Grinch Threatening Christmas of Catalog Firms, Even L.L. Bean : Retailing: Business picks up as holiday nears, but it’s still 10% below projections. Rising paper and postage costs have caused a double whammy.
Last-minute holiday shoppers? Heidi Woodbrey knows all about the dawdlers who waited to buy gifts this year.
During each shift at L.L. Bean, she fills 800 orders of polar fleece jackets, wool socks, flannel shirts, hunting boots and other goodies, most of it destined to go under trees this Christmas.
But it wasn’t so merry early in the season as customers either delayed their orders or didn’t place them at all.
“They just don’t have any money, and they’re waiting until the last minute,” Woodbrey said recently as she tucked polar fleece, flannel and wool items into boxes. “I know that. As for myself, I haven’t bought one Christmas present yet.”
Like other mail-order companies, L.L. Bean has struggled this holiday season. Sales are 10% below the company’s projections--though still up from last year--and increasing paper and postage prices delivered a double whammy to the firm’s budget.
L.L. Bean had planned to surpass $1 billion in sales, but that goal may prove elusive.
“It’s really anyone’s guess at this point,” said spokeswoman Catharine Hartnett, who was at a loss to explain the lag in orders this season. “It’s been so unpredictable.”
L.L. Bean, which specializes in outdoors goods and clothing, was cruising along at its typical 18% to 20% growth rate through the spring and summer. Then the holiday season hit.
Since the first 308-page Christmas catalogs began arriving at homes in October, sales began slowing despite the company’s first television advertising campaign and a marketing effort on the Internet.
“It was so sudden,” Hartnett said. “Within seven weeks things went down, and kept going down, at a time when things should be going up.”
The lower-than-expected sales and increased mailing costs prompted the company to institute a hiring freeze, cut operating budgets and delay a major expansion of its famous 24-hour store in downtown Freeport.
Sales are still 10% ahead of last year--a rate some retailers would envy--but L.L. Bean had planned for a busier holiday season, the three-month window when 40% of annual sales occur.
The problems are universal in the mail-order and retail industries, which have more goods chasing procrastinating and debt-conscious consumers this holiday season, said Steve Ashley, an analyst at Cleary Gull Reiland & McDevitt Inc. in Milwaukee.
The softness can be seen in a 50% drop in stock prices for 11 publicly traded mail-order companies over the last two years, he said.
In Freeport, it’s hard for a first-time visitor to notice any slowdown during a walk through L.L. Bean’s cavernous packing facility where sleeping bags, down comforters, hunting boots, coats, pajamas and other items are stacked in 35-foot-tall shelves awaiting shipment.
A dozen forklifts zoom from row to row in a 638,000-square-foot building that is so big there are traffic signs posted for the forklift operators. In another part of the building, boxes stacked 50 feet high in a reserve storage space are moved by computer-operated stackers.
Outside, Federal Express trucks are backed up to loading bays, standing at the ready to take away the packages after catalog orders are picked off the shelves, boxed by packers such as Woodbrey and sent down a chute, where another automated system takes care of the rest.
L.L. Bean knew its mailing and paper costs were going up, so the company took steps to reduce costs this season. For example, only people who have bought children’s clothing in the past received a catalog insert on kids’ apparel, Hartnett said.
The company was able to generate 10% more business on 35% fewer catalog pages using the technique in the fall of 1994, she said.
L.L. Bean still doesn’t understand why its business has been so soft. But Hartnett said things may improve in the final shopping days before Christmas. In fact, the company set a record Dec. 13, shipping 140,689 packages.
Woodbrey, who joined L.L. Bean in September, said her hours have gone from 20 to closer to 40 a week.
Two workstations away, veteran packer Emma Condon recently worked 13 days in a row. She said she likes it busy.
“Everyone is trying to get everything out so people will get their stuff on time,” said Condon earlier this month, who doesn’t begrudge customers waiting until the last minute. “Everyone is doing their best.”
Of course, there’s a silver lining to the slow start to the holiday season at Bean.
Typically, many items are on back-order because of demand late in the season, making it possible to fill only 70% of last-minute orders. This year, there are enough items in stock to fill 90% of orders.
Rushing to fill customer orders for the holidays, David Robinson pulls a rack of L.L. Bean products through the distribution center. Catalog sales are below projections this season.
