The Spiegel Group Reports Strong Earnings Growth in Fourth Quarter And Full-Year 1999
PR Newswire, 02/15/2000 09:16
DOWNERS GROVE, Ill., Feb. 15 /PRNewswire/ -- The Spiegel Group today reported an 80 percent increase in net earnings for the fourth quarter of 1999, the ninth consecutive quarter of year-over-year improvement. Net earnings for the quarter ended January 1, 2000, rose $33.2 million to $74.7 million, or $0.57 per share, compared to $41.5 million, or $0.32 per share, in last year's fourth quarter.
For the fiscal year ended January 1, 2000, net earnings grew $73.5 million to $85.3 million, or $0.65 per share, compared to earnings before the redemption of preferred stock of $11.8 million, or $0.09 per share, a year ago. Excluding the redemption of preferred stock and the accounting for receivable sales, net earnings improved by $93.3 million in 1999 compared to 1998.
James W. Sievers, office of the president and chief financial officer of The Spiegel Group, said, "The solid performance we achieved throughout the year continued in the fourth quarter, propelling The Spiegel Group to record operating income in 1999. Initiatives aimed at strengthening our merchandise performance by generating higher gross margins on a growing sales base produced dramatic improvement by each of our brands: Eddie Bauer, Newport News and Spiegel. This progress complemented by profitable growth in our FCNB Preferred credit operations combined to deliver a $168 million operating income improvement in our merchandising segment for the year."
Total revenue for the fourth quarter rose 11 percent to $1.126 billion from $1.017 billion in last year's fourth quarter. The revenue gain reflects a 10 percent increase in net sales and a 19 percent increase in finance revenue. For the full year ended January 1, 2000, revenue increased 9 percent, reflecting net sales growth of 10 percent and a 2 percent decrease in finance revenue.
Comparable-store sales for the company's Eddie Bauer division increased 3 percent for the quarter and 6 percent for the year.
Sales growth in the fourth quarter was heavily influenced by a stronger contribution from Spiegel Catalog, delivering a 38 percent sales gain. In addition, all three marketing channels contributed to the Group's progress, with total catalog sales rising 14 percent, total e-commerce sales jumping 358 percent and Eddie Bauer comparable-store sales growing 3 percent.
Finance revenue rose 19 percent in the quarter due to higher receivables resulting from increased utilization of the company's FCNB Preferred and bankcard programs. Higher credit usage was driven by stronger sales growth, particularly from Spiegel and Newport News.
The company's gross profit margin as a percent of net sales increased 520 basis points in the quarter to 40.3 percent from 35.1 percent in the year-earlier period, primarily due to less promotional activity which resulted in lower markdowns. Eddie Bauer and Spiegel drove the margin gains, as their respective customers responded favorably to revamped and more focused product offerings.
The fourth quarter SG&A ratio increased 160 basis points to 32.8 percent of total revenue compared to a year ago. This increase was primarily due to charges taken to recognize the disposition of certain assets, including the closing of 7 Eddie Bauer stores in the United Kingdom as well as the write-off of certain leasehold improvements. Eddie Bauer's joint venture partner in the UK plans to close the store operations in the first quarter of 2000 and continue to serve this market by focusing on in-home shopping channels. Additionally, incremental expense was realized to increase the provision for doubtful accounts due to the substantial growth in the Preferred and bankcard receivables. In the Bankcard segment, the SG&A ratio for the quarter reflects the impact of non-comparable items, relating to the accounting for the sale of receivables, that benefited 1998's fourth quarter.
Reviewing the year's results, Sievers added, "The Spiegel Group made important progress in 1999, delivering on its key objectives. Eddie Bauer, Newport News and Spiegel logged healthy sales increases and improved operating profits, while our Preferred charge and bankcard programs grew significantly. More importantly, every division made a positive contribution to operating income. Debt rose to fund the substantial growth in receivables while inventories were up only 2 percent."
The company also noted that it will continue to utilize asset-backed securitization of receivables as a financing resource to manage debt and help fund the growth of its credit businesses.
Commenting on 2000, Michael R. Moran, chairman of the office of the president for The Spiegel Group, said, "While the Group showed dramatic recovery in 1999, we are by no means satisfied as 2000 remains filled with challenges and opportunities. Our top priority is to continue to drive sales and gross profit margins higher by keeping our merchandising strategies focused on our customers' lifestyle needs and in sync with customers' expectations of the Eddie Bauer, Newport News and Spiegel brands. Another top priority is maximizing the e-commerce potential of each of our brands. As a multi-channel retailer, our company is uniquely positioned to capitalize on consumers' growing interest in electronic shopping without the costs of building brand equity or a service infrastructure from scratch. We have capitalized on our core competencies to build a strong platform for future growth. Working from this stronger base, we are well positioned to achieve our financial objective for 2000 of at least 15 percent earnings per share improvement driven by continued expansion of gross profit margins on moderate sales growth."
This press release contains statements that are forward-looking statements within the meaning of applicable federal securities laws and are based upon Spiegel, Inc.'s current expectations and assumptions, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Potential risks and uncertainties include, but are not limited to, factors such as the financial strength and performance of the retail and direct marketing industry, changes in consumer spending patterns, dependence on the securitization of accounts receivable to fund operations, state and federal laws and regulations related to offering and extending credit, risks associated with collections on the company's credit card portfolio, interest rate fluctuations, postal rate increases, paper and printing costs, the success of planned merchandising, advertising, marketing and promotional campaigns, and other factors that may be described in the company's filings with the Securities and Exchange Commission.
Spiegel, Inc. (The Spiegel Group) is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, more than 550 specialty retail and outlet stores and five e-commerce sites (eddiebauer.com, eddiebaueroutlet.com, newport-news.com, spiegel.com, and ultimate-outlet.com). The Spiegel Group's businesses include Eddie Bauer, Newport News, Spiegel and First Consumers National Bank. The company's Class A Non-Voting Common Stock trades on the NASDAQ National Market System under the ticker symbol: SPGLA. |
