Evine Live’s net sales rose 5 percent in the fourth quarter last year, to $211.5 million, but operating income dropped precipitously, to $1.6 million from $3.9 million in the prior-year period, the company reported Wednesday.
Operating expenses also increased, up $3.1 million to $64.8 million, and was driven primarily by increased program distribution and increased variable expense.
Earnings per share dropped to one cent, which includes distribution facility consolidation and technology upgrade costs. EPS for the prior fourth quarter was six cents, which included executive and management transition costs.
Consumer electronics was the fastest-growing category at 35 percent of net sales versus the prior-year period, followed by the beauty category at 23 percent and fashion at 3 percent; jewelry and watches declined by 2 percent and home declined by 11 percent.
The return rate for the quarter was 18.9% percent,an improvement of 100 basis points year-over-year.
Chairman and Interim CEO Bob Rosenblatt, who replaced ousted Mark Bozek, had lengthy comments in the press release.
Although the Company had solid revenue growth in the fourth quarter, we are disappointed with the overall bottom line results. e profit erosion that continued into our fourth quarter doesn’t reflect the merchandising balance and operational discipline necessary to deliver consistent growth in value to all stakeholders.
We are in the midst of implementing plans to address these issues, but we are mindful that it will take some time to fix them in the right way. Last week we took our first steps toward addressing these issues and cut our full-year operating expense by $5 million through a reduction in corporate overhead and other operating costs.
Evine Live has a proven business model and we are strongly positioned to continue to use our expertise as a leader in the digital video commerce space. Our historical focus on developing proprietary and exclusive brands to broaden our product offering is proving to be a good idea.
However, it is only one piece of a much broader business strategy that is required to create profitable results and to build shareholder value. Our work going forward is centered on building a cohesive merchandising strategy with clear accountability.
With the $17 million bank term loan from GACP Finance Co., LLC, our recently strengthened balance sheet provides the Company some additional flexibility in building long-term relationships with our vendors, as well as the ability to be more opportunistic in the broader marketplace.
For 2015, sales were up 3 percent to $693.3 million, with operating income in the negative column at $8.7 million from a positive $1 million in 2014.
Consumer electronics was the fastest-growing category at 29 percent versus the prior year, followed by beauty at 14 percent and fashion at 10 percent; jewelry and watches declined by 3 percent and home declined by 9 percent.
The return rate for the year was 19.8 percent, an improvement of 170 basis points year-over-year.