Spiegel sales drop leads to 3Q loss
November 5, 2001,
Downers Grove, IL — With retail sales tumbling in the midst of mounting consumer uncertainty — and hobbled by mounting bad-debt charge-offs in its big credit business — Spiegel Inc. recorded a third-quarter loss of $12.3 million, compared with a year-before profit of $13.5 million.
Overall sales at Spiegel, including retail and credit revenues, tumbled by 12.9 percent, to $703.8 million from $807.5 million last year, a drop of more than $100 million. Retail sales at the direct-mail retailer fell by 10.8 percent, to $574.7 million from $644.0 million a year ago, with each of the company's four merchant divisions reporting sales weakness. Direct-mail sales were off by 13 percent, while sales in bricks-and-mortar stores fell by 7 percent. Internet sales continued to provide a big lift, jumping up by 42 percent.
Putting earnings under further pressure, margins narrowed by 180 basis points, to 34.2 percent from 36.0 percent a year ago, due mostly to higher markdowns and additional marketing promotions at Eddie Bauer. But continued cost-cutting provided some measure of relief, and overhead was pared by 7.1 percent, to $326.8 million from $351.8 million last year, a cash savings of $25.0 million.
Going forward, the company remains cautious, said James Cannataro, executive vp and cfo. "In planning holiday season demand, we took a conservative approach in our inventory commitments. We expect the retail environment to remain challenging in the fourth quarter. As a result, we have intensified marketing promotions and will continue to tightly manage expenses."
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