Sales up; profits down in Q1
By Janice Chamberlain -- Kids Today, 7/1/2006
On the surface, first quarter 2006 was a good time for juvenile home furnishings retailers. Overall sales for the 12 companies on this edition of the Kids Today quarterly retail scorecard grew 9.5% to more than $114 billion from $104.5 billion in the comparable 2005 period, and aggregate net income jumped 12.4% to $3.7 billion.
As the cliché says, the devil's in the details.
While just two retailers saw sales decline quarter over quarter, more than half of the companies saw profits slip compared with the first quarter of 2005.
The largest percentage gain in revenues belonged to Baby Universe, which more than doubled its revenues to $9.5 million from $4.5 million a year ago. The online company's latest quarter benefited from its Jan. 13 acquisition of Posh Tots, another online retailer.
Wal-Mart outdistanced the rest in dollar revenue growth, adding nearly $8.8 billion to its coffers to finish the quarter up 12.3% to $80.5 billion.
Sears Holding, the new company comprised of Sears and Kmart, managed quite a turnaround, posting net income of $180 million in the latest quarter, measured against a net loss of $78 million in the comparable 2005 period.
Linens 'n Things was hardest hit during the quarter — a $65.6 million net lost puts it on a steep downward spiral after its $4.1 million loss in the first quarter of 2005.
J. C. Penney was first in net profit percentage increase, up 22.1% to $210 million from $172 million a year ago.
Kids Today's first-quarter retailer scorecard is based on the financial results of 12 juvenile retail companies with fiscal quarters ending from Feb. 25 to April 30, 2006.
The addition of three companies to the Kids Today quarterly retail scorecard added more than just numbers to the report; three of the big players in the juvenile home furnishings industry are now on board.
New to the report are The Bombay Company, Pier 1 Imports and Williams-Sonoma.
All three operate kids specialty stores — Williams-Sonoma under the Pottery Barn Kids moniker. Pier 1's comparable fiscal quarter ended Feb. 25; Bombay and Williams-Sonoma finished their quarters at the end of April.
Returning to the scorecard is Hanover Direct, which has resumed filing regular earnings reports.
| revenue in millions | net income in millions | return on revenues | |||||||
| Retailer | Qtr. ended | 2006 | 2005 | change | 2006 | 2005 | Change | 2006 | 2005 |
| Wal-Mart | 4/30 | $80,468.01 | $71,680.01 | 12.3% | $2,615.0 | $2,461.0 | 6.3% | 3.2% | 3.4% |
| Target | 4/29 | 12,863.02 | 11,477.02 | 12.1 | 554.0 | 494.0 | 12.1 | 4.3 | 4.3 |
| Sears Holding3 | 4/29 | 11,998.0 | 12,763.04 | -6.0 | 180.05 | (78.0)5 | — | 1.5 | -0.6 |
| J.C. Penney | 4/29 | 4,220.0 | 4,118.0 | 2.5 | 210.06 | 172.06 | 22.1 | 5.0 | 4.2 |
| Bed Bath & Beyond | 2/25 | 1,685.3 | 1,467.6 | 14.8 | 197.9 | 181.0 | 9.4 | 11.7 | 12.3 |
| Burlington Coat Factory | 2/25 | 1,032.07 | 975.67 | 5.8 | 58.3 | 66.78 | -12.6 | 5.7 | 6.8 |
| Williams-Sonoma | 4/30 | 794.39 | 720.79 | 10.2 | 23.1 | 26.2 | -11.7 | 2.9 | 3.6 |
| Linens 'n Things10 | 4/1 | 592.8 | 570.9 | 3.8 | (65.5)11 | (4.1)11 | — | -11.0 | -0.7 |
| Pier 1 Imports | 2/25 | 506.0 | 502.3 | 0.7 | (10.0)12 | 18.812 | — | -2.0 | 3.7 |
| The Bombay Company13 | 4/29 | 118.7 | 122.1 | -2.8 | (15.6)14 | (8.0)14 | — | -13.1 | -6.5 |
| Hanover Direct | 4/1 | 100.3 | 89.7 | 11.8 | (1.8)15 | 3.116 | — | 1.8 | 3.5 |
| Baby Universe17 | 3/31 | 9.5 | 4.5 | 108.8 | (0.2)18 | (0.1)18 | — | -2.1 | -2.1 |
| TOTAL | $114,387.8 | $104,491.5 | 9.5% | $3,745.3 | $3,332.7 | 12.4% | 3.3% | 3.2% | |
| Notes: Figures in parenthesis are losses or declines. 1. Includes non-sales income of $855 million in the 2006 quarter and $772 million in the 2005 quarter. 2. Includes credit card revenues of $370 million in the 2006 quarter and $306 million in the 2005 quarter. 3. Represents the combined results of Kmart and Sears as though the companies had been combined as of the beginning of 2004. 4. Includes credit and financial products revenues of $95 million. 5. Includes pretax gains on the sale of assets of $17 million in the 2006 quarter and $7 million in the 2005 quarter and pretax restructuring charges of $9 million in the 2006 quarter and $3 million in the 2005 quarter and pretax bankruptcy recoveries of $1 million in the 2006 quarter and $17 million in the 2005 quarter. The 2005 quarter also includes a $90 million extraordinary charge, the cumulative effect of an accounting change. 6. Includes pretax real estate and other income of $13 million in the 2006 quarter and $22 million in the 2005 quarter. The 2006 quarter also includes a $3 million net loss from discontinued operations and the 2005 quarter also includes $1 million in net income from discontinued operations. 7. Includes non-sales revenues of $8.4 million in the 2006 quarter and $7.5 million in the 2005 quarter. 8. Includes $603,000 in net income from discontinued operations. 9. Includes direct-to-customer revenues of $360.4 million in the 2006 quarter and $323.5 million in the 2005 quarter. 10. 2006 figures represent the combined results of the predecessor company from Jan. 1 to Feb. 13 and the successor company from Feb. 14 to April 1. 11. Includes income tax benefits of $32.6 million in the 2006 quarter and $2.4 million in the 2005 quarter. 12. Includes net losses from discontinued operations of $3 million in the 2006 quarter and $1.5 million in the 2005 quarter. The 2006 quarter also includes a $2.7 million income tax benefit. 13. Excludes the results of Bailey Street Trading from its May 2005 sale. 2005 figures are restated. 14. Includes income tax benefits of $404,000 in the 2006 quarter and $5.5 million in the 2005 quarter. 15. Includes an $8,000 income tax benefit. 16. After preferred dividends of $79,000; includes a $24,000 pretax special charge and a $3 million net gain from discontinued operations 17. Includes the results of Posh Tots from its Jan. 13 acquisition. 18. Includes a $38,032 pretax stock-based compensation charge and a $116,585 pretax restructuring charge. Source: Company reports and Kids Today market research |
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