During its fiscal 2009, Blyth’s catalog and Internet business made up 18% of its revenue, the same as in 2008. But its direct selling operations, which rely on in-home and event sales, pulled in 63%, up from 59% a year earlier, primarily because of reductions in wholesale operations revenue.
How does that translate into dollars? Catalog and Internet revenue stood at $190.1 million, below the $206.8 million recorded a year ago, while direct selling operating income was $664.5 million, down from $686.8 million.
Catalog and Internet operations recorded an operating loss of $59.1 million, compared with an operating loss of $48.9 million a year ago. Direct selling’s operating income was $74.4 million, down from $98.7 million, and wholesale operations generated a $11.2 million loss, somewhat better than the $19 million loss it recorded a year earlier.
According to Blyth’s annual Securities and Exchange Commission filing, the catalog and Internet revenue drop was due to “lower consumer discretionary spending, as well as order processing difficulties associated with the implementation of a new Enterprise Resource Planning system.”
The company attributed the direct selling revenue drop to a decline in the number of sales consultants -- from 27,000 to 21,000 -- due to competitors’ increased ability to attract and retain consultants.
Blyth’s warehouse business pulled in $196.2 million, a drop from the $271.4 million it generated a year ago.
The company’s direct response brands include As We Change; Boca Java; Easy Comforts; Exposures; Home Marketplace; Miles Kimball; and Walter Drake.
Blyth generated $1.05 billion in net sales during its fiscal 2009, down from $1.16 billion a year ago. The company reported a $15.5 million loss, as opposed to $11.1 million in net income a year ago. During the year, the company took an impairment charge of $49.2 million related to its Miles Kimball business. In fiscal 2008, those same operations generated a $48.8 million impairment charge. The most recent year ended Jan. 31.
The Programmer’s Take: Blyth doesn’t go into a lot of detail about the stumbles of its Enterprise Resource Planning (ERP) system, which is a shame. Here are some questions: Within catalog and Internet operations, did the ERP’s stumble contribute to significant numbers of order cancellations, or refunds, and if so what does that mean for the company’s 2009 forecasts? And was part of the reason 6,000 members of its direct selling staff pulled away from its program because the orders they placed were eaten by the system as well? And how did Blyth communicate with all affected? There’s a management case study waiting to be written by an enterprising Harvard Business School sort…
