The Spiegel Group continues to experience strong growth in its web-selling business, but it’s not enough to offset sales declines elsewhere in the company. Web sales in the first quarter ended March 31 grew 94% over the year-earlier levels, but that was more than wiped out by a 13% decline in catalog sales and a 3% decline in retail store sales. Total companywide sales were down 3% in the first quarter. Finance revenue from Speigel’s credit card operation was down 10%. The result was a 3% decline in total revenue to $749.6 million.
"As expected, the first quarter presented a more challenging economic
environment as well as difficult comparisons to last year's strong first
quarter results," said James W. Sievers, office of the president and chief
financial officer of The Spiegel Group. "We experienced higher charge-offs in
our credit card businesses and customer response in each of our merchant
companies was relatively weak. Clearly, the economy has negatively affected
consumer behavior and our financial results."
Spiegel reported a net loss of $12.2 million for the first quarter compared to earnings of $20.2 million, before the cumulative effect of an accounting change, in the first quarter of 2000. Operating income declined by $47.2 million for the quarter, including a $51.8 million decrease in income for the merchandising segment and a $4.4 million improvement in the bankcard segment. The gross profit margin as a percent of net sales decreased in the first quarter to 35% from 35.95 in the year-earlier period. Margin growth achieved by the company's Newport News and Spiegel divisions was offset by lower margins at Eddie Bauer. Eddie Bauer's margin decline was driven by higher markdowns versus last year.
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