The Spiegel Group Reports First Quarter Earnings

Apr 24, 2001, 01:00 ET from The Spiegel Group

    DOWNERS GROVE, Ill., April 24 /PRNewswire Interactive News Release/ --
 The Spiegel Group (Nasdaq: SPGLA) today announced financial results for the
 first quarter ended March 31, 2001.  The company reported a net loss of
 $12.2 million, or $0.09 per share, compared to earnings of $20.2 million, or
 $0.15 per share, before the cumulative effect of an accounting change, in the
 first quarter of 2000.  Results were consistent with previous guidance and
 First Call consensus estimates.
     "As expected, the first quarter presented a more challenging economic
 environment as well as difficult comparisons to last year's strong first
 quarter results," stated James W. Sievers, office of the president and chief
 financial officer of The Spiegel Group.  "We experienced higher charge-offs in
 our credit card businesses and customer response in each of our merchant
 companies was relatively weak.  Clearly, the economy has negatively affected
 consumer behavior and our financial results."
     Operating income declined by $47.2 million for the quarter, including
 a $51.8 million decrease in income for the merchandising segment and a
 $4.4 million improvement in the bankcard segment.
     Total revenue for the quarter declined 3 percent to $749.6 million
 reflecting a 3 percent decrease in net sales and a 10 percent decrease in
 finance revenue.
     Net sales for the quarter included a 2 percent decline in direct sales
 and a 3 percent drop in retail store sales.  Direct sales are comprised of a
 94 percent lift in e-commerce sales and a 13 percent decrease in catalog
 sales.  The drop in retail store sales was due to a 10 percent decline in
 Eddie Bauer's comparable-store sales offset somewhat by sales growth in its
 outlet stores.
     The decline in finance revenue was primarily attributable to lower
 securitization income, which includes retained-interest income from
 securitized receivables and net pretax gains on the sale of receivables.
 While the yield on receivables rose in the quarter along with the level of
 receivables serviced, higher charge-offs negatively impacted the performance
 of the credit card business, particularly in the private-label programs,
 resulting in lower excess cash flows from the securitization of receivables,
 which reduced finance revenue.  In addition, due to lower receivables sold
 during the quarter, net gains on the sale of receivables were $8.4 million in
 this year's first quarter compared to $15.5 million in the same period last
 year.  The $7.6 million decrease in finance revenue reflects a $15.1 million,
 or 34 percent, decline in revenue from the private-label credit card programs
 net of a $7.5 million, or 24 percent, increase in bankcard revenue.
     The gross profit margin as a percent of net sales decreased in the first
 quarter to 35.0 percent from 35.9 percent in the year-earlier period.  Margin
 growth achieved by the company's Newport News and Spiegel divisions was offset
 by lower margins at Eddie Bauer.  Eddie Bauer's margin decline was driven by
 higher markdowns versus last year.
     Selling, general and administrative expenses as a percent to total revenue
 increased by 530 basis points to 47.0 percent for the quarter.  This increase
 resulted from lower productivity on catalog circulation for each of the
 Group's merchant companies and weaker performance from private-label credit
 card programs compared to the prior year.
 
     Outlook
     Commenting on the company's outlook, Michael R. Moran, chairman of the
 office of the president, stated, "Given the challenging economic environment,
 we have intensified our efforts to reduce expenses and conservatively manage
 our inventory commitments going forward.  Although the economic outlook for
 the second half of the year is uncertain, we have taken important actions in
 our credit business and our Eddie Bauer division that are expected to
 positively impact earnings."
     The company confirmed its previously issued guidance for the second
 quarter, calling for modest revenue growth and earnings of $0.02 to $0.05 for
 the quarter ending June 30, 2001.
 
     Management Comments
     Mike Moran, chairman of office of the president for The Spiegel Group,
 will provide comments on the company's first quarter financial results today
 at 10:00 a.m. Eastern Time.  This information can be accessed as follows:
     * Call 800-405-2236 and enter passcode 325882
     * Visit the Earnings Overviews and Presentations section of the company's
       Web site at thespiegelgroup.com and enter passcode 325882.
 
     The pre-recorded call will be accessible through May 8, 2001.
     This press release contains statements that are forward-looking within the
 meaning of applicable federal securities laws and are based upon Spiegel,
 Inc.'s current expectations and assumptions.  Words such as "expect," "plan,"
 "believe," "anticipate," and similar expressions identify forward-looking
 statements.  Any such forward-looking statements 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.
     The Spiegel Group is a leading international specialty retailer marketing
 fashionable apparel and home furnishings to customers through catalogs, nearly
 580 specialty retail and outlet stores and eight e-commerce sites, including
 eddiebauer.com, newport-news.com and spiegel.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.
 Investor relations information is available on The Spiegel Group web site
 ( thespiegelgroup.com ).
 
 
                         Spiegel, Inc. and Subsidiaries
                      Consolidated Statements of Earnings
                   ($000s omitted, except per share amounts)
 
                                                   Thirteen Weeks Ended
                                               March 31,            April 1,
                                                  2001              2000 (a)
     Net sales and other revenues:
       Net sales                                $611,679          $627,477
       Finance revenue                            68,639            76,197
       Other revenue                              69,233            66,697
                                                 749,551           770,371
     Cost of sales and operating expenses:
       Cost of sales, including buying and
         occupancy expenses                      397,674           402,376
       Selling, general and administrative
         expenses                                352,545           321,450
                                                 750,219           723,826
 
     Operating income (loss)                        (668)           46,545
 
     Interest expense                             18,764            14,456
 
     Earnings (loss) before
       income taxes                              (19,432)           32,089
 
     Income tax provision (benefit)               (7,190)           11,873
 
     Earnings (loss) before
       cumulative effect of
       accounting change                         (12,242)           20,216
 
     Cumulative effect of
       accounting change (b)                           0             4,076
 
     Net earnings (loss)                        $(12,242)          $16,140
 
     Net earnings (loss) per
       common share before cumulative
       effect of accounting change:
         Basic and Diluted                        $(0.09)            $0.15
 
     Cumulative effect of
       accounting change
         Basic and Diluted                         $0.00             $0.03
 
     Net earnings (loss) per
       common share:
         Basic and Diluted                        $(0.09)            $0.12
 
     Weighted average number of common
       shares outstanding:
         Basic                               131,867,366       131,859,113
         Diluted                             131,999,107       131,985,828
 
     (a) Certain prior year amounts have been reclassified from amounts
         previously reported to conform with the current presentation.  These
         reclassifications primarily relate to changes in the classification
         of catalog shipping revenue in response to guidance contained in
         EITF No. 00-10.
     (b) The cumulative effect of accounting change in the first quarter 2000
         resulted from a change in revenue recognition policy related to a
         marketing program at the Company's Newport News division in response
         to SAB No. 101.
 
     Supplemental Information:                     Thirteen Weeks Ended
                                                 March 31,        April 1,
                                                    2001           2000
     Operating income (loss) before
       net pre-tax gains on the sale of
       receivables                                $(9,113)       $31,054
 
     Net pre-tax gains:
       FCNB Preferred credit receivables            5,612          8,643
       FCNB bankcard credit receivables             2,833          6,848
     Total net pre-tax gains                        8,445         15,491
 
     Operating income (loss)                        $(668)       $46,545
 
 
                         Spiegel, Inc. and Subsidiaries
                         Supplemental Sales Information
                                ($000s omitted)
 
 Consolidated Net Sales by Division
 
                                     Thirteen Weeks Ended
                                    March 31,       April 1,           %
                                      2001            2000           change
 
     Eddie Bauer                    $332,911        $345,006         -4%
     Newport News                    121,407         109,384         11%
     Spiegel                         157,361         173,087         -9%
 
       Total                        $611,679        $627,477         -3%
 
 Consolidated Net Sales by Channel
 
                                     Thirteen Weeks Ended
                                    March 31,       April 1,          %
                                      2001            2000         change
 
     Catalog                        $290,311        $332,703        -13%
     E-Commerce                       70,683          36,349         94%
     Total Direct                    360,994         369,052         -2%
     Retail stores(a)                250,685         258,425         -3%
 
       Total                        $611,679        $627,477         -3%
 
     (a) Includes Eddie Bauer retail store sales, as well as outlet store sales
         for all divisions -- Eddie Bauer, Newport News and Spiegel.  As of
         March 31, 2001, there were 475 Eddie Bauer retail stores, 70 Eddie
         Bauer outlet stores, 16 Newport News outlet stores and 18 Spiegel
         outlet stores.
 
 
                         Spiegel, Inc. and Subsidiaries
                          Business Segment Comparison
                                ($000s omitted)
 
                                                  Thirteen Weeks Ended
                                                March 31,           April 1,
                                                   2001              2000
 
     Revenue:
       Merchandising                            $709,274          $737,732
       Bankcard                                   40,277            32,639
     Total Revenue                              $749,551          $770,371
 
     Operating income (loss):
       Merchandising                            $(21,889)          $29,900
       Bankcard                                   21,264            16,865
 
     Total segment operating income (loss)          (625)           46,765
 
     Premium on acquisitions                         (43)             (220)
 
     Total operating income (loss)                 $(668)          $46,545
 
 
                           Spiegel, Inc. and Subsidiaries
                       Condensed Consolidated Balance Sheets
                                  ($000s omitted)
 
                                    (unaudited)     (unaudited)
                                      March 31,       April 1,  December 30,
     ASSETS                             2001             2000        2000
     Current assets:
      Receivables, net               $1,082,481       $871,106    $1,113,451
      Inventories                       581,435        484,122       562,863
      Other current assets              270,742        168,299       305,900
 
      Total current assets            1,934,658      1,523,527     1,982,214
 
      Total non-current assets          625,273        578,203       600,805
 
        Total assets                 $2,559,931     $2,101,730    $2,583,019
 
     LIABILITIES and STOCKHOLDERS' EQUITY
 
      Total current liabilities        $704,357       $733,586      $947,904
 
      Total long-term liabilities     1,049,997        622,863       807,633
 
       Total liabilities              1,754,354      1,356,449     1,755,537
 
       Total stockholders' equity       805,577        745,281       827,482
 
          Total liabilities and
           stockholders' equity      $2,559,931     $2,101,730    $2,583,019
 
                    MAKE YOUR OPINION COUNT -     Click Here
                http://tbutton.prnewswire.com/prn/11690X63831261
 
 

SOURCE The Spiegel Group
    DOWNERS GROVE, Ill., April 24 /PRNewswire Interactive News Release/ --
 The Spiegel Group (Nasdaq: SPGLA) today announced financial results for the
 first quarter ended March 31, 2001.  The company reported a net loss of
 $12.2 million, or $0.09 per share, compared to earnings of $20.2 million, or
 $0.15 per share, before the cumulative effect of an accounting change, in the
 first quarter of 2000.  Results were consistent with previous guidance and
 First Call consensus estimates.
     "As expected, the first quarter presented a more challenging economic
 environment as well as difficult comparisons to last year's strong first
 quarter results," stated James W. Sievers, office of the president and chief
 financial officer of The Spiegel Group.  "We experienced higher charge-offs in
 our credit card businesses and customer response in each of our merchant
 companies was relatively weak.  Clearly, the economy has negatively affected
 consumer behavior and our financial results."
     Operating income declined by $47.2 million for the quarter, including
 a $51.8 million decrease in income for the merchandising segment and a
 $4.4 million improvement in the bankcard segment.
     Total revenue for the quarter declined 3 percent to $749.6 million
 reflecting a 3 percent decrease in net sales and a 10 percent decrease in
 finance revenue.
     Net sales for the quarter included a 2 percent decline in direct sales
 and a 3 percent drop in retail store sales.  Direct sales are comprised of a
 94 percent lift in e-commerce sales and a 13 percent decrease in catalog
 sales.  The drop in retail store sales was due to a 10 percent decline in
 Eddie Bauer's comparable-store sales offset somewhat by sales growth in its
 outlet stores.
     The decline in finance revenue was primarily attributable to lower
 securitization income, which includes retained-interest income from
 securitized receivables and net pretax gains on the sale of receivables.
 While the yield on receivables rose in the quarter along with the level of
 receivables serviced, higher charge-offs negatively impacted the performance
 of the credit card business, particularly in the private-label programs,
 resulting in lower excess cash flows from the securitization of receivables,
 which reduced finance revenue.  In addition, due to lower receivables sold
 during the quarter, net gains on the sale of receivables were $8.4 million in
 this year's first quarter compared to $15.5 million in the same period last
 year.  The $7.6 million decrease in finance revenue reflects a $15.1 million,
 or 34 percent, decline in revenue from the private-label credit card programs
 net of a $7.5 million, or 24 percent, increase in bankcard revenue.
     The gross profit margin as a percent of net sales decreased in the first
 quarter to 35.0 percent from 35.9 percent in the year-earlier period.  Margin
 growth achieved by the company's Newport News and Spiegel divisions was offset
 by lower margins at Eddie Bauer.  Eddie Bauer's margin decline was driven by
 higher markdowns versus last year.
     Selling, general and administrative expenses as a percent to total revenue
 increased by 530 basis points to 47.0 percent for the quarter.  This increase
 resulted from lower productivity on catalog circulation for each of the
 Group's merchant companies and weaker performance from private-label credit
 card programs compared to the prior year.
 
     Outlook
     Commenting on the company's outlook, Michael R. Moran, chairman of the
 office of the president, stated, "Given the challenging economic environment,
 we have intensified our efforts to reduce expenses and conservatively manage
 our inventory commitments going forward.  Although the economic outlook for
 the second half of the year is uncertain, we have taken important actions in
 our credit business and our Eddie Bauer division that are expected to
 positively impact earnings."
     The company confirmed its previously issued guidance for the second
 quarter, calling for modest revenue growth and earnings of $0.02 to $0.05 for
 the quarter ending June 30, 2001.
 
     Management Comments
     Mike Moran, chairman of office of the president for The Spiegel Group,
 will provide comments on the company's first quarter financial results today
 at 10:00 a.m. Eastern Time.  This information can be accessed as follows:
     * Call 800-405-2236 and enter passcode 325882
     * Visit the Earnings Overviews and Presentations section of the company's
       Web site at thespiegelgroup.com and enter passcode 325882.
 
     The pre-recorded call will be accessible through May 8, 2001.
     This press release contains statements that are forward-looking within the
 meaning of applicable federal securities laws and are based upon Spiegel,
 Inc.'s current expectations and assumptions.  Words such as "expect," "plan,"
 "believe," "anticipate," and similar expressions identify forward-looking
 statements.  Any such forward-looking statements 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.
     The Spiegel Group is a leading international specialty retailer marketing
 fashionable apparel and home furnishings to customers through catalogs, nearly
 580 specialty retail and outlet stores and eight e-commerce sites, including
 eddiebauer.com, newport-news.com and spiegel.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.
 Investor relations information is available on The Spiegel Group web site
 ( thespiegelgroup.com ).
 
 
                         Spiegel, Inc. and Subsidiaries
                      Consolidated Statements of Earnings
                   ($000s omitted, except per share amounts)
 
                                                   Thirteen Weeks Ended
                                               March 31,            April 1,
                                                  2001              2000 (a)
     Net sales and other revenues:
       Net sales                                $611,679          $627,477
       Finance revenue                            68,639            76,197
       Other revenue                              69,233            66,697
                                                 749,551           770,371
     Cost of sales and operating expenses:
       Cost of sales, including buying and
         occupancy expenses                      397,674           402,376
       Selling, general and administrative
         expenses                                352,545           321,450
                                                 750,219           723,826
 
     Operating income (loss)                        (668)           46,545
 
     Interest expense                             18,764            14,456
 
     Earnings (loss) before
       income taxes                              (19,432)           32,089
 
     Income tax provision (benefit)               (7,190)           11,873
 
     Earnings (loss) before
       cumulative effect of
       accounting change                         (12,242)           20,216
 
     Cumulative effect of
       accounting change (b)                           0             4,076
 
     Net earnings (loss)                        $(12,242)          $16,140
 
     Net earnings (loss) per
       common share before cumulative
       effect of accounting change:
         Basic and Diluted                        $(0.09)            $0.15
 
     Cumulative effect of
       accounting change
         Basic and Diluted                         $0.00             $0.03
 
     Net earnings (loss) per
       common share:
         Basic and Diluted                        $(0.09)            $0.12
 
     Weighted average number of common
       shares outstanding:
         Basic                               131,867,366       131,859,113
         Diluted                             131,999,107       131,985,828
 
     (a) Certain prior year amounts have been reclassified from amounts
         previously reported to conform with the current presentation.  These
         reclassifications primarily relate to changes in the classification
         of catalog shipping revenue in response to guidance contained in
         EITF No. 00-10.
     (b) The cumulative effect of accounting change in the first quarter 2000
         resulted from a change in revenue recognition policy related to a
         marketing program at the Company's Newport News division in response
         to SAB No. 101.
 
     Supplemental Information:                     Thirteen Weeks Ended
                                                 March 31,        April 1,
                                                    2001           2000
     Operating income (loss) before
       net pre-tax gains on the sale of
       receivables                                $(9,113)       $31,054
 
     Net pre-tax gains:
       FCNB Preferred credit receivables            5,612          8,643
       FCNB bankcard credit receivables             2,833          6,848
     Total net pre-tax gains                        8,445         15,491
 
     Operating income (loss)                        $(668)       $46,545
 
 
                         Spiegel, Inc. and Subsidiaries
                         Supplemental Sales Information
                                ($000s omitted)
 
 Consolidated Net Sales by Division
 
                                     Thirteen Weeks Ended
                                    March 31,       April 1,           %
                                      2001            2000           change
 
     Eddie Bauer                    $332,911        $345,006         -4%
     Newport News                    121,407         109,384         11%
     Spiegel                         157,361         173,087         -9%
 
       Total                        $611,679        $627,477         -3%
 
 Consolidated Net Sales by Channel
 
                                     Thirteen Weeks Ended
                                    March 31,       April 1,          %
                                      2001            2000         change
 
     Catalog                        $290,311        $332,703        -13%
     E-Commerce                       70,683          36,349         94%
     Total Direct                    360,994         369,052         -2%
     Retail stores(a)                250,685         258,425         -3%
 
       Total                        $611,679        $627,477         -3%
 
     (a) Includes Eddie Bauer retail store sales, as well as outlet store sales
         for all divisions -- Eddie Bauer, Newport News and Spiegel.  As of
         March 31, 2001, there were 475 Eddie Bauer retail stores, 70 Eddie
         Bauer outlet stores, 16 Newport News outlet stores and 18 Spiegel
         outlet stores.
 
 
                         Spiegel, Inc. and Subsidiaries
                          Business Segment Comparison
                                ($000s omitted)
 
                                                  Thirteen Weeks Ended
                                                March 31,           April 1,
                                                   2001              2000
 
     Revenue:
       Merchandising                            $709,274          $737,732
       Bankcard                                   40,277            32,639
     Total Revenue                              $749,551          $770,371
 
     Operating income (loss):
       Merchandising                            $(21,889)          $29,900
       Bankcard                                   21,264            16,865
 
     Total segment operating income (loss)          (625)           46,765
 
     Premium on acquisitions                         (43)             (220)
 
     Total operating income (loss)                 $(668)          $46,545
 
 
                           Spiegel, Inc. and Subsidiaries
                       Condensed Consolidated Balance Sheets
                                  ($000s omitted)
 
                                    (unaudited)     (unaudited)
                                      March 31,       April 1,  December 30,
     ASSETS                             2001             2000        2000
     Current assets:
      Receivables, net               $1,082,481       $871,106    $1,113,451
      Inventories                       581,435        484,122       562,863
      Other current assets              270,742        168,299       305,900
 
      Total current assets            1,934,658      1,523,527     1,982,214
 
      Total non-current assets          625,273        578,203       600,805
 
        Total assets                 $2,559,931     $2,101,730    $2,583,019
 
     LIABILITIES and STOCKHOLDERS' EQUITY
 
      Total current liabilities        $704,357       $733,586      $947,904
 
      Total long-term liabilities     1,049,997        622,863       807,633
 
       Total liabilities              1,754,354      1,356,449     1,755,537
 
       Total stockholders' equity       805,577        745,281       827,482
 
          Total liabilities and
           stockholders' equity      $2,559,931     $2,101,730    $2,583,019
 
                    MAKE YOUR OPINION COUNT -     Click Here
                http://tbutton.prnewswire.com/prn/11690X63831261
 
 SOURCE  The Spiegel Group