SPIEGEL CATALOG SPURS GROWTH IN 2ND QUARTER
NEW YORK — The Spiegel Group reported earnings jumped 56.8 percent in the second quarter as strength in its catalog and credit card businesses offset weakness at Eddie Bauer.
In the quarter ended July 1, earnings rose to $25.8 million, or 20 cents a share, from $16.5 million, or 13 cents, a year ago. Jim Sievers, chief financial officer, said operating profits in Spiegel’s merchandising segment grew by $5 million as a result of sales growth, improved gross margins — particularly at the namesake Spiegel catalog — and a stronger preferred credit contribution. Bankcard operating income increased $8.5 million due to higher finance revenues and lower charge-offs.
Net revenues advanced 7.2 percent to $805.9 million from $752 million as a result of a 4 percent gain in merchandise sales and a 40 percent hike in finance revenue. The rise in finance revenues resulted primarily from higher average receivables and an $8.2 million net pretax gain on the sale of receivables.
Direct sales grew 8 percent as a 380 percent surge in e-commerce sales offset a 1 percent dip in catalog sales. E-commerce sales grew nearly fivefold to $46 million, representing 7 percent of sales versus 1 percent a year ago. Retail sales were flat, with a 5 percent decrease in Bauer’s same-store sales matching an increase at outlets.
Sales grew 14 percent at the Spiegel direct business and 9 percent at Newport News, with each increasing profits. The Spiegel division was helped by significantly reduced markdowns and a shift toward higher-margin apparel and private label products. The main Spiegel catalog saw a good response to its products as it reinforced the company’s position as the “Lifestyle Resource for the Working Woman.” Newport News’ customers responded well this spring to its “Easy Style” positioning and its Web site.
Bauer was hurt by sluggish customer demand this spring, and the chain’s first fall floorset, which began July 17, featured “sportswear that is functional, versatile and stylish yet comfortable,” said Michael R. Moran, chairman.
“Eddie Bauer also will be introducing several enhancements to its e-commerce business, including a total Web site redesign and the exclusive online launch of a new business expected in the third quarter,” Moran said. “Spiegel and Newport News plan to build on the positive momentum established in the first half of the year, more fully utilizing the strength of their dual-channel marketing capabilities to drive sales and earnings, while strengthening customer response.”
In the half, earnings for the firm, based in Downers Grove, Ill., shot up more than sevenfold to $46.1 million, or 35 cents, from $6.5 million, or 5 cents, a year ago. Sales climbed 10.4 percent to $1.52 billion from $1.38 billion.
Spiegel operates more than 550 specialty and outlet stores, six e-commerce sites and a corporate Web site.