope | 17,336 | 22,199 | 28% | (2,261) | (3,832) | NM |
| Sharper Image Corp. | 156,405 | 144,882 | (7%) | 1,915 | (4,576) | NM |
| The Sportsman’s Guide | 44,594 | 64,326 | 44% | 1,167 | 2,096 | 80% |
| The Talbots | 412,181 | 446,531 | 8% | 33,464 | 34,519 | 3% |
| Vermont Teddy Bear Co. | 20,100 | 25,600 | 27% | 1,389 | 221 | (84%) |
| Williams-Sonoma | 640,910 | 720,688 | 12% | 21,390 | 26,173 | 22% |
| Notes: Price-to-earnings ratios are from various sources NM = not meaningful Source: Tully & Holland |
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