Merchants report Q3 woes

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That the third quarter was tough for multichannel merchants was again apparent Nov. 16 as another round of results were released. However, growth in Internet sales provided a bright spot for a couple of retailers.

Sears Holdings Corp. reported revenues declined $300 million for a total of $11.9 billion for the 13 weeks ended Oct. 28, with revenues at Sears declining $100 million and revenues at Kmart dropping $200 million.

Comparable-store sales decreased 3 percent in the aggregate, with Sears Domestic same-store sales declining 4.8 percent and Kmart same-store sales declining 0.7 percent.

The Hoffman Estates, IL, retailer also said its net income for the third quarter totaled $196 million, or $1.27 per diluted share compared with net income of $58 million, or $0.35 per diluted share, for the same period last year.

Williams-Sonoma Inc., San Francisco, said net revenues for the third quarter of fiscal year 2006, the period ended Oct. 29, increased 3 percent for a total of $852.8 million. Same-store sales were flat during the same period.

"Our revenue growth of 3 percent was slightly below our expectations due to further softening in the Pottery Barn brand, and increasing volatility of our other home furnishings brands," Howard Lester, chairman/CEO of Williams-Sonoma, said in a statement.

"As both of these trends have continued into the fourth quarter, we are increasingly concerned about the 'home-related' macro-economic environment, as well as the competitive landscape - which is becoming highly promotional," he said.

The company's direct-to-consumer net revenues decreased 0.3 percent for a total of $381.9 million. This decrease was primarily driven by lost revenues in the Hold Everything brand - shut down earlier this year - and a reduction in year-over-year revenues in the Pottery Barn brand. Internet revenues increased 15.1 percent for a total of $227.3 million.

The company estimates that approximately 45 percent of its company-wide non-gift registry Internet revenues are incremental to the direct-to-consumer customer channel. It also estimates approximately 55 percent of these purchases are made by customers who recently received a catalog.

Williams-Sonoma's net earnings for the third fiscal quarter decreased 21.4 percent to $29.1 million, or 25 cents per diluted share, versus $37.1 million, or 31 cents per diluted share, last year.

The Bombay Company Inc., Fort Worth, TX, saw its revenue drop 15.5 percent for the three months ended Oct. 28 for a total of $108.2 million. Same-store sales declined 15.5 percent during the same period.

Bombay's direct-to-consumer business grew to $7.4 million for the quarter compared to $5.5 million last year, driven primarily by Internet sales.

The company's net loss for the quarter totaled $15.6 million, or 43 cents per share, compared to a net loss of $4.4 million, or 12 cents per share, last year.

Limited Brands, Columbus, OH, reported net sales for the third quarter ended Oct. 28 totaled $2.1 billion compared to $1.9 billion last year. Comparable-store sales for the quarter increased 10 percent.

The company's net income totaled $23.5 million and earnings per share increased to 6 cents for the third quarter compared to no gain or loss last year.


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