June 14, 2006, 12:00 AM

Design Within Reach posts Q1 web sales decline

E-commerce sales at Design Within Reach dropped 16% in the first quarter as the multi-channel furniture retailer reduced its promotions and advertising program to concentrate on expanding stores.

Direct marketing and e-commerce sales at Design Within Reach Inc. dropped substantially in the first quarter as the multi-channel furniture retailer reduced its promotions and advertising program to concentrate on store expansion.

In Q1 e-commerce sales at Design Within Reach, No. 215 in the Internet Retailer Top 500 Guide to Retail Web Sites, totaled $6.4 million, a decrease of 16% from e-commerce sales of $7.6 million in the first quarter of 2005. Total sales also declined 1% to $35 million in Q1 from $35.5 million in Q1 2005.

“The company`s online sales were down 16% due to a reduction in marketing price promotions from the same period last year; also, phone sales were down 22%,” the company says. “While Design Within Reach believes its direct sales channels offer a convenient shopping forum for its customers, the company plans to carefully examine the costs associated with these channels, particularly customer prospecting effectiveness and catalog profitability.”

In the first quarter the web represented 18.4% of all revenue compared with 21.4% in Q1 2005. At the same time, Design Within Reach, which sells modern design European-style home furnishings, appointed a new CEO, Ray Brunner, who will spend considerable time looking for ways to improve operations. “I have a strong understanding of our core competencies and firmly believe our problem is not at the top line but is an expense and control issue,” Brunner says. “We are examining every line item to return to the fundamentals of cost control and bring DWR back to profitability."

Prior to his new role as CEO, Brunner was Design Within Reach’s executive vice president of real estate and studio operations. He replaced Tara Poseley.

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