SPIEGEL STRUGGLES IN QUARTER
Byline: Jennifer Weitzman
NEW YORK — Weak sales and bad debt led The Spiegel Group to report a third-quarter loss and severely reduce its fourth-quarter outlook.
The Downers Grove, Ill.-based catalog retailer said it lost $12.3 million, or 9 cents a share, for the quarter ending Sept. 29. That compares with earnings of $13.5 million, or 10 cents a share, for the same period last year. Earnings met the firm’s guidance, which was lowered in September.
Total revenue was $703.8 million, a 12.8 percent decrease from last year’s sales of $807.5 million. Direct sales declined 13 percent, while retail stores’ sales fell 7 percent. E-commerce sales continued to outpace the overall sales trend, posting a 42 percent increase that was offset by a 22 percent decrease in catalog sales for the total direct business. The decline in retail store sales includes a 15 percent decrease in Eddie Bauer’s comparable-store sales but growth in outlet store comps.
Martin Zaepfel, chief executive, said Bauer debuted its new brand positioning and apparel offering in stores on Sept. 5 but that comps since have fallen short of expectations. “Eddie Bauer has a strong holiday offering and I am confident that as mall traffic builds during the busy holiday season, sales will strengthen,” Zaepfel said. Spiegel has seen improving sales trends in other areas of Eddie Bauer’s business, such as direct sales and Eddie Bauer Home.
The company lowered guidance for its fourth quarter, ending Dec. 29, due to the weaker than expected economic environment and further uncertainty about consumer confidence and spending. The company now expects earnings in the range of 25 to 30 cents a share, compared with earnings of 50 per share last year. Total revenue is expected to be down 5 to 10 percent and Eddie Bauer comps are expected to be down more than 10 percent.
To manage, Zaepfel said, “each of our merchant companies and our bank are focused on actions that will improve earnings performance in the fourth quarter. At the same time, we are developing merchandise strategies aimed at improving sales productivity and reducing the reliance on credit marketing programs to drive sales. Each of our merchant companies will continue to enhance its brand positioning by better aligning its product offer with customers’ needs and strengthening its price-value equation. In addition, we will continue to take actions to strengthen the quality of our credit card portfolios.”
For the nine-month period, Spiegel posted a loss of $19.5 million, or 15 cents a share, compared with earnings of $59.5 million, or 45 cents, on a 7 percent sales decrease to $2.28 billion from $2.44 billion.