Retailer cuts direct mail program and loses 61% profit
Retailer J.Jill recently announced its Q1 earnings. Linda Heasley, President and CEO of J. Jill stated:
“We are disappointed with our first quarter performance and are taking immediate actions.”
For the first quarter ending May 4, 2019:
- Total net sales for the thirteen weeks ended May 4, 2019 were $176.5 million versus $181.5 million for the thirteen weeks ended May 5, 2018.
- Gross profit decreased to $116.3 million from $120.3 million in the first quarter of fiscal 2018.
- Net income decreased to $4.4 million from $11.3 million in the first quarter of fiscal 2018.
Why the significant drops? Heasley mentioned a few things:
- Going into the quarter, we planned some shift from direct mail to alternative media options, primarily digital.
- In hindsight, we moved much too soon.
- We made adjustments quickly when we saw the results, and we were able to add back some direct mail touch points along with some changes in digital to better support our promotional activities.
- That restored traffic to planned levels albeit belatedly.
J.Jill found out that print and direct mail still play a large role in the customer journey.
Other companies such as Nordstrom are finding that eliminating direct mail can really impact their bottom line and have re-added direct mail back into their marketing mix.
Heasley continued: “We will continue to test and optimize the balance between the catalog and alternative media to maximize the effectiveness of our campaigns, our messaging and creative expression and overall efforts to attract customers to J. Jill.”
Ross Collins, an analyst for Cowen and Company, asked for clarification what Heasley meant by “moving too much too soon” and what they intended to do in the future. Heasley responded: “Thank you for your question. Relative to the marketing mix, we have been trying to right-size the role of the catalog in the overall marketing media spend, it’s a significant investment for us.”
“…we shifted those dollars into social and digital and we probably moved a little too much from print into social and digital, although social and digital seem to be paying off in a good way.”
“It’s again better appreciating what the role of the catalog does for our customer, as she is highly engaged – and while you might not redeem the coupon on the front of the catalog cover, she is using the catalog for inspiration. And that’s what we mean by we moved a little too much too fast and we’re looking at remixing that spend to the back part of the year. We’ve invested more into print touch points for the customer.”
Kudos to them for realizing they needed to add it back into their marketing mx.