It wasn’t exactly a stellar first quarter for Evine Live.
The No. 3 home shopping network posted fiscal first-quarter earnings Wednesday, reporting that net sales were $158 million, down 1 percent compared with the same period last year.
That’s not a good showing compared to Evine Live’s rivals. QVC saw a 3 percent sales gain, to $1.3 billion in the first quarter, while HSN was up 10 percent, to $600.5 million.
And quite frankly, CEO Mark Bozek had a lot of ‘splaining to do, as Ricky Ricardo used to say in “I Love Lucy.” Bozek doth protest too much, as far as we’re concerned.
This is straight from Evine Live’s press release, from Bozek:
“While we hoped to deliver top line growth of at least 3 percent, several factors including a lower than ideal average selling price in watches, discounting excess textiles inventory on-air and lower shipping revenues worked against us. These factors also contributed to the decrease in our adjusted EBITDA to $2 million.
On the other hand, we’ve launched over a dozen proprietary brands since the beginning of the year, and our new brands are being well received and are driving higher sales per minute than our legacy product.
In addition, our Fashion Day at the end of April was an extraordinary success, and contributed to year-over-year segment growth of 18 percent in the quarter. With time, we expect new, higher margin brands to grow to represent an increasing share of the total, which should lift the top and bottom lines overall. We have a lot of exciting growth initiatives underway and I look forward to sharing more detail about them at our Investor Day on May 28.
This was another productive quarter for our team. After an extensive recruiting process, we completed our executive transition plan during the first quarter when we hired our new Chief Financial Officer, Tim Peterman, and our new Chief Merchandising Officer, Penny Burnett.
Tim and Penny are great additions to our team and I couldn’t be more excited to be working with them. Furthermore, just last week we celebrated the official opening of our expanded distribution facility and call center in Bowling Green, Ky. There is still work to do, but when complete it will allow us to deliver faster shipping times and improved customer service.
It has been just under a year since I took over as CEO of a company that needed a cohesive strategic vision. Our success hinges on our commitment to be nimble and continuously test new product launches, merchandising mix and programming platforms.
While new initiatives take time, the progress we are making is clearly reflected in several encouraging first-quarter records – including total customers, average purchase frequency and units shipped. While the balance of 2015 will continue to be a transition period, the heavy lifting has been done and the benefit of changes we have made should be visible in our bottom line by year end.”
As Bozek said, fashion was Evine Live’s fastest-growing segment, with sales up 18 percent.
Jewelry posted sales growth of 8 percent, followed by beauty with 7 percent gains.
Watches declined 15 percent on less primetime air time allocation. Less air time? Really?
Total active customers on a trailing 12 month basis were 1.4 million, a 2 percent increase.
There were 2.2 million net shipped units, a 17 percent increase.
Average purchase frequency rose to 4.1 units per customer, a 15 jump.
Mobile remained the fastest-growing platform, with sales of $28 million, a 26 percent gain.
Peterman did some brown-nosing for his new boss, as well.
“I’m a long time student and fan of the home shopping industry, and actually worked with Mark at IAC,” he said.
“It is great to see that the Evine Live platform is catching up with the times and being positioned as a relevant competitor in the digital commerce space. Our peers are posting robust margins and we expect that we should be able to as well. Achieving sustainable, positive earnings per share growth is one of my primary goals. And while posting margin improvement is particularly challenging for smaller retail companies given the recent shipping pressures of higher costs and lower margins, we are committed to working more efficiently as an organization to deliver our overall profitability goals.”
Peterman continued, “We have a solid liquidity position that includes $18 million of cash, including restricted cash, and $30 million of availability on our revolving credit facility as of the end of the first quarter. We are focused on improving our existing distribution footprint with thoughtful changes, including a possible second channel similar to our peers.
“Furthermore, by year end, we expect to improve our inventory life cycle by establishing an outlet center close to our Bowling Green distribution center, which will provide an avenue to move merchandise that no longer meets our minimum performance levels for on-air allocation and avoids the situation we experienced this quarter in discounting excess textiles. As a reminder, given our $298 million Federal NOL position, our ability to generate free cash flow will accelerate once we deliver taxable income.”
The company also offered an outlook for the rest of the year, saying that it expects the cumulative effect of its changes to have an impact by the fourth quarter.
“In the meantime, for the next two quarters sales are anticipated to be relatively flat with prior year results, followed by sales growth in the fourth quarter,” the press release said. “The company expects to turn the corner on generating positive net income on a sustainable quarterly basis in the fourth quarter.