Thursday, May 20, 2010

ShopNBC Lost 11 Million in First Quarter

Via Martwire

-- ShopNBC adjusted EBITDA loss of ($4.3) million vs. ($6.8) million in
the prior year
-- Gross Margin increased 510 bps to 36.6% vs. 31.5% last year
-- ShopNBC e-commerce sales penetration at 39.6%
ShopNBC (NASDAQ:VVTV - News), the premium lifestyle brand in multi-media retailing, today announced financial results for its fiscal first quarter ended May 1, 2010.

First quarter revenues were $125.0 million, a 6.6% decrease from the same period last year, primarily due to lower sales in Consumer Electronics. The company continued to strategically lower its net average selling price to $108 vs. $144 in the year-ago quarter, while increasing net shipped units by 23%. E-commerce sales penetration was a record 39.6% of total company sales in the quarter, up 950 basis points vs. last year.

Customer trends continued to improve with new and active customers up 48% and 30%, respectively, on a 12-month rolling basis vs. same period last year. Return rates for the quarter were 19.2% vs. 21.7% in the year-ago quarter, reflecting improvements in overall customer satisfaction and strategically lowered price points.

Gross profit increased 8.4% to $45.7 million and gross profit margin improved 510 basis points to 36.6% vs. 31.5% last year, driven by merchandise margin rate improvements in several key categories.

Adjusted EBITDA was a loss of ($4.3) million compared to an Adjusted EBITDA loss of ($6.8) million in the year-ago period, driven by improvements in gross margin.

Operating expenses in the first quarter increased slightly to $54.9 million, or 1.9%.

Net loss for the first quarter was ($11.0) million compared to a net loss of ($12.0) million for the same quarter last year.

Liquidity and Capital Resources

First quarter cash and cash equivalents balance ended at $25.9 million, including $5.0 million of restricted cash. The cash and cash equivalents balance is an increase of $3.8 million vs. the prior quarter driven by working capital. Additionally, the company entered into a 3-year revolving credit facility in November 2009 to finance working capital investment and fund other company growth initiatives. To date, the company has not drawn upon the line of credit. The company has a current availability of $20 million under the facility, of which $12 million of such availability is subject to meeting certain future financial objectives.

ShopNBC Strengthens Merchandising Organization

In the first quarter, Rod Ghormley joined as ShopNBC's Vice President of Home. Previously, Mr. Ghormley served as Senior Vice President and General Merchandise Manager for ShopKo's home division, and he held executive merchandise positions at Amazon, QVC, and Foley's Department Stores. The company also appointed Scott Garozzo as ShopNBC's Director of Jewelry. Previously, Mr. Garozzo served as Senior Vice President of Merchandising & Product Development at SHR & Simmons Jewelry Company. Prior to that, he held merchandising positions in the jewelry category at QVC and Lord & Taylor.

"We continued to make progress in the first quarter across the many leading indicators that drive our business," said Keith Stewart, CEO of ShopNBC. "Our gross profit margin improved by 510 basis points to 36.6%. Our e-commerce penetration continued to perform at industry-leading levels, up 950 basis points to 39.6%. Disciplined execution in merchandising and financial planning remained in focus, reflecting well-controlled inventories, working capital management and tight expense controls, as we offered the customer a continuous flow of new and exciting merchandise."

Added Mr. Stewart: "Looking ahead, we expect our customer activity and leading indicators to continue trending positively. While sales in the business segment of Consumer Electronics were soft in the quarter, we have clearly defined strategies in place to ensure this business improves. We remain excited about our multi-channel offerings and go-forward plans to drive the top line and deliver sustained, profitable growth."

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