DOUBLE-DIGIT SALES GAIN REVERSES SPIEGEL LOSS
Byline: Arnold J. Karr
NEW YORK — With all three of its brands reporting volume and profit gains, the Spiegel Group returned to profitability with a double-digit sales rise in the first quarter.
The Downers Grove, Illinois-based operator of the Spiegel catalog, Eddie Bauer stores and catalogs, and five e-commerce sites generated net income of $20.2 million, or 15 cents per share, during the quarter ended April 1. In the prior year, the company had a net loss of $10 million, or 8 cents per share.
First quarter results include pretax gains of $15.5 million, or 7 cents per share, relating to the sale of preferred credit and bankcard receivables through its First Consumers National Bank (FCNB). Without these items, net income would have been reduced about $10 million .
Revenues for the quarter grew 14.3 percent to $714.9 million compared to $625.2 million in the year-ago period. Net sales advanced 11.2 percent to $627.5 million, while finance revenue mushroomed 49.5 percent to $76.2 million. Excluding the effect of the receivables gains, finance revenue would have risen 19 percent, to about $61 million.
“The significant earnings turnaround reported this quarter reflects the combined strength of our merchant companies and our credit operations,” said James Sievers, Spiegel’s chief financial officer and a member of the office of the president. “We realized improved operating income from each of our businesses — Eddie Bauer, Spiegel, Newport News and FCNB — driving operating income up by more than $49 million for the quarter.”
Operating income was $46.5 million, one-third of it attributable to the sale of receivables.
The strong showing easily beat analysts’ consensus estimates for earnings of 2 cents per share and enabled the company to resume payment of dividends. Shares of Spiegel gained 1/4 to close at 8 1/4 on the Nasdaq Tuesday.
Sales were up for all three of the company’s brands during the quarter, paced by a 25 percent advance by Spiegel, to $173.1 million. Newport News posted a robust 19 percent gain, to $109.4 million, while Eddie Bauer, the largest of the company’s units, lagged with a 3 percent uptick to $345.0 million.
Bauer’s numbers were most affected by the less-than-stellar performance of Spiegel’s retail operations during the quarter, which experienced a 2 percent decline to finish the period with $252.2 million in sales. The company said that outlet store sales declined and that same-store sales results were flat for the Eddie Bauer stores. Although Spiegel operates outlet stores for all three of its brands, only Eddie Bauer operates regular retail stores. At the end of the quarter, Spiegel operated 473 Bauer units and a total of 85 outlet stores — 52 under the Bauer banner, 20 Spiegel and 13 Newport News.
Catalog sales advanced 12.4 percent to $337.7 million.
The quarter also saw the company’s Internet initiatives bear fruit as e-commerce sales increased nearly five-fold to $37.5 million in the 2000 quarter compared with $7.7 million a year ago. E-commerce’s share of quarterly net sales leaped to 6 percent from 1.4 percent.
“The Spiegel Group is off to a strong start this year as we continue to implement initiatives that parlay our strengths as multichannel retailers and strengthen the connection with our customers,” said Michael Moran, chairman of the office of the president at Spiegel, in a statement. “Eddie Bauer, Newport News and Spiegel each registered significant sales growth from e-commerce this quarter and will continue to develop programs aimed at fueling further expansion.”
With the resumption of dividends, stockholders of record May 8 will receive a quarterly dividend of 4 cents per share payable on May 15. When the company last paid dividends in 1995, the rate was 5 cents per share per quarter.