ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Sunday, December 17, 1995 TAG: 9512150048
SECTION: BUSINESS PAGE: G-4 EDITION: METRO
SOURCE: JAMES BERNSTEIN NEWSDAY
Christmas catalogs may look as hale, hearty and fat this year as St. Nick himself, but their publishers feel more like poor Rudolph: picked on.
The companies are complaining about 14 percent increases in postal rates and far steeper increases in the cost of paper - as high as 50 percent over last year. They have had to reduce their work forces, the size of their catalogs and the number they mail out.
Catalog industry experts say mailings are down about 15 percent from last year, and companies are unable to explain why just about everybody believes catalogs are dropping onto their doorsteps like snowflakes in Buffalo. In fact, many say that with costs up and profits down, they are on thin ice this year.
Investors apparently agree. The stocks of the 10 publicly traded catalog companies have dropped, some as much as 50 percent.
``Our costs went up $25 million this year'' because of the postal and paper increases, said Catherine Hartnett, a spokeswoman for L.L. Bean, one of the oldest and best-known of the catalog companies. ``We've never had an increase like that before.'' The privately held Freeport, Maine, company put a freeze on full-time hiring and reduced its seasonal hiring by 300 people, though it still added 4,300.
``We're going to look very carefully at all our catalogs next year and make sure they're all productive,'' Hartnett said.
Big as the U.S. catalog industry is - last year, 8,000 companies mailed out 12 billion catalogs, bringing in revenues of nearly $60 billion - it could do nothing to halt the rise in paper costs as paper manufacturers attempt to make up for revenues lost early in the decade. The catalog industry also lobbied hard against the postal rate increases, saying it was still coping with hikes from 1988 and 1991.
The postal and paper increases hit at a time when growth in the catalog industry is slowing. The business is no longer racking up the double-digit growth rates it enjoyed in the booming 1980s. Last year, catalog sales grew between 7 percent and 8 percent, industry experts say. Similar growth is expected for the remainder of the decade, according to the Direct Marketing Association, a trade group.
However, James Rosenfield of Rosenfield & Associates, a Los Angeles company specializing in direct marketing, dismisses the idea that the industry is ebbing. He suggested the companies are using the postage and paper-price increases as an excuse to reduce staff. ``My own observation is that there are more catalogs on my doorstep than ever before,'' Rosenfield said. ``I'm a little skeptical of all the moaning and crying. The fact that profits are down doesn't mean anything. Every catalog company is making heavy investments in technology. That's a reason why profits are down.''
Catalogs that used to be flush with merchandise - everything from apparel to nose-hair clippers - are taking a closer look at themselves, said Charlotte Lacomb, a spokeswoman for Lands' End in Dodgeville, Wis. ``We have cut out some items,'' Lacomb said, declining to be specific. ``We have to make sure every item can pay its way. It's been a tough year.''
LENGTH: Medium: 59 linesby CNB