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ShopNBC Announces Third Quarter Fiscal 2009 Financial Results

ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in electronic retailing, today announced financial results for its third fiscal quarter ended October 31, 2009. ShopNBC is available anywhere: cable and satellite TV, mobile devices (iPhone and iPod Touch), online at, and streamed live at http://www.ShopNBC.TV.

Third Quarter Results
Third quarter revenues were $119.4 million, a 4% decrease from the same period last year, as the company shifted its merchandise mix, intentionally lowered its average selling price by 49% and increased unit volume by 90%. EBITDA, as adjusted, was a loss of ($5.6) million compared to an EBITDA, as adjusted, loss of ($13.3) million in the year-ago period. Net loss for the third quarter was ($12.9) million compared to a net loss of ($20.8) million for the same quarter last year.
Third Quarter Highlights

The company noted several key improvements in the quarter:
Customers. Customer trends continued to improve with new and active customers up a record 118% and 64%, respectively, in the third quarter vs. the same period last year. Increased customer demand in the quarter led to a 4% growth in net orders over last year, the company's first increase in seven quarters. This is an acceleration of the company's first half performance of new and active customer growth of 60% and 29%, respectively. Return rates for the quarter were 21.9% vs. 29.2% in the year-ago quarter, reflecting improvements in delivery time, customer service, product quality, and lower price points. The customer service contact rate decreased 24% in the quarter.

Merchandising. Gross profit margin was 33.2%, 130 basis points lower compared to last year, driven primarily by increased promotional activity. These promotions contributed to the significant new customer growth the company achieved in the quarter.

-- Net average selling price was lowered to a record $95 during the quarter vs. $187 in the year-ago quarter, which is a 49% decline.

-- A record 122 new vendors were added to ShopNBC's new and existing merchandise categories of home, fashion, beauty and jewelry. The company launched 58 new show titles, product categories and brands in the quarter, such as Suzanne Somers, Esprit Outerwear, Laundry by Shelli Segal, Sensual Solutions by Dr. Robert Rey, Sensa Weight-Loss System, Brilliante Purely Platinum, The Culinary Institute of America, and Griot's Auto Care.

-- A record 103 new guests -- 90 of those being experts in their field -- were added to the network's talent ranks, including the hottest celebrity hair stylist Ted Gibson, chef Marcus Samuelson, and America's favorite shoe expert Miss Meghan Cleary.

-- Successful sales events and key items wins: "Trick or Treat Value Pay" with sales of $11 million; "Beauty & Style Week" event with sales of $5.6 million; Mitsubishi 65" DLP HDTV with sales of $2.2 million ($2,351 DPM); and an Invicta Reserve Limited Anniversary Edition Swiss Quartz Chronograph Strap Watch with sales of $2 million ($6,780 DPM).

-- Net shipped units in the quarter increased a record 90% as lower price points and new merchandise drove increased customer activity. Net unit successes include 28,000 Sensa Weight-Loss System Starter Kits; 17,500 Grand Suites 700 Thread Count Sheet Sets; 10,000 Pro-V Stainless Steel Mandolin Slicers; and 15,500 14K Colors of Gold Elongated Hoop Earrings.

Cash and Securities Balance. Third quarter cash and securities balance ended at $32.5 million, including $10.5 million of restricted cash. This cash and securities balance is a decrease of $3.9 million vs. the prior quarter driven by the EBITDA loss of ($5.6) million, capital expenditures of $2.3 million, and $4.3 million of working capital benefit.

Operating Expenses. Operating expenses decreased $12 million year-over-year or 20% in the quarter. This decrease was driven by broad-based reductions in the company's cost structure, including lower cable and satellite fees, lower headcount vs. the prior-year period, and a significant decline in transactional costs in the areas of order capture, customer service, credit and fulfillment.

Distribution. In the quarter, the company successfully concluded all of its carriage agreements that were up for renewal in the last year while preserving 100% of our distribution footprint of 73 million homes, leading to a cost savings of approximately $24 million in fiscal 2009 and improved channel positions in many markets. The company's Internet penetration was an industry leading 34% of total sales in the quarter, up 300 basis points vs. last year. attracted new and returning customers with expanded product categories, assortments, and content enhancements. This resulted in 31% of the company's new customers. In addition, the live chat programs and extended social networking provided stronger customer engagement, which substantially increased buyer conversion rates to 6.3% and an increase in orders of 78% over last year's same period. In the fourth fiscal quarter of 2009, the company will further enhance the shopping experience of with the launch of its commerce-enabled mobile site as well as incentives that drive customers to the Web site to decrease transaction costs.

"Merchandising efforts to unlock our customer growth potential showed real signs of progress in the third quarter, as we build new businesses in strategic product categories," said Keith Stewart, ShopNBC's President and CEO. "Record gains were made in new and active customer counts. Net shipped units were at record levels. E-commerce is proving to be a powerful complement for additional growth. With a focus on delivering a premium shopping experience across our multichannel platform of TV and the Web, the customer is reacting strongly to our initiatives."

Added Stewart: "Year-to-date EBITDA, as adjusted, is $18.2 million better than last year. We are highly focused on delivering the high expectations that have grown during the turnaround of ShopNBC. I remain confident about our fourth quarter plans."

Conference Call Information
The company has scheduled its conference call for 11 a.m. EST / 10 a.m. CST on Wednesday, November 18, 2009, to discuss the results for the fiscal second quarter. To participate in the conference call, please dial 1-888-606-5948 (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 1-866-403-7090 with pass code 7467622 (keypad: SHOPNBC).

You also may participate via live audio stream by logging on to To access the audio stream, please use conference number 2244891 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.
EBITDA and EBITDA, as adjusted

The Company defines EBITDA as 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-recurring 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 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.

About ShopNBC
ShopNBC is a multi-channel electronic retailer operating with a premium lifestyle brand. The shopping network reaches 73 million homes in the United States via cable and satellite television: DISH Network channels 134 and 228; DIRECTV channel 316. As part of the network's ShopNBC Anywhere initiative, customers can shop via cable and satellite TV, mobile devices (iPhone and iPod Touch), online at, and streamed live at www.ShopNBC.TV. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV).

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 distribution for the Company's programming and the fees associated therewith; the success of the Company's e-commerce and rebranding initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; 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.

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Discussion Starter · #6 ·
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right - this is the classic operating costs and organizational costs versus current revenues, and then the ridiculous way wall street values everything, stock prices, company values, etc.
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