The retail environment seems to be quite healthy for many of the major outdoor specialty chains, although the competitive environment is heating up at the same time. Brick and mortar retailers who are successfully integrating the Internet and catalogs into their sales strategy seem to be driving most of the success, while Internet-only retailers are seeing continued strong growth.
L.L. Bean reported an 8.5% increase in sales for fiscal 2004, from $1.30 billion for fiscal 2003 up to $1.41 billion during the most recent fiscal year. The company also posted a 7% comparable store sales increase. L.L. Bean spokesperson Rich Donaldson told BOSS that Internet demand was up 22% in 2004 versus last year. Traditional catalog sales continue to be the dominant channel for the retailer, though current trends suggest that e-commerce will likely surpass catalog/phone/mail orders within the next couple of years.
In a prepared statement, Chris McCormick, L.L.Bean's president and CEO said, “On one hand, there are many notable achievements here. Our top line growth and market share performance were outstanding… All sales channels – catalog, web, and retail – delivered positive year over year results, and we added many new customers in the process.
“On the other hand, our ability to achieve these results is ever more challenging and coming at an increasing cost. We continue to operate in a price deflationary retail environment, which puts significant pressure on margins and operations. As a result, we are spending more marketing dollars than ever to drive unit sales while making considerable investments in new technologies and marketing initiatives to deliver future sales growth. The retail business climate is very competitive.”
REI was also able to leverage its multi-channel approach. The retailers fiscal 2004 sales increased 10.2%, from $805 million to $887 million, while 2004 operating income increased from $56 million to $72 million. Net income increased 32.5% to $25.3 million compared to $19.1 million in 2003.
Comp store sales increased 5.3% on top of a 2.9% increase in 2003. Direct Sales – Internet, catalog, and mail order – increased by 11.3% led by online sales growth.
Based on 2004 results, REI also increased its financial support of environmental stewardship efforts to $2.5 million for 2005. The company also announced a $44 million member refund to its active members.
REIs CFO Brad Johnson told BOSS that direct sales, which includes both catalog and internet, posted double-digit increases fueled by the in-store pick-up and gift registry initiatives. Apparel and cycling sales were strong throughout 2004, while camping equipment sales were soft, “like the rest of the market.” SnowSports sales were strong in areas where the weather cooperated
REI added seven new retail stores in 2004, and its newly remodeled Portland store received a Leadership in Energy and Environmental Design for Commercial Interiors Gold Rating, making it the first retail store in the U.S. to achieve this standard. REI plans to open 8 stores next year.
In the e-commerce world, Backcountry.com is also showing some very positive sales results for 2004. The company successfully launched separate ski-only and snowboard-only retail websites in 2004, both selling full-price merchandise. The on-line retail company has also launched a single item per day closeout retail site called steepandcheap.com to compliment its existing closeout site, backcountryoutlet.com. All of this action boosted sales by 84% during 2004 to roughly $27 million, and the company reported record breaking single day sales, monthly sales, and record single day shipments.
