Harry & David's fiscal Q2 earnings essentially flat year-over-year at US$41.6M as sales rose 2.2% to US$260.4M; for first 26 weeks of fiscal 2014, sales climbed 1.4% to US$292.1M as store closures, lower sales hampered growth
Cindy Allen
MEDFORD, Oregon
,
February 4, 2014
(Mail-Tribune )
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Holiday gift-buying faced perils aplenty, from a government sequester and shutdown to rising interest rates and consumers waiting until the last moment in hopes of snagging gigantic discounts. Still, Harry & David managed to increase sales 2.7 percent -- matching the national retail figure -- during the 2013 holiday period. The Medford-based gourmet food and gift company with deep ties to the Rogue Valley's pear orchards reported second fiscal quarter 2014 sales of $260.4 million versus $254.8 million a year earlier.
The cost of producing, marketing and delivering those goods increased as well, diminishing earnings as the company saw its profit slip $105,000 to $41.6 million in the quarter ending Dec. 28. "The quarter was a challenging one for many retailers -- ShopperTrak publicly reported lower customer traffic at retail while growth lagged behind projections put forth by the National Retail Federation and others," Harry & David Chief Executive Officer Craig Johnson said in a statement. "Additionally, this holiday season had six fewer shopping days than last year -- 26 days in 2013 as opposed to 32 days in 2012." Chief Financial Officer Mike Schwindle said retailers who hold their ground on prices can lose sales as customers veer to another website with a bigger discount. "Retailers and consumers engage every year in the game of retail chicken during the holiday season," Schwindle said. "How this ultimately plays out varies a bit from year to year. This past year was certainly a very promotional one as evidenced by the depth and intensity of discounting." Schwindle pointed out many retailers, including Walmart, have announced earnings warnings or revisions reflecting their holiday struggles. Harry & David has done its best to keep step with changing buying habits, Schwindle said. The company saw a 9-percent growth in online sales, including an 8-percent gain in turning website visits to sales from desktop computers and 14 percent by tablet users. "Consumer patterns continue to evidence channel shift from brick and mortar to online business," Schwindle said. "Our investments in online customer experience and in online marketing channels paid off well." Harry & David benefited from sales at 33 seasonal stores, Johnson said, and began its partnership with The Cheesecake Factory during the fall as well. For the first 26 weeks of fiscal 2014, Harry & David said its sales rose 1.4 percent to $292.1 million from $288.0 million the prior year due to increased orders driven by improved Web traffic. However, store closures and deteriorating sales hampered growth. In the months ahead, the company wants to meet customers "where they want to browse and shop," Johnson said. "We look to drive additional relevance, awareness, and consideration not just during the holiday season but all year long."
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