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Lillian Vernon income dips 32%

RYE, NY -With consumer spending cooling and sales falling off due to a lower response rate to its mailings, specialty catalog retailer Lillian Vernon reported third-quarter profits declined by 32.3 percent, to $6.6 million from $9.7 million last year.

In a continued soft retail environment, sales dropped off by 6.9 percent, to $98.3 million form $105.6 million the previous year.

And should sales continue to be weak through the crucial Christmas quarter, earnings for the entire fiscal year could come in 40 to 50 percent lower than prior-year levels, the direct-mailer warned.

With sales under pressure, average gross margin contracted by 120 basis points, to 54.1 percent from 55.3 percent a year ago. Gross margin dollars weakened by 9.0 percent, to $53.2 million from $58.5 million. Given the sagging top line, costs climbed higher as a percentage of sales by 180 basis points, to 42.6 percent from 40.8 percent. But measured in absolute dollars, costs were reduced by 2.8 percent, to $41.9 million from $3.1 million, the product of ongoing cost cutting.

Going forward, said Lillian Vernon, ceo, "We are focused on controlling inventory levels and expenses and are planning unique and value-priced offerings for the spring season."

LILLIAN VERNON INC.


Qtr. 11/25 (x000) 2000 1999 %CHG

Sales

$98,340

$105,630

-6.9

Oper. income (EBIT)

11,288

15,335

-26.4

Net income

6,551

9,670

-32.3

Per share (diluted)

0.75

1.06

-29.2

Average gross margin

54.1%

55.3%

-

SG & A expenses

42.6%

40.8%

-

NINE MONTHS

2000

1999

%CHG

Sales

174,802

170,246

2.7

Oper. income (EBIT)

5,864

7,929

-26.0

Net income

3,602

5,407

-33.4

Per share (diluted)

0.41

0.59

-30.5

Average gross margin

52.0%

52.4%

-

SG & A Expenses

48.6%

47.8%

-


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