Coldwater Creek Juggles Lines

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Coldwater Creek's decision to discontinue The Home Book in the fall as a cost-cutting measure will result in many of its items shifting to the company's other catalogs.


"It was an extremely exciting venue, but it turned out to be prohibitively expensive to continue pursuing that promotional vehicle," said David Gunter, director of corporate communications & investor relations for Coldwater Creek, Sandpoint, ID. "We will save a substantial amount of money by discontinuing the book. [Its] overall trend was upward, but more slowly than we would have liked to have seen. We probably will have a Summer book and a Late Summer transition book is a possibility, but the merchandise to be continued is to be consolidated with other books by the fall."


The catalog is produced four times per year and accounts for "a small percentage" of the company's overall circulation, accounting for a "single digit percentage" of overall sales. It was the firm's smallest revenue producer.


"The bigger picture was the overall economic environment, and when we looked at The Home Book, we came to the conclusion that 80 percent of sales from the book are in apparel and we are first and foremost a women's apparel company," he said. "We have explored home merchandise, but the customer comes to us for apparel and we had certain internal benchmarks we would like to have seen regarding home merchandise."


Loungewear is The Home Book's best seller while casual weekend wear is also a big seller. Net sales for The Home Book amounted to $16.5 million in fiscal 2000, which ended March 3, 2001.


"We feel that we can maintain approximately 65 percent of the revenue that The Home Book was producing in the other three titles while at the same time increasing profitability by eliminating the costs of production," he said.


"Decorative items and accessories, including candles, have done very well for us. But we're not going to go forward with quilts, throws and bedding. For the most part, with bedding, you will see that discontinued. The beauty of this consolidation is that for apparel and accessories, we can find homes for those items in other titles quite nicely. The apparel will show up in Natural Elements and Northcountry, which will also be the home for hard goods, and we will also see Spirit of the West taking on some of the accessories."


Total catalog circulation for all four titles was 180 million in fiscal 2000. The firm's total circulation will be below that total when fiscal 2001 ends in March and the company will continue to pull back, by about 22 percent, in fiscal 2002.


Gunter said Home Book customers would likely continue to be mailed other catalogs based on their purchase history. It is expected that recipients will be informed during the summer regarding the transition of merchandise that will go forward into other existing books.


The company previously announced that its disappointing holiday performance will lead to a fourth-quarter 2001 loss of $4.4 million to $4.9 million when it releases its quarter and full-year numbers March 2. Customer demand did not meet expectations during the season. It doesn't expect sales to rebound until September when the fall catalog and retail season starts.


The company said last month that chief financial officer Donald Robson resigned and that it would eliminate nearly 220 jobs, including about 120 positions in connection with the closure of its Sandpoint distribution center. The company also announced the closure of its galleryatthecreek.com specialty merchandise Web site.


Coldwater Creek is a multi-channel retailer of women's apparel, gifts, jewelry, home merchandise and accessories, sold through catalogs, coldwatercreek.com and retail stores.


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