Evine’s Sales Slip 1% In Third Quarter

Not a great third quarter for Evine this year, especially when someone is stalking the company.

The home shopping network posted net sales of $150 million, a roughly 1 percent decrease year-over-year. Management estimates net sales would have increased 1 percent when excluding the estimated $3 million negative sales impact from Hurricanes Harvey and Irma during the quarter.

Evine suffered a net loss of $1.1 million, and an adjusted EBITDA of $3.8 million, a 49 percent improvement year-over-year.

“I am very proud of our Q3 operating results,” CEO Bob Rosenblatt said in a canned statement.

“As our stakeholders know, this is the very beginning of what we call Year Two, the phase in our strategic plan that is focused on delivering revenue and free cash-flow growth. In Year One, we fixed our merchandising mix and significantly improved our balance sheet and profitability. This coming year our plan is to begin scaling our enterprise. In addition, boosted by our recent sale of our Boston television station, we are positioned to deliver positive EPS [earnings per share] for the fiscal year, which would be the first time we have accomplished this since fiscal 2007.”

He added, “We believe our strategy of a thoughtful transition over time into an interactive digital commerce company will drive sustainable revenue growth, EPS growth and multiple expansion growth that will combine to drive significant shareholder value. Specifically, longer term we seek to build and operate multiplatform digital commerce experiences using proprietary technologies that monetize multiple business models.”

The top-performing category in the third quarter was beauty, which rose 10 percent year-over-year. Fashion, home and consumer electronics also increased.

The return rate for the quarter was 19.1 percent, an improvement of 140 basis points year-over-year.

Gross profit as a percentage of sales increased 150 basis points to 38.1 percent year-over-year, driven primarily by improved rates. Gross profit dollars increased 3 percent to $57.3 million. Operating expense remained flat at $58 million.

As of the end of October total cash was $23 million, compared to $22 million at the end of the second quarter. Evine also had an additional $13 million of unused availability on its revolving credit facility with PNC Bank, which gave it total liquidity of about $36 million as of the end of the third quarter.

As previously announced Evine agreed to sell its television station, WWDP, serving the Boston market, for an aggregate of $13.5 million. The transaction includes two agreements with unrelated parties.

The first agreement closed in the third quarter and resulted in the initial receipt of a $2.5 million cash payment. That cash was used to pay down an equal amount of our loan with GACP.

The transaction resulted in an $833,000 net tax benefit related to the reversal of a deferred tax liability that was partially offset by a $221,000 loss related to the early debt extinguishment.

Got that?

The second agreement is expected to close in the fourth quarter following satisfaction of customary closing conditions, including Federal Communications Commission approval.

The financial impact of this transaction, including the complete pay-down of the remaining $3.6 million loan with GACP, is expected to include a $3 million positive impact to net income in the fourth quarter.

“We continue to expect fourth-quarter revenue growth in the mid- to high-single digits,” the network said in a press release Tuesday.

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