It's a sign that summer's gone and Christmas is on the way: Catalogs are spilling out of mailboxes.
Consumers may not detect anything different--mail-order merchants start bombarding customers in early fall--but more catalogs travel the mail now, a sign the industry is recovering from problems of the past two years.
In 1995, catalog companies were hit by a double whammy: an increase in postal rates and a surge in paper prices. Merchants mailed fewer catalogs and made fewer sales.
The year before, merchants knew their costs were going to rise so they mailed a deluge of catalogs, thinking it would bring in more business. It didn't.
"It's been tough on the industry," said Jeff Johnson, director of creative services at Rivertown Trading Co., whose catalogs include Signals, Wireless and Seasons.
But Johnson optimistically views the coming season, as do other catalog retailers and analysts who follow the industry. "We're feeling pretty good about this fall because paper has come down," he said.
Debra O'Shea, an analyst at Barrington Research Associates Inc. in Chicago, said of the industry, "My gut feeling is that it's doing better than it has in a couple of years. A lot of the stocks have jumped tremendously this year."
Among the big companies expected to do well during Christmas are Williams-Sonoma, the San Francisco-based cookware and home furnishings retailer, and apparel stalwart Lands' End. But Spiegel and the JCPenney catalog may have a tougher time.
In recent years catalog retailers have faced many of the same issues confronting other merchants: Consumer caution when the economy has been weak, and women's unhappiness with clothing styles. This Christmas season, high consumer debt levels have aroused concern.
Some mail-order companies have their own individual problems.
Although JCPenney stores are showing signs of rebounding from a slump, the catalog operation hasn't turned around, said Julie Carlson, a JCPenney spokeswoman.
The company dealt with paper inflation by shaving an eighth of an inch off the dimensions of its catalogs and switching to a different grade. Now that prices have stabilized, it is sending out new holiday catalogs with expanded offerings.
Spiegel, in reporting a 1995 loss of nearly $9.5 million, said it was hit by paper price increases exceeding 50% and a 14% increase in postal rates. Fallout from the higher costs continued into this year--Spiegel lost $17.6 million and said it still suffered the effects of the decline in catalog distribution last year.
But Spiegel, known for its giant semiannual catalog and Eddie Bauer stores and catalog, also has fundamental merchandising problems.
"For the general merchandise catalog, the question is, do you need to specialize?" O'Shea said. "Spiegel is what the Sears catalog used to be. . . . Is that what the customer wants?"
Sears closed its big catalog operation three years ago because it was losing money.
Wall Street isn't happy with Spiegel's prospects. The company's stock traded around $7 a share early in 1996, recovered, then fell back to its lows.
But Spiegel is trying to boost sales. Matt Koellner, an analyst with Olde Discount Corp. in Detroit, said the catalog is offering more national brands--the same strategy that helped Sears turn its stores around.
Even strong companies are not immune from problems. Williams-Sonoma has been doing phenomenally well, O'Shea said, but "they've been unable to handle the sales volume they did get."
The past two Christmas seasons, the company stopped shipping orders days earlier than planned because it couldn't get the merchandise out in time, she said. The company had promised Christmas delivery on orders called in as late as Dec. 22.
The company's 1995 earnings fell 87% to $2.5 million although sales rose 22%.
Williams-Sonoma has tried to fix the problems by improving efficiency at a Memphis, Tenn., warehouse.
Wall Street is optimistic. Williams-Sonoma's stock rose 62.5 cents to $30.50 on Nasdaq on Friday,C more than double its low reached earlier this year.
Other catalog retailers are refining merchandise and customer service as they seek sales improvements. Over the past year, Lands' End has been revamping its clothes--even staples like turtlenecks have been changed.
It's unclear whether many apparel catalogs will be able to overcome the same doldrums clothing stores suffered. But O'Shea, the Barrington analyst, said Lands' End should benefit from the continuing shift toward casual wear.