Byline: Jennifer Weitzman

NEW YORK — Bigger, better assortments of business-casual apparel should help revive sales at Eddie Bauer, the sole weak link in an otherwise strong third quarter at The Spiegel Group.
Michael Moran, chairman of the office of the president at Spiegel, acknowledged that Bauer’s problems stemmed from weaknesses in its apparel offerings and marketing program.
However, robust results from its Spiegel and Newport News divisions enabled the Downers Grove, Ill.-based retailer’s earnings to more than triple, reaching $13.5 million for the third quarter ended Sept. 30, up from $4.2 million in last year’s quarter. Earnings per share moved to 10 cents, twice Wall Street consensus estimates, from 3 cents.
Net sales increased 1.4 percent to $644.0 million from $635.1 million. The sales increase reflects an 11 percent rise in direct sales — including a 218 percent rise in e-commerce sales and a 1 percent gain in catalog sales — offset by a 9 percent decline in retail store sales.
Shares of Spiegel closed at $7.38, down 22 cents, in Nasdaq trading Tuesday.
Total sales at Eddie Bauer decreased 8 percent in the quarter, reflecting a 9 percent decline in its retail and outlet stores and a 15 percent drop in its same-store sales.
To be more “in sync” with its customers and relevant to marketplace trends, Eddie Bauer pledged a return to “tasteful, classic styling with greater color impact” by increasing its emphasis on its dress-casual line for both men and women. Moran said the men’s offering would be in stores this holiday season, followed by the women’s assortment next spring.
On a conference call Tuesday, Moran said the apparel collections at Eddie Bauer were too casual and weekend-oriented and didn’t provide enough versatility. Specifically, the retailer could not capitalize on the growing demand from its core customers for the business-casual category because its offering was limited to the larger format stores. Currently, only 12 percent of stores carry business-casual apparel.
Bauer’s management has been bolstered by the additions of Steve Newman as president of apparel and Stephen Donnelly as head of men’s merchandising.
Yet despite the challenging retail environment, Moran said The Spiegel Group expects to achieve 40 to 45 percent growth in earnings per share for the year from last year’s earnings of 65 cents a share. That figure puts the firm at the lower end of consensus estimates, which run the range of 92 cents to $1.05.
The Spiegel division had a 17 percent increase in sales in the quarter and 18 percent year to date. Net sales per buyer are expected to grow 10 percent for the year, and a reduction in customer attrition rates should reduce pressure on more costly customer acquisition efforts.
For the nine months, total revenue increased 9 percent to $2.3 billion from $2.1 billion and earnings reached $59.5 million, or 45 cents a share, compared with $10.7 million, or 8 cents.