February 28, 2007, 12:00 AM

Design Within Reach pulls web sales up 10% to $7.6 million in Q3

Design Within Reach Inc.’s online net sales rose 10.1%, or about $700,000, to $7.6 million for the third quarter of 2006. Online sales accounted for 17% of total net sales, while plans call for plans a web site upgrade and three more studios.

Mark Brohan

Research Director

Design Within Reach Inc.’s online net sales rose 10.1%, or $700,000, to $7.6 million for the third quarter of 2006. Online sales accounted for 17.3% of total net sales, on par with the same quarter in 2005.

Design Within Reach, No. 215 in the Internet Retailer Top 500 Guide, is a multi-channel retailer that specializes in designer furniture at affordable prices. The company reported net sales increased $4.5 million, or 11.4%, to $43.9 million in the third quarter, from $39.4 million in Q3 2005. Web sales held steady at 17.3% for Q3 2006 compared to 17.5% in the same quarter a year earlier.

Sales growth of about $3.6 million came from sales at 10 stores, or studios, which opened from October 2, 2005 through September 30, 2006. An outlet store that opened in the second quarter of 2006 contributed about $600,000 in additional sales. The company had 62 studios operating at the end of Q3 2006.

Telephone sales generated by print catalogs declined $600,000, or 11.5%, in the third quarter 2006 compared to the third quarter 2005.

For the three quarters ending September 30, 2006, net sales increased $11.1 million, or 9.5%, to $127.9, compared to $116.8 million in the year-earlier period. The increase largely came from a $12.3 million increase in studio sales, but also included a $2.6 million increase in other sales, the company says. “Other” sales increased 236%, compared to the same period in 2005, which the company attributed to three warehouse sales and its outlet store.

Also in 2006, Design Within Reach began replacing core information systems bought in 2005 that didn’t meet company expectations. The systems were designed to support product sourcing, merchandise planning, forecasting, inventory management, product distribution and transportation, and price management. The systems also tied into financial reporting, which the company cited as the reason for its delayed Q2 report.

“We encountered problems with the conversion, due in large part to the absence of rigorous testing of the new systems prior to implementation. In particular, the new systems do not contain mechanisms to automatically identify and correct or reject erroneous or incomplete data,” the company says in its financial statement.

The company expects to complete the implementation in FY 2007. It also plans to invest in a web site upgrade and add three studios.


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