MINNEAPOLIS, MN --
(MARKET WIRE)
-- 11/18/2009 --
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 www.ShopNBC.com, and streamed live at 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.
ShopNBC.com. The company's Internet penetration was an industry leading 34%
of total sales in the quarter, up 300 basis points vs. last year.
ShopNBC.com 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
ShopNBC.com 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
https://e-meetings.verizonbusiness.com. 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 www.ShopNBC.com, 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.
VALUE VISION MEDIA, INC.
Key Performance Metrics*
(Unaudited)
Q3 YTD
For the three months For the nine months
ending ending
10/31/2009 11/1/2008 % 10/31/2009 11/1/2008 %
------- ------- ------- ------- ------- -------
Program Distribution
Cable FTEs 43,331 43,326 0% 43,624 42,886 2%
Satellite FTEs 29,732 28,846 3% 29,473 28,632 3%
------- ------- ------- ------- ------- -------
Total FTEs (Average
000s) 73,063 72,172 1% 73,097 71,518 2%
Net Sales per FTE
(Annualized) $ 6.54 $ 6.92 -6% $ 6.80 $ 7.85 -13%
Customer Counts
Year-to-Date
New 138,940 63,716 118% 359,571 202,233 78%
Active 413,618 251,605 64% 780,348 552,566 41%
Product Mix
Jewelry 26% 33% 25% 39%
Apparel, Fashion
Accessories and
Health & Beauty 16% 12% 13% 10%
Computers &
Electronics 11% 25% 19% 20%
Watches, Coins &
Collectibles 33% 21% 33% 23%
Home & All Other 14% 9% 10% 8%
Net Shipped Units
(000s) 1,186 625 90% 3,084 2,074 49%
Average Price Point -
net units $ 95 $ 187 -49% $ 114 $ 193 -41%
Return Rate 21.9% 29.2% -7.3ppt 21.8% 32.7% -10.9ppt
------- ------- ------- ------- ------- -------
*Includes ShopNBC TV and ShopNBC.com only.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Nine Month
Periods Ended Periods Ended
---------------------- ----------------------
October 31 November 1 October 31 November 1
2009 2008 2009 2008
---------- ---------- ---------- ----------
Net sales $ 119,441 $ 124,769 $ 372,588 $ 422,984
Cost of sales 79,774 81,694 249,172 282,072
(exclusive of
depreciation and
amortization shown below)
Operating expense:
Distribution and selling 41,774 51,743 130,898 162,653
General and
administrative 4,264 5,582 13,200 17,599
Depreciation and
amortization 3,507 4,246 10,723 12,811
Restructuring costs 126 175 715 505
CEO transition costs 1,567 1,883 1,867 2,713
---------- ---------- ---------- ----------
Total operating
expense 51,238 63,629 157,403 196,281
---------- ---------- ---------- ----------
Operating loss (11,571) (20,554) (33,987) (55,369)
---------- ---------- ---------- ----------
Other income (expense):
Interest income 2 745 365 2,331
Interest expense (Series
B Preferred Stock) (1,350) - (3,328) -
Gain (loss) on sale of
investments - (969) 3,628 (969)
---------- ---------- ---------- ----------
Total other income
(expense) (1,348) (224) 665 1,362
---------- ---------- ---------- ----------
Loss before income taxes (12,919) (20,778) (33,322) (54,007)
Income tax (provision)
benefit - - 157 (33)
---------- ---------- ---------- ----------
Net loss (12,919) (20,778) (33,165) (54,040)
Excess of preferred stock
carrying value
over redemption value - - 27,362 -
Accretion of redeemable
Series A preferred stock - (73) (62) (219)
---------- ---------- ---------- ----------
Net loss available to
common shareholders $ (12,919) $ (20,851) $ (5,865) $ (54,259)
========== ========== ========== ==========
Net loss per common share $ (0.40) $ (0.62) $ (0.18) $ (1.62)
========== ========== ========== ==========
Net loss per common share
---assuming dilution $ (0.40) $ (0.62) $ (0.18) $ (1.62)
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 32,332,278 33,590,834 32,569,618 33,580,955
========== ========== ========== ==========
Diluted 32,332,278 33,590,834 32,569,618 33,580,955
========== ========== ========== ==========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
October 31, January 31,
2009 2009
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 22,014 $ 53,845
Restricted cash 10,461 1,589
Accounts receivable, net 54,577 51,310
Inventories 61,005 51,057
Prepaid expenses and other 4,759 3,668
----------- -----------
Total current assets 152,816 161,469
Long term investments - 15,728
Property and equipment, net 29,816 31,723
FCC broadcasting license 23,111 23,111
NBC Trademark License Agreement, net 4,961 7,381
Other Assets 1,991 2,088
----------- -----------
$ 212,695 $ 241,500
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 69,596 $ 64,615
Accrued liabilities 28,977 30,657
Deferred revenue 728 716
----------- -----------
Total current liabilities 99,301 95,988
Deferred revenue 1,334 1,849
Long Term Obligations 1,897 -
Accrued Dividends - Series B Preferred Stock 3,355 -
Series B Mandatorily Redeemable Preferred Stock 11,075 -
$.01 par value, 4,929,266 shares authorized;
4,929,266 shares issued and outstanding
----------- -----------
Total liabilities 116,962 97,837
Commitments and Contingencies
Series A Redeemable Convertible Preferred Stock, - 44,191
$.01 par value, 5,339,500 shares authorized
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 32,336,402 and 33,690,266
shares issued and outstanding 323 337
Warrants to purchase 6,029,487 and 29,487
shares of common stock 671 138
Additional paid-in capital 315,287 286,380
Accumulated deficit (220,548) (187,383)
----------- -----------
Total shareholders' equity 95,733 99,472
----------- -----------
$ 212,695 $ 241,500
=========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Loss:
For the Three Month For the Nine Month
Periods Ended Periods Ended
---------------------- ----------------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
---------- ---------- ---------- ----------
EBITDA, as adjusted (000's) $ (5,630) $ (13,283) $ (18,152) $ (36,343)
Less:
Gain (loss) on sale of
investments - (969) 3,628 (969)
Restructuring costs (126) (175) (715) (505)
CEO transition costs (1,567) (1,883) (1,867) (2,713)
Non-cash share-based
compensation (741) (967) (2,530) (2,997)
---------- ---------- ---------- ----------
EBITDA (as defined) (a) (8,064) (17,277) (19,636) (43,527)
---------- ---------- ---------- ----------
A reconciliation of EBITDA
to net loss is as follows:
EBITDA, as defined (8,064) (17,277) (19,636) (43,527)
Adjustments:
Depreciation and
amortization (3,507) (4,246) (10,723) (12,811)
Interest income 2 745 365 2,331
Interest expense (1,350) - (3,328) -
Income taxes - - 157 (33)
---------- ---------- ---------- ----------
Net loss $ (12,919) $ (20,778) $ (33,165) $ (54,040)
========== ========== ========== ==========
(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-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 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:
ShopNBC
Media Relations
Anthony Giombetti
612-308-1190
