September 28, 2010, 8:13 AM

Web sales turn sour for Harry & David

Web sales declined year over year to $175.5 million in fiscal 2010.

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Fiscal 2010 was a tough one, including online, for gourmet food and gifts retailer Harry and David Holdings Inc.

For the 2010 fiscal year ended June 26, Internet Retailer calculates:

  • Web sales declined year over year 3.8% to $175.5 million from $182.5 million. That figure is based on information in the company’s recently filed annual report with the U.S. Securities and Exchange Commission that e-commerce represented 62% of Harry and David’s direct market sales of $283.1 million in fiscal 2010 compared with 56% of $325.9 million in direct market sales in fiscal 2009.

For the 2010 fiscal year, Harry and David, No. 84 in the Internet Retailer Top 500, Internet Retailer Top 500 Guide also reported:

  • Total sales declined 12.8% to $426.8 million from $489.6 million in fiscal 2010.
  • Direct market sales declined 13.1% to $283.1 million from $325.9 million in fiscal 2009.
  • Store sales declined year over year 9.1% to $114.4 million from $125.9 million.
  • Comparable-store sales decreased 4.1%.
  • Wholesale revenue decreased 22.5% to $29.2 million from $37.7 million in fiscal 2009.
  • Net loss grew year over year about 95% to $39.2 million from $20.1 million.

 “Throughout fiscal 2010, we continued to experience a challenging retail environment characterized by a slowly recovering economy and cautious discretionary consumer spending,” says CEO Steven Heyer. “Despite our sales decline we were able to return to positive operating cash flow by improving our management of working capital and reducing controllable operating expenses.”

Internet Retailer calculates the web accounted for 41.1% of total sales compared with 37.3% in fiscal 2009.

Harry and David, which sells online at HarryandDavid.com, Wolfermans.com and HoneyBell.com, doesn’t break out quarterly web sales, but for the fourth quarter did report:

  • Total sales decreased about 13% to $47.3 million from $54.4 million in Q4 of fiscal 2009.
  • Net loss increased 22.5% to $21.2 million from $17.3 million.

"Despite a 42% reduction in catalog circulation, the Harry & David Internet business was only down 3.8% in fiscal year 2010," says chief brand officer Ross Klein. "What’s more impressive is that with continued circulation reductions, the web business has actually grown 16% fiscal year to date."

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