What a difference a year makes. At this time last year, more than half of the consumer catalogers tracked by Catalog Age were bemoaning eroding profits. But for the first quarter of 2004, 88% of the marketers posted income gains or narrower losses compared with the first quarter of last year. New York-based Alloy and Plano, TX-based J.C. Penney were the two exceptions among the 16 companies.
On the sales side of the ledger, all but two catalogers — Edgewater, NJ-based Hanover Direct and Warren, PA-based Blair Corp. — showed sales increases from the previous first quarter. Last year, 69% of the catalogers tracked posted first-quarter sales increases.
“The 2004 first quarter was outstanding,” says Jim Adams, managing director for Wellesley, MA-based investment bank Tully & Holland, which tracks the companies for Catalog Age. “It’s time to make money.”
CATALOG AGE SPOTLIGHT ON FIRST QUARTER FINANCIALS
Alloy Posts Wider Loss
Quarter ended: April 30
The facts: The New York-based teen cataloger and marketing services provider, which mails the Alloy, Delia’s, CCS, and Dan’s Comp catalogs, lost $9.2 million for the quarter, compared with a net loss of $388,000 a year earlier, because of increased selling, marketing costs, and general and administrative costs.
Total revenue for the first quarter increased 27%, to $87.8 million. Net merchandise revenue — sales from the catalogs and the Delia’s stores — increased 48%, to $44.3 million from $30.0 million last year. The gains came from teen girls’ brand Delia’s, acquired this past fall, which offset sales declines at Alloy’s other titles. First-quarter revenue from sponsorships and other marketing programs increased 10%, to $43.6 million, primarily due to the OCM sponsorship business acquired in the second quarter of 2003.
The skinny: Due to disappointing results, Alloy folded teen title Girlfriends LA and rock ‘n’ roll merchandise book Old Glory in the first quarter of this year, says chief financial officer Sam Gradess.
Coldwater Creek Continues Retail Run
Quarter ended: May 1
The facts: Sandpoint, ID-based Coldwater Creek credits its first-quarter sales and income growth to its continuing retail rollout. The women’s apparel marketer operated 71 retail stores at the end of the first quarter, compared with 44 stores a year earlier.
Net income increased 185%, to $5.5 million from $1.9 million for the first quarter of 2003. Net sales rose 8%, to $124.5 million, compared with $115.2 million last year.
Net retail sales increased 69.5%, to $56.5 million, on a 42% increase in store square footage. Retail sales represented 45.4% of total sales, compared with 28.9% of sales for the first quarter of fiscal 2003.
Net sales from Coldwater’s catalog and e-commerce business decreased 17%, to $68.0 million from $81.9 million. Catalog sales dropped 28%, to $33.0 million from $45.9 million. E-commerce sales fell 3%, to $34.9 million from $35.9 million.
The skinny: During the first quarter, Coldwater Creek generated $913,000 in list rental income — 28% more than the $714,000 in list income it earned for the first quarter of 2003.
Brookstone Narrows Net Loss
Quarter ended: May 1
The facts: Nashua, NH-based cataloger/retailer Brookstone, which mails the Gardener’s Eden, Hard-to-Find Tools, and Brookstone catalogs, narrowed its first-quarter loss to $4.6 million from $6.4 million last year.
Overall company sales rose 27%, to $77.5 million. Direct marketing sales climbed 16%, to $11.8 million. Same-store sales for the quarter rose 20%.
The skinny: Combined circulation for the three titles increased nearly 10% for the quarter, but circ for Gardeners Eden was cut 5%. Nonetheless, the title posted a 5% boost in first-quarter direct marketing sales — perhaps due to its new Website.
Improved Retail Sales, Income at Talbots
Quarter ended: May 1
The facts: Sales of merchandise at full prices rather than discounted fueled the top- and bottom-line improvements at Hingham, MA-based cataloger/retailer The Talbots. First-quarter net sales increased 6%, to $419.0 million. Catalog sales dipped slightly, though, to $65.6 million from $65.8 million last year. Store sales more than made up the difference, increasing 7%, to $353.4 million from $329.2 million last year. Net income rose 13%, to $33.3 million.
The skinny: Despite the gains, lean inventories and weakness in the company’s Talbots Kids and dresses business affected results.
More Big Gains for Williams-Sonoma
Quarter ended: May 2
The facts: San Francisco-based home decor cataloger/retailer Williams-Sonoma continues to churn out double-digit gains in sales and earnings. The company, whose titles include Pottery Barn, Hold Everything, and West Elm, enjoyed a 24% leap in first-quarter direct sales, to $246.6 million from last year’s $198.6 million, largely thanks to the Pottery Barn and West Elm brands. Internet sales jumped 59%, to $95.6 million. Retail sales increased 15% to $349.4 million, due in large part to 33 store openings. Comparable store sales increased 7%.
Overall net revenue, including shipping fees, increased 19% to $640.9 million. Net earnings increased 60%, to $21.4 million.
The skinny: Encouraged by its first-quarter results, Williams-Sonoma is boosting catalog circulation 11%-13% for the remainder of the year.
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 6/26/04) |
||||||||||
| 1-800-Flowers.com | $124,121 | $134,069 | 8% | $1,183 | $1,943 | 64% | 3/28/04 | 36.02 | |||||||||
| Alloy | 69,444 | 87,847 | 27% | (388) | (9,243) | NM | 4/30/04 | N/A | |||||||||
| Blair Corp. | 137,014 | 128,642 | (6%) | 500 | 571 | 14% | 3/31/04 | 15.86 | |||||||||
| Brookstone | 60,957 | 77,451 | 27% | (6,411) | (4,644) | NM | 5/1/04 | 22.95 | |||||||||
| Coldwater Creek | 115,204 | 124,460 | 8% | 1,914 | 5,455 | 185% | 5/1/04 | 44.64 | |||||||||
| Gaiam | 22,972 | 23,775 | 3% | (353) | (329) | NM | 3/31/04 | N/A | |||||||||
| Hanover Direct | 102,474 | 95,312 | (7%) | 192 | 418 | 118% | 3/27/04 | N/A | |||||||||
| J.C. Penney Co. | 3,711,000 | 4,033,000 | 9% | 61,000 | 41,000 | (33%) | 5/1/04 | 24.95 | |||||||||
| J. Jill Group | 82,363 | 99,929 | 21% | 768 | 2,225 | 190% | 3/27/04 | 57.37 | |||||||||
| Jos. A. Bank Clothiers | 62,272 | 79,929 | 28% | 2,174 | 5,335 | 145% | 5/1/04 | 16.48 | |||||||||
| Red Envelope | 15,116 | 17,336 | 15% | (2,653) | (2,261) | NM | 3/28/04 | N/A | |||||||||
| Sharper Image | 116,309 | 156,405 | 34% | 678 | 2,106 | 211% | 4/30/04 | 18.93 | |||||||||
| The Sportsman’s Guide | 43,749 | 44,594 | 2% | 957 | 1,167 | 22% | 3/31/04 | 17.65 | |||||||||
| The Talbots | 394,991 | 418,984 | 6% | 29,400 | 33,341 | 13% | 5/1/04 | 20.69 | |||||||||
| Vermont Teddy Bear Co. | 14,528 | 20,078 | 38% | 1,005 | 1,438 | 43% | 3/31/04 | 19.36 | |||||||||
| Williams-Sonoma | 536,840 | 640,910 | 19% | 13,395 | 21,390 | 60% | 5/2/04 | 23.89 | |||||||||
| Dow Jones Industrial Average | 19.24 | ||||||||||||||||
| Standard & Poor’s 500 Index | 21.8 | ||||||||||||||||
| Notes: Price-to-earnings ratios are from various sources NM = not meaningful NA = not available |
Source: Tully & Holland | ||||||||||||||||