Williams-Sonoma Earnings Not Penalized By Catalog Cuts
Third-quarter 2009 direct marketing revenue for Williams-Sonoma Inc. dropped 8.1% from third-quarter 2008’s level, falling from $327.7 million to $301 million. But this was to be expected, as the company’s total catalog circulation fell 18.1%, and total pages circulated were down 20.6%.
The company’s Internet revenue fell 7%, from 247.5 million a year ago to $230.1 million.
Total retail revenue ticked up from $424.4 million in third-quarter 2008 to $428.3 million. All told, the company pulled in $729.3 million during its most recent third quarter, down from $752.1 million a year ago.
Direct revenue made up 41.3% of total revenue during the quarter, compared with 43.6% a year earlier.
The company trimmed both its cost of goods sold in the third quarter – to 65.3%, from 68% a year earlier – as well as selling, general and administrative expenses, which slipped from 34.6% of revenue to 33.4%. The third quarter saw net earnings of $7.3 million, compared with an $11 million loss a year ago.
The Forecaster’s Take: Chances are pretty good the deep cuts in catalog page count and circulation haven’t been reflected Williams-Sonoma’s direct marketing revenue – yet. But unless previous mailings have been filled with fat, when a company cuts its mailings going into the holiday season there is fallout from the loss of message repetition. Unless Williams-Sonoma is planning a fourth-quarter mail surge, look for the drop in page count and direct marketing revenue to be more in line during the next set of results. And if there was that much fat in the mailings two years into rough economic times, why was it there?
