Valley Media Reports Fiscal 2000 First Quarter Results
Sales Increased 20% and Internet Sales Rose 172%
WOODLAND, Calif.--(BUSINESS WIRE)--Valley Media, Inc. (Nasdaq:VMIX - news), a recognized leader in the full-line distribution of music and video entertainment products, today announced its financial results for the quarter ending July 3, 1999.
Valley Media reported a net loss for the first quarter of fiscal 2000 of $799,000 or $0.09 per share versus a loss before an extraordinary item of $1.3 million or $0.26 per share over the same period one year ago. Net sales for the quarter increased by 20% from $154.4 million to $185.8 million compared to the same period in fiscal 1999. Full-line Distribution sales decreased 7% from $124.8 million to $116.3 million, New Media sales increased 172% from $21.7 million to $59.1 million and Independent Distribution sales increased 11% from $12.6 million to $14.0 million.
Sales growth in the first quarter of fiscal 2000 was primarily driven by sales to Internet retailers by our New Media business and by DVD sales increases. This growth was partially offset by weak video sell-through releases. Gross margins increased from 11.0% to 11.8% primarily because of changes in mix including higher volumes in New Media and lower volumes in our relatively lower margin video business.
''We achieved an important strategic milestone by moving our Woodland Distribution Center to a new 260,000 square foot building,'' commented CEO Rob Cain. ''This facility will streamline our operations and give us the capacity to aggressively pursue significant growth opportunities. The significant costs associated with the move were an investment in our future. Between the Woodland move and the addition of our Louisville facility last year, we have more than tripled our capacity. As we have already disclosed, our first quarter fiscal 2000 financial results were burdened by significant issues associated with the move. We moved the majority of the inventory by the end of May. In June, we focussed on addressing a number of problems created by the inventory move. During the month of July, we successfully moved our automation equipment. We expect to have the financial impact of the move fully behind us by the end of the September 1999 quarter.''
Cain added, ''We are making progress on a number of other fronts as well. We have added important customers such as Buy.com and VirginMega.com and have added strong labels to our roster including Castle and Matador. We have a number of initiatives under way to further strengthen our New Media business. Our DVD sales are running approximately 350% ahead of the same period last year. We look forward to a strong release schedule for Independent Distribution in September from such artists as Loreena McKennitt, John Prine and Ricky Skaggs. Strategically, we are spending significant amounts of time exploring digital distribution and other initiatives to maximize synergies between our Independent Distribution and New Media businesses to better position ourselves for a future that blends physical and digital distribution. For example, we have signed a letter of intent with Amplified.com to work with them on custom compilations for Internet retailers and on digital distribution for the labels we represent.''
Valley Media is a distributor of music, video and DVD product offering Internet fulfillment, full-line distribution, independent distribution, publications, and proprietary database products. Valley Media operates facilities in seven states with primary distribution facilities in Louisville, Ky., and at its Woodland, Calif., corporate headquarters. Additional information is available at www.valley-media.com.
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