Catalog Prospecting Part of Chico’s FAS’s Plans
Apparel marketer Chico’s FAS racked up $20.2 million in direct channel sales during its most recent second quarter, a 46% from $13.8 million in second-quarter 2008. On a percentage basis, the most recent direct sales amounted to 4.8% of the chain’s revenue, compared with 3.4% from a year ago.
Granted this is going from little to less-than-little, but it mirrors first-quarter 2009’s results, when direct sales amounted to 5.3% of sales (just under $22 million), up from 3.9% a year earlier.
The increase in the most recent quarter’s direct sales came despite a $900,000 decrease in direct mail expenses versus second-quarter 2008’s spending. Overall marketing expense slipped from $16.8 million a year ago to $16.2 million for the quarter ended Aug. 1.
Second-quarter net sales for all of Chico’s operations (including its Chico’s/Soma stores and White House | Black Market chain) were $419.9 million, up from $405.2 million a year ago. The company racked up $14.9 million in net income, up from $6.7 million in second-quarter 2008.
The Eavesdropper’s Take: An earnings conference call yielded several tidbits regarding Chico’s direct marketing thinking. First, the company recently redesigned its catalog, and CEO David F. Dyer attributed some of the sales bump the company experienced to customers reacting to its fall mailing – a mailing that boosted Chico’s full-price sales during the quarter. Fall catalog prospecting circulation will go up: “We are really going after adding new customers,” Dyer said, according to transcript firm Seeking Alpha. And executive VP and CFO Kent Kleeberger noted “I think that in the first part of spring our circulation was down. We probably cut too deep…we put more money into reactivation. And then in the fall we’re going to be putting more money into prospecting.” Separately, Dyer noted the company had been mailing and e-mailing to lapsed customers, and had experienced a reactivation rate of 6.8%.
