Shop At Home Quarterly Operating Results Show Significant Improvement
NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 25, 2001--Shop At Home, Inc. (Nasdaq:SATH), a 15-year-old nationally televised home shopping service, today announced financial operating results for the quarter ending September 30, 2001, the first quarter of fiscal year 2002. EBITDA (earnings before interest, taxes, depreciation and amortization) results reflected significant improvement and signal the success of the Company's turnaround plan, which was implemented in this quarter. Revenues for the first quarter were $43.4 million, compared to revenues of $40.8 million for the same period last year. Net loss improved to $4.8 million from $8.8 million last year.
The Company's EBITDA loss of $1.9 million represented an improvement of 67%, or $4.0 million, compared to the same quarter last year. The principal components of the EBITDA improvement were higher net revenues and margins; and lower affiliate fees, salaries and general and administrative expenses. The contribution of each component to improved EBITDA was as follows:
EBITDA Improvement
Component ($ = millions)
--------------
Increase in net revenues
(less cost of goods sold) $ 0.9
Reduction in cost of goods
sold as a % of net revenues 1.2
Reduction in affiliate fees 1.1
Reduction in salaries and wages 0.3
Reduction in general and administrative 0.5
--------------
Total EBITDA improvement $ 4.0
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The Company's EBITDA for the September 2001 quarter represented its best performance since March 2000, 18 months ago.
Last week the Company made a major announcement concerning the largest distribution increase in Company history with DIRECTV. The DIRECTV agreement expands Shop At Home's coverage of its television shopping programming by over 10 million full time households. This will increase the Company's total household reach to 73 million different households and 40 million full time equivalent subscribers.
Some key achievements since May 2001 have been:
(i.) EBITDA for September 2001 quarter was the best in 18 months
(ii.) September quarter improved over the fourth quarter (June) last fiscal year in all major indices of performance, including revenue, margin and EBITDA
(iii.) September quarter EBITDA was 84% better than June quarter 2001
(iv.) Improved merchandise margins in most product categories
(v.) Reduction of affiliate distribution costs
i. Annualized savings of over $4.0 million with more houses
reached
(vi.) A new DIRECTV agreement adding over 10 million households
(vii.) A loan funding for $17.5 million
(viii.) Establishment of program schedules and guides
(ix.) Change in sports memorabilia reliance levels
(x.) Customer service complaints reduced substantially
(xi.) New senior management with home shopping experience
The last quarter operating results began to reflect substantial expense improvements in cost of distribution of the Company's programming. During the last 90 days, renegotiations of distribution costs have resulted in annual improvements of more than $4.0 million in distribution costs.
During the quarter, two new executive officers with substantial home shopping experience have joined the Company. Thomas Merrihew, who was with QVC for six years, is Executive Vice President of Sales and Merchandising, while Robert Wales, who was with HSN for eleven years, is Executive Vice President of Operations.
The tragic events of September 11, 2001 negatively impacted retail shopping as the Company interrupted its normal broadcasting on two separate occasions. Revenues were below normal for several weeks; however, the Company is optimistic that future revenues will not be severely impacted by America's adjustment and response to September 11.
Conference Call and Webcast
As noted in the Company's October 22, 2001 press release, a conference call to discuss Fiscal Year 2002 1st Quarter Earnings will be held at 10:30 a.m. CST on October 25, 2001. A live listen-only web-cast of the conference call will be available for 90 days on the Company's website at www.shopathometv.com/corporate/news-index.html or by dial-in instant replay at 1-800-835-4112. The dial-in instant replay will be available beginning October 26 until November 5, 2001. |
