Not even a bad economy can justify a 72% drop in catalog sales. But such a falloff makes sense for a company that has closed or spun off some of its catalog operations.
Such is the case with Charming Shoppes, which saw its catalog sales drop from $22.5 million during second-quarter 2008 to $6.3 million for the quarter just ended. Between the two quarters, the apparel marketer shut its Lane Bryant Woman catalog and sold off its non-core misses apparel catalog business.
That said, the second quarter saw an overall revenue drop from $648.6 million a year ago to $527.2 million for the quarter just ended. But the news wasn’t all bad: Charming Shoppes recorded $5 million in net income, compared with a $10.7 million net loss in second-quarter 2008. The current quarter ended Aug. 1.
The company accomplished this turnaround in part by reducing the cost of its good sold, from 53.3% of sales a year ago to 50% for the quarter just ended. It also trimmed restructuring charges from 2.3% of sales to 1.5% -- even with the costs associated with the Lane Bryant Woman catalog and ShoeTrader.com shutdowns, as well as the other catalog divestures.
The Eavesdropper’s Take: Charming Shoppes is not turning its back on its catalog operations. During an earnings teleconference, president and CEO James P. Fogarty discussed how is company has modified its monthly magalogs, which are “converting reasonably well with our existing customer base, but we are not converting as well with those we don’t market to, i.e. our walk-in customers.” Look for the company to start using its magalogs in-store, Fogarty added. Lane Bryant currently mails to between 3 and 3.5 million magalogs a month: Each book is between 20 and 30 pages.
