ShopNBC reported Wednesday that its fiscal third-quarter net sales were up a whisker, rising 2 percent, to $137.6 million versus the year-ago period.
The slight sales improvements were driven by the beauty, health, & fitness categories. That performance offset a decrease in the categories of fashion & accessories and home & consumer electronics, according to the network.
ShopNBC’s gain was less than its much-bigger rivals. QVC recently reported a third-quarter revenue increase of 3 percent, to $1.2 billion. HSN’s sales increase in the quarter was 5 percent, to $537.4 million.
ShopNBC CEO Keith Stewart is always long-winded in these press releases, and this one was no exception.
“In Q3 we made progress in many areas of the organization while also addressing areas not yet performing up to expectations,” he said in his canned statement. “I am pleased with the progress made in the emerging category of beauty, health, & fitness.”
He continued,”The company strategically shifted airtime from jewelry & watches to invest in our home & consumer electronics and beauty, health, & fitness categories in Q3. This airtime shift helped diversify our product mix and reduce our average selling price, contributing to improved new and active customer counts in the quarter.”
“We still have work to do in the home & consumer electronics category to further broaden our product mix. Ongoing initiatives to improve customer service and engagement yielded positive results in the third quarter, including improved call center efficiency and lower transaction costs.”
“Additionally, our ‘Watch & Shop Anytime, Anywhere’ strategy is constantly evolving to align with our customers’ shopping preferences. This initiative further supported growth in our mobile penetration, which has more than doubled to approximately 16% of Internet sales year-to-date versus last year.”
Added Stewart, “As previously announced, starting Jan. 1, ValueVision (i.e. ShopNBC) will benefit from a $15 million annual distribution cost savings as well as a second channel of exposure in approximately 19 million television households. Both enhancements are expected to make important contributions to our operating performance next year.”
Gross profit dollars increased 1.1 percent, though gross profit margin decreased by 30 basis points to 36.9 percent in the third quarter versus last year, principally reflecting an increase in shipping and handling promotions.
ShopNBC’s operating expenses dipped 3 percent in the quarter, as rate reductions within variable expenses helped offset an increase in TV distribution fees related to a 3.1 percent growth in the average number of homes in the company’s distribution footprint.
The home shopping network saw a third-quarter adjusted EBITDA gain of $600,000 compared to an adjusted EBITDA loss of $500,000 last year.
The company’s average selling price decreased 4.8 percent to $100 in in the quarter versus last year. Net shipped units rose 7.2 percent in the quarter.
ShopNBC’s Internet sales penetration rose 70 basis points to 44.8 percent in the third quarter.
ShopNBC executive vice president and chief financial officer William McGrath got his two cents in, too.
“ValueVision’s cash, including restricted cash, position totaled $32.6 million at the end of the third quarter, compared to $40.3 million in Q2’12,” he said. “The company’s working capital position reflects planned seasonal inventory increases in advance of our peak fourth-quarter selling season. Inventories rose $8 million to $54 million in Q3’12 versus $46 million in Q2’12. Additionally, accounts receivable increased in the quarter due to higher usage of ValuePay installment sales.”
We’ve been too busy at work to listen to the ShopNBC conference call, but if you are interested, go to http://www.media-server.com/m/p/7hni5d7c.