-- ShopNBC adjusted EBITDA loss of ($4.3) million vs. ($6.8) million in
the prior year
-- Gross Margin increased 510 bps to 36.6% vs. 31.5% last year
-- ShopNBC e-commerce sales penetration at 39.6%
ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in
multi-media retailing, today announced financial results for its
fiscal first quarter ended May 1, 2010.
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points)
Q1
For the three months ending
--------- --------- ---------
5/1/2010 5/2/2009 Change
--------- --------- ---------
Net Sales $ 125.0 $ 133.8 -6.6%
EBITDA, as adjusted $ (4.3) $ (6.8) 36.8%
Net Loss $ (11.0) $ (12.0) 8.7%
Homes (Average 000s) 75,681 72,929 3.8%
Net Shipped Units (000s) 1,079 877 23.0%
Average Price Point $ 108 $ 144 -25.0%
Return Rate % 19.2% 21.7% -250 bps
Gross Margin % 36.6% 31.5% 510 bps
Internet Net Sales % 39.6% 30.1% 950 bps
New Customers - 12 month rolling 548,731 372,005 47.5%
Active Customers - 12 month rolling 1,050,599 807,603 30.1%
First Quarter 2010 Results
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."
Conference Call Information
The company has scheduled its conference call for 11 a.m. ET /
10 a.m. CT on Wednesday, May 19, 2010, to discuss the results for
the fiscal first quarter 2010. To participate in the conference
call, please dial 1-800-369-2063 (pass code: SHOPNBC) five to ten
minutes prior to the call time. If you are unable to participate
live in the conference call, a replay will be available for 30
days. To access the replay, please dial 1-800-925-1214 with pass
code 7467622 (keypad: SHOPNBC).
You also may participate via live audio stream by logging on to
https://e-meetings.verizonbusiness.com. To access the audio stream,
please use conference number 7807468 with pass code: SHOPNBC. A
rebroadcast of the audio stream will be available using the same
access information for 30 days after the initial broadcast.
About ShopNBC
ShopNBC is a multi-media retailer operating with a premium
lifestyle brand. Over 1 million customers benefit from ShopNBC as
an authority and destination in the categories of home,
electronics, beauty, health, fitness, fashion, jewelry and watches.
As part of the company's "ShopNBC Anywhere" initiative, customers
can interact and shop via cable and satellite TV in 76 million
homes (DISH Network channels 134 and 228; DIRECTV channel 316);
mobile devices including iPhone, BlackBerry and Droid; online at
www.ShopNBC.com; live streaming at www.ShopNBC.TV; and social
networking sites Facebook, Twitter and YouTube. ShopNBC is owned
and operated by ValueVision Media (NASDAQ: VVTV). For more
information, please visit www.ShopNBC.com/IR.
EBITDA and EBITDA, as adjusted
EBITDA represents net loss for the respective periods excluding
depreciation and amortization expense, interest income (expense)
and income taxes. The company defines Adjusted EBITDA as EBITDA
excluding non-operating gains (losses); non-cash impairment charges
and write-downs; restructuring and chief executive officer
transition costs; and non-cash share-based compensation expense.
The company has included the term "Adjusted EBITDA" in our EBITDA
reconciliation in order to adequately assess the operating
performance of our "core" television and internet businesses and in
order to maintain comparability to our analyst's coverage and
financial guidance, when given. Management believes that Adjusted
EBITDA allows investors to make a more meaningful comparison
between our core business operating results over different periods
of time with those of other similar companies. In addition,
management uses Adjusted EBITDA as a metric measure to evaluate
operating performance under its management and executive incentive
compensation programs. Adjusted EBITDA should not be construed as
an alternative to operating income (loss) or to cash flows from
operating activities as determined in accordance with generally
accepted accounting principles and should not be construed as a
measure of liquidity. Adjusted EBITDA may not be comparable to
similarly entitled measures reported by other companies.
Forward-Looking Information
This release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current
expectations and accordingly are subject to uncertainty and changes
in circumstances. Actual results may vary materially from the
expectations contained herein due to various important factors,
including (but not limited to): consumer spending and debt levels;
interest rates; competitive pressures on sales, pricing and gross
profit margins; the level of cable and satellite distribution for
the company's programming and the fees associated therewith; the
success of the company's e-commerce and new sales initiatives; the
success of its strategic alliances and relationships; the ability
of the company to manage its operating expenses successfully; the
ability of the Company to establish and maintain acceptable
commercial terms with third party vendors and other third parties
with whom the Company has contractual relationships; changes in
governmental or regulatory requirements; litigation or governmental
proceedings affecting the company's operations; and the ability of
the company to obtain and retain key executives and employees. More
detailed information about those factors is set forth in the
company's filings with the Securities and Exchange Commission,
including the company's annual report on Form 10-K, quarterly
reports on Form 10-Q, and current reports on Form 8-K. The company
is under no obligation (and expressly disclaims any such
obligation) to update or alter its forward-looking statements
whether as a result of new information, future events or
otherwise.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
May 1, January 30,
2010 2010
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 20,932 $ 17,000
Restricted cash and investments 4,961 5,060
Accounts receivable, net 52,901 68,891
Inventories 42,690 44,077
Prepaid expenses and other 4,198 4,333
----------- -----------
Total current assets 125,682 139,361
Property and equipment, net 27,339 28,342
FCC broadcasting license 23,111 23,111
NBC Trademark License Agreement, net 3,348 4,154
Other Assets 1,056 1,246
----------- -----------
$ 180,536 $ 196,214
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,251 $ 58,777
Accrued liabilities 39,890 26,487
Deferred revenue 728 728
----------- -----------
Total current liabilities 83,869 85,992
Deferred revenue 970 1,153
Long Term Payable - 4,841
Accrued Dividends - Series B Preferred Stock 6,047 4,681
Series B Mandatorily Redeemable Preferred Stock 11,531 11,243
$.01 par value, 4,929,266 shares authorized;
4,929,266 shares issued and outstanding
----------- -----------
Total liabilities 102,417 107,910
Commitments and Contingencies
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 32,686,735 and 32,672,735
shares issued and outstanding 327 327
Warrants to purchase 6,022,115 shares of
common stock 637 637
Additional paid-in capital 317,507 316,721
Accumulated deficit (240,352) (229,381)
----------- -----------
Total shareholders' equity 78,119 88,304
----------- -----------
$ 180,536 $ 196,214
=========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month Periods Ended
--------------- ---------------
May 1, May 2,
2010 2009
--------------- ---------------
Net sales 124,977 $ 133,802
Cost of sales 79,240 91,613
(exclusive of depreciation
and amortization shown below)
Operating expense:
Distribution and selling 46,042 45,239
General and administrative 4,768 4,627
Depreciation and amortization 3,690 3,789
Restructuring costs 376 104
CEO transition costs - 77
--------------- ---------------
Total operating expense 54,876 53,836
--------------- ---------------
Operating loss (9,139) (11,647)
--------------- ---------------
Other income (expense):
Interest income 42 216
Interest expense (1,850) (743)
--------------- ---------------
Total other expense (1,808) (527)
--------------- ---------------
Loss before income taxes (10,947) (12,174)
Income tax (provision) benefit (24) 162
--------------- ---------------
Net loss (10,971) (12,012)
Excess of preferred stock carrying value
over redemption value - 27,362
Accretion of redeemable
Series A preferred stock - (62)
--------------- ---------------
Net income (loss) available to
common shareholders $ (10,971) $ 15,288
=============== ===============
Net income (loss) per common share $ (0.34) $ 0.46
=============== ===============
Net income (loss) per common share
---assuming dilution $ (0.34) $ 0.46
=============== ===============
Weighted average number of
common shares outstanding:
Basic 32,679,504 33,103,736
=============== ===============
Diluted 32,679,504 33,110,074
=============== ===============
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Loss:
For the Three Month Periods Ended
--------------------------------
May 1, May 2,
2010 2009
--------------- ---------------
EBITDA, as adjusted (000's) $ (4,292) $ (6,789)
Less:
Restructuring costs (376) (104)
CEO transition costs - (77)
Non-cash share-based compensation (781) (888)
--------------- ---------------
EBITDA (as defined) (a) (5,449) (7,858)
--------------- ---------------
A reconciliation of EBITDA to net loss is
as follows:
EBITDA, as defined (5,449) (7,858)
Adjustments:
Depreciation and amortization (3,690) (3,789)
Interest income 42 216
Interest expense (1,850) (743)
Income taxes (24) 162
--------------- ---------------
Net loss $ (10,971) $ (12,012)
=============== ===============
(a) EBITDA as defined for this statistical presentation represents net
income (loss) for the respective periods excluding depreciation and
amortization expense, interest income (expense) and income taxes. The
Company defines EBITDA, as adjusted, as EBITDA excluding non-operating
gains (losses); non-cash impairment charges and writedowns, restructuring
and CEO transition costs; and non-cash share-based compensation expense.
Management has included the term EBITDA, as adjusted, in its EBITDA
reconciliation in order to adequately assess the operating performance of
the Company's "core" television and Internet businesses and in order to
maintain comparability to its analyst's coverage and financial guidance
when given. Management believes that EBITDA, as adjusted, allows investors
to make a more meaningful comparison between our core business operating
results over different periods of time with those of other similar
companies. In addition, management uses EBITDA, as adjusted, as a metric
measure to evaluate operating performance under its management and
executive incentive compensation programs. EBITDA, as adjusted, should not
be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with GAAP and should
not be construed as a measure of liquidity. EBITDA, as adjusted, may not
be comparable to similarly entitled measures reported by other companies.
Contact Information Media Relations Anthony Giombetti
agiombetti@shopnbc.com 612-308-1190
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