Shop At Home Reports Second Quarter Results; EBITDA Improvement of 58.7% Over Last Quarter
NASHVILLE, Tenn.--(BUSINESS WIRE)--Jan. 29, 2001--Shop At Home, Inc. (Nasdaq:SATH), an electronic commerce leader in both the broadcast and Internet channels, today, reported second quarter revenue of $46.5 million. The Company realized a 58.7% improvement in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) loss in the December quarter over the quarter ended September 30, 2000.
collectibles.com continued its sales growth with record quarterly revenues of $5.4 million, a 27% increase from the quarter ended September 30, 2000 and a 1,162% increase over the same period last year.
Shop At Home President and CEO, Kent Lillie said, "Our ongoing dedication to the Company's comprehensive turnaround program has produced consistent quarter over quarter improvements since the inception of this program in July. Significant cost reductions have been achieved through headcount reductions, in affiliate charges by canceling or lowering the payments related to unprofitable carriage agreements, and through tenacious renegotiations of many of our major contracts. Gross margins have improved significantly from the September and June quarters through the reduction of returns, credit card fraud and cost of goods sold.
"Although I am pleased with the progress we have made in our turnaround efforts, we are committed to the significant challenges ahead in the retail market, namely, to increase sales volume by diversifying our product offerings, expanding our strategic partnerships and improving customer service which will ultimately improve our bottom-line."
Arthur Tek, Executive Vice President and CFO, stated, "We were pleased that the Company's cash burn slowed dramatically during the December quarter. As a result, we were able to use $4.5 million to repurchase Series B preferred stock, which we believe reduced potential dilution for our common shareholders. Although our cash balance declined moderately from $12.2 million at September 30, 2000 to $10.8 million at December 31, 2000, we would have enjoyed an increase without the preferred stock repurchase."
Second Quarter Highlights
-- Gross margin has improved to 36.2% in the December quarter
from 31.7% in the September quarter and 29.2% in the June
quarter. (1)
-- Chargebacks, primarily due to fraud, have been reduced to 1.2%
of sales, dropping from 2.4% of sales in the September quarter
and 3.6% of sales in the June quarter.
-- Annualized base salaries as of December 31, 2000 have been
reduced to $17.6 million from $18.6 million as of September 30,
2000 and $21.1 million as of June 30, 2000.
-- The Company has eliminated or renegotiated unprofitable
affiliation agreements resulting in annualized savings of
3.5 million. The Company anticipates additional savings from
other affiliate cancellations and renegotiations in the near
term.
-- The average price point for merchandise during the December
quarter was reduced to $179 from $220 in the September
quarter. The Company made progress in lowering its average
price point to attract more customers.
-- collectibles.com revenue rose to 11.7% of total net revenue
for the quarter ended December 31, 2000 from 10.4% of revenue
for the quarter ended September 30, 2000 and 2.3% for the year
ended June 30, 2000.
-- The Company's private label credit card, implemented in late
October, has produced $5.2 million in sales. Third party
financing provides additional cash for operations while
eliminating collection risk for the Company.
-- The Company reduced its full and part-time headcount to 543
employees as of December 31, 2000 from 571 as of September 30,
2000 and 673 as of June 30, 2000.
-- Salaries and wages, as a percent of revenues, decreased to
9.9% in the December quarter, from a high of 13.1% in the June
quarter, and 11.4% in the September quarter.
Operating and Net Losses
The Company improved its EBITDA losses to $2,450,000, a 58.7% gain from the prior quarter's EBITDA loss of $5,933,000. Net loss for the December quarter was $5.2 million for continuing operations or $0.15 per share, a 29% improvement over the net loss of $7.3 million or $0.24 per share in the September quarter, and a 61% improvement over the net loss of $13.5 million or $0.44 per share in the June quarter.
The Company realized an additional net loss of $2.9 million for discontinued operations or $0.08 per share for the quarter ended December 31, 2000 and a net loss of $4.2 million or $0.12 per share for preferred stock accretion and dividends. Net loss available for common shareholders totaled $12.3 million or $0.35 per share.
Sale of KZJL Houston
On January 12, 2001, the FCC granted license transfer approval for the sale of Shop At Home's Houston station, KZJL, to Liberman Broadcasting for $57 million in cash, at closing. The Company anticipates receipt of funds and final closing by the end of the March 31, 2001 quarter. The Company will utilize the proceeds of the sale to repay its $20 million bank facility. Management is evaluating a number of alternatives with regard to the best use of the balance of the proceeds, which could include payment of existing bond debt, or to invest in increasing the Company's household reach, either through the acquisition of undervalued broadcast properties or to be used as incentives to cable or DBS satellite.
Discontinuance of Collector's Edge
The Company has discontinued the operations of its subsidiary and segment, Collector's Edge of Tennessee (CET), which formerly manufactured and distributed football trading cards. The Company is currently negotiating the sale of CET's assets, which have been written down to reflect their net realizable value. Revenues from CET are as follows: |
