A 11% drop in direct sales and an rise in customer delinquencies helped fuel a 9% revenue decline for The Spiegel Group during August.
The Downers Grove, IL-based apparel marketer reported sales of $188.7 million, compared with $208.2 million for the same four-week period last year.
And it expects a third-quarter loss of up to 10 cents per share. The quarter ends Sept. 29.
A 60% increase in e-commerce sales was offset by a 21% decline in catalog sales during August. Retail store sales fell by 7%.
Comparable-store sales fell by 11% for the firm’s Eddie Bauer division, contributing to a 6% decline for the entire Bauer unit.
Despite signs pointing to an improvement in delinquency trends, defaults rose in the firm’s private-label credit business. The firm now expects “higher charge-offs to negatively affect our earnings in the third and fourth quarters,” said Jim Cannataro, executive vice president and chief financial officer of Spiegel, in a statement.
The firm is implementing “more restrictive credit measures aimed at lowering our charge-off exposure and improving the quality of our portfolio,” Cannataro said. But, he added, “it will take time.”
Revenue is expected to be flat or slightly up during the fourth quarter.
“Each of our merchant companies made conservative inventory commitments going into the fall season,” Cannataro said. “We will continue to focus on tightly managing inventory levels, taking the necessary steps to keep inventories current.”
He added that the Eddie Bauer division has “taken aggressive markdowns to move prior season product and have a clear presentation of the new fall product.”
Overall sales declined by 5% during the 34 weeks that ended Aug. 25—to $1.6 million.
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