For the all-important fourth quarter, 11 of the 15 publicly traded consumer marketers tracked by Catalog Age — 73% — reported revenue increases. That’s consistent with the fourth quarter of 2002, when 75% of the consumer mailers enjoyed a year-over-year increase in sales.
As for profits, two-thirds reported a rise in fourth-quarter income, an improvement upon 58% a year ago.
The solid numbers reflect the general confidence among consumers during the holiday season, says Jim Adams, managing director of Wellesley, MA-based Tully & Holland, which helps track the financial data for Catalog Age. “You can gauge consumer sentiment by their wallets,” he says. “This is definitely a sign that the economy is getting better.”
CATALOG AGE’S SPOTLIGHT ON FOURTH-QUARTER FINANCIALS
Disappointing Quarter for Gaiam
Quarter ended: Dec. 31
The facts: The Broomfield, CO-based parent of the Real Goods, Harmony, and Living Arts catalogs reported lower-than-expected sales. Fourth-quarter revenue fell 6%, to $35.1 million from $37.3 million the previous year. The declines extended to the other side of the ledger: Gaiam reported $341,000 in net income, a steep drop from $2.3 million in 2002. Last year was a transitional one for the manufacturer/marketer of healthy-living products — it expanded its product categories with a children’s line available to retailers, for instance, and doubled its sales staff — and those changes no doubt affected the bottom line.
The skinny: Although Gaiam ended the year with $8.4 million in cash, 26% less than the $11.4 million it had at the end of 2002, it has no debt and $15 million available on its credit line.
Williams-Sonoma Hits Billion-Dollar Mark
Quarter ended: Feb. 1
The facts: The San Francisco-based parent of the West Elm, Hold Everything, Chambers, Williams-Sonoma, and Pottery Barn home furnishings and kitchenware brands posted gains across all channels. Direct-to-customer sales in the fourth quarter increased 26%, to $322.2 million from $255.2 million the previous year. The Pottery Barn and Pottery Barn Kids brands led the growth, with a boost in incremental sales from its newest title, PBTeen. None of the company’s brands suffered catalog and Internet sales declines, however. Internet sales in the fourth quarter increased 74%, to $120.9 million. Retail sales rose 12%, to $625.1 million from $557.1 million last year. And earnings jumped 28%, to $102.1 million from $79.8 million.
The skinny: Direct-to-customer shipping fees increased 23%, to $54.7 million from $44.5 million for the fourth quarter of 2002.
Sharper Image Posts Double-Digit Gains
Quarter ended: Jan. 31
The facts: It’s onward and upward for Sharper Image Corp. Total fourth-quarter sales for the San Francisco-based cataloger/retailer of high-tech gadgets increased 29%, to $278.4 million from 2002’s $216.5 million. Retail sales increased 33%, to $171.7 million; comparable-store sales increased 17%. Catalog sales rose 14%, to $54.9 million from $48.0 million. Internet sales increased 34%, to $43.6 million. As for net income, it jumped 35%, to $22.8 million from $16.9 million.
The skinny: Sharper Image had one less-than-desirable increase: cost of goods sold. It rose 29%, to $119.5 million from $92.6 million the previous fourth quarter.
Sales Up, Profit Down for J. Jill
Quarter ended: Dec. 27
The facts: The women’s apparel cataloger/retailer reported a 49% drop in net income, to $3.2 million from $6.2 million for the fourth quarter of 2002. “We determined that the front-end product development and merchandising infrastructure that had historically worked well in our catalog business was inadequate when it came to supporting a more complex multichannel business,” president/CEO Gordon Cooke said in a statement. J. Jill is now reengineering and upgrading its merchandising processes and infrastructure. On the revenue side of the ledger, retail sales rose 38%, to $62.2 million. But catalog sales fell 21% to $33.6 million. Web sales dropped 6%, to $19.3 million.The direct channel contributed 31% fewer dollars to the bottom line: $12.0 million, compared with $17.4 million the previous fourth quarter.
The skinny: The Quincy, MA-based marketer will open fewer stores this year than planned. Whereas it had launched 34 stores in fiscal 2003, in 2004 it plans to open 20. J. Jill will also cut the number of catalog pages circulated this year by about 15%.
Sportman’s Guide Brings Home Profits
Quarter ended: Dec. 31
The facts: South St. Paul, MN-based Sportsman’s Guide credits its profitable mail plan and rise in Web activity for its strong fourth-quarter performance. The outdoor gear cataloger’s sales rose 8%, to $71.7 million from $66.3 million the previous year. Even more impressive, net earnings swell 45%, to $3.8 million from $2.6 million.
The skinny: Sportsman’s Guide says it ended the year with its strongest balance sheet ever: $32.1 million of cash, no outstanding bank advances, and inventory of $18.9 million, 8% lower than 2002 levels.
Despite Gains, Penney Loses $1.1 billion
Quarter ended: Jan. 31
The facts: The direct division of Plano, TX-based cataloger/retailer J.C. Penney Co. enjoyed its first year-over-year sales growth following several years of repositioning. For the fourth quarter, combined department store and catalog/Internet sales were $6.1 billion, up 6% from the previous fourth quarter. Nonetheless, Penney posted a fourth-quarter loss of $1.1 billion because of the bite that its Eckerd Drugstore chain and Mexico store operations took out of the bottom line.
The skinny: The sale of Eckerd drugstore operations on April 5 to the Jean Coutu Group and CVS Corp. for $4.53 billion in cash will generate $3.5 billion in cash proceeds after closing adjustments, taxes, fees and other related expenses.
FINANCIAL REPORT
| 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 3/30/04) | |
| 1-800-Flowers.com | $197,429 | $213,182 | 8% | $10,087 | $13,678 | 36% | 12/28/03 | 37.07 |
| Alloy | 103,699 | 116,252 | 12% | 8,089 | (76,578) | NM | 1/31/04 | N/A |
| Blair Corp. | 167,941 | 166,481 | (1%) | 6,222 | 9,133 | 47% | 12/31/03 | 14.82 |
| Brookstone | 185,171 | 219,085 | 18% | 27,438 | 32,143 | 17% | 1/31/04 | 21.99 |
| Coldwater Creek | 174,239 | 168,834 | (3%) | 3,757 | 6,384 | 70% | 1/31/04 | 41.79 |
| Gaiam | 37,300 | 35,100 | (6%) | 2,300 | 341 | (85%) | 12/31/03 | N/A |
| J.C. Penney Co. | 5,743,000 | 6,098,000 | 6% | 202,000 | (1,069,000) | NM | 1/31/04 | 27.30 |
| The J. Jill Group | 107,850 | 114,851 | 6% | 6,178 | 3,178 | (49%) | 12/27/03 | 57.71 |
| Jos. A. Bank Clothiers | 77,942 | 100,938 | 30% | 6,410 | 9,580 | 49% | 1/31/04 | 24.43 |
| Red Envelope | 34,290 | 35,922 | 5% | 912 | 1,176 | 29% | 12/28/03 | N/A |
| Sharper Image Corp. | 216,478 | 278,382 | 29% | 16,879 | 22,779 | 35% | 1/31/04 | 20.86 |
| Sportsman’s Guide | 66,313 | 71,700 | 8% | 2,647 | 3,845 | 45% | 12/31/03 | 17.83 |
| The Talbots | 431,801 | 431,576 | 0 | 28,335 | 21,970 | (22%) | 1/31/04 | 19.98 |
| Vermont Teddy Bear Co. | 9,290 | 13,410 | 44% | 117 | 428 | 266% | 12/31/03 | 23.90 |
| Williams-Sonoma | 858,964 | 1,004,281 | 17% | 79,772 | 102,116 | 28% | 2/1/04 | 26.17 |
| Dow Jones Industrial Average | 19.52 | |||||||
| Standard & Poor’s 500 Index | 22.58 | |||||||
| Notes: Price-to-earnings ratios are from various sources | ||||||||
| NM = not meaningful NA = not available | Source: Tully & Holland | |||||||