Despite booming consumer confidence throughout the spring and summer, the second quarter wasn’t particularly encouraging for most of the publicly traded catalogers and Internet-only merchants tracked by Catalog Age. Sixty percent of the consumer catalogers and all but one of the online marketers reported a decline in sales, a decline in earnings, or both. Cataloger/retailers faired better, with just two-Brookstone and J.C. Penney-of the six suffering a drop in second-quarter sales or earnings.
Among the consumer catalogers, Brylane, Coldwater Creek, DM Management, Hanover Direct, NBTY, and Specialty Catalog Corp. reported gains on both sides of the ledger. Sandpoint, ID-based apparel, gifts, and linens cataloger Coldwater Creek, for one, boosted second-quarter sales 68%, to nearly $61 million. The company attributes the sales lift to increased circulation of its Northcountry and Spirit of the West titles. The added expense of increased mailing is reflected in its earnings: Net income rose only 34%, lagging behind the sales growth.
On the flip side, net sales for Minneapolis-based general merchandise and membership services cataloger Damark fell 22%, to $115.6 million, following a 22% reduction in mailings and a drop in average order size. Worse, net earnings plummeted; the company lost $4.6 million, compared with net income of $2.1 million for the previous second quarter.
“Traditionally, spring is sluggish for consumer catalogers,” says Nick Holland of Boston investment firm Ulin & Holland. “And when you factor in excess inventory or declining average orders, you’ll get these results.”
Among cataloger/retailers, Hingham, MA-based Talbots displayed an impressive turnaround. Thanks largely to improved merchandising and the resulting decrease in clearance activity, the women’s apparel marketer grew catalog sales 10%, to $32 million, while increasing total revenue 9%, to $267.7 million. And earnings rebounded from a loss of $11.5 million last year to a profit of $1.3 million.
Web sales grow, as do losses All but one of the six Internet merchants tracked by Catalog Age benefited from triple-digit sales growth. Spokane, WA-based Egghead.com was the exception-but during the second quarter of ’97, the software merchant still had a retail presence; the company closed all 80 of its stores in January.
During the same quarter, all but one e-merchant increased their losses. This time Sportsline USA, which sells licensed sports merchandise, was the exception. Chief financial officer Kenneth Sanders credits the Ft. Lauderdale, FL-based company’s strategic relationships with America Online and CBS Sports with boosting its revenue and helping it trim its net loss 9%. Nonetheless, Sanders says, echoing the mantra of most e-merchants, “we’re sacrificing profits for long-term growth.”-MDF