SOURCE: ShopNBC

ShopNBC

March 17, 2011 08:03 ET

ValueVision Q4 2010 Net Sales Rose 15.2% to $178.8 Million; Adjusted EBITDA Rose to $8.0 Million vs. a Loss of $1.3 Million

2010 Net Sales Rose 6.5% to $562.3 Million and Adjusted EBITDA Improved to a Positive $2.4 Million vs. a Loss of $19.4 Million

MINNEAPOLIS, MN--(Marketwire - March 17, 2011) - ValueVision Media, Inc. (NASDAQ: VVTV)

Q4 '10 Progress Across Key Operating Metrics:

--  Net Sales Increased 15.2% to $178.8M
--  Adjusted EBITDA of $8.0M vs. ($1.3M)
--  Net Shipped Units Rose 4.3%
--  Gross Margin Rose 90 bps to 33.3%
--  New Customers Rose 10.9%; Active Customers Rose 12.0% on 12 month 
    rolling basis
--  Internet Sales Penetration Rose 510 bps to 44.0%

ValueVision Media, Inc. (NASDAQ: VVTV), a premium interactive retailer via TV, Internet and mobile, operating under the "ShopNBC" brand, today announced improved operating results for its fiscal fourth quarter (Q4 2010) and year ended January 29, 2011 (FY 2010). ValueVision will host a conference call and webcast to review its results at 11:00 a.m. ET today, details below.

 
SUMMARY RESULTS AND KEY OPERATING METRICS         
($ Millions, except average price points)
         
                   Three months ended             Twelve months ended
               ---------------------------  ------------------------------ 
               1/29/2011 1/30/2010 Change   1/29/2011  1/30/2010   Change
               --------  --------  -------  ---------  ---------  -------- 
                Q4 '10    Q4 '09             FY 2010    FY 2009

Net Sales      $  178.8  $  155.3     15.2% $   562.3  $   527.9       6.5%
EBITDA, as
 adjusted      $    8.0  $   (1.3)  +$ 9.3  $     2.4  $   (19.4) + $ 21.8
Net Loss       $   (1.4) $   (8.8)  +$ 7.4  $   (25.9) $   (42.0) + $ 16.1

Homes (Average
 000s)           77,498    74,701      3.7%    76,437     73,576       3.9%
Net Shipped
 Units (000s)     1,585     1,519      4.3%     5,175      4,537      14.1%
Average Price
 Point         $    105  $     96      8.9% $     101  $     108      -6.5%
Return Rate %      18.7%     19.0%  -30 bps      19.8%      21.0%  -120 bps
Gross Margin %     33.3%     32.4%   90 bps      35.5%      32.9%   260 bps
Internet Net
 Sales %           44.0%     38.9%  510 bps      41.2%      33.7%   750 bps
New Customers -
 12 month
 rolling            N/A       N/A             580,117    523,314      10.9%
Active Customers -
 12 month
 rolling            N/A       N/A           1,144,028  1,021,725      12.0%

"Continued merchandising improvements and operating discipline yielded another quarter of double digit sales gains and gross margin improvement, with an over $9 million improvement in Adjusted EBITDA in Q4 2010 versus last year," said Keith Stewart, CEO of ValueVision Media. "Our full year performance highlights progress in each of our key operating metrics, including new and active customers, Internet sales penetration, gross margin, net units shipped and a strategic reduction in average price point. These improvements yielded a 6.5% gain in net sales and improved Adjusted EBITDA by $21.8 million to a positive $2.4 million and highlight growing consumer acceptance of the value and convenience of our interactive shopping offerings."

Continued Stewart, "Having markedly improved the business over the past two years under a new management team and committed employee base, we are now turning our full attention to driving top-line growth through a more diversified base of merchandise categories and broader product selection. While we believe in the growth potential of the business, we do expect some quarterly variability in our operating performance as we diversify our merchandise mix and test and launch new products, as well as from seasonal factors."

 
Sales by Product Category
                                        Q4 '10   Q4 '09     2010     2009
                                        -------  -------  -------  ------- 
Jewelry & Watches                            45%      51%      52%      55%
Fashion & Accessories                         6%       8%       6%       7%
Health & Beauty (and Fitness)                10%       7%      10%       7%
Home & Electronics                           39%      34%      32%      31%
                                        -------  -------  -------  ------- 
                                            100%     100%     100%     100%

Bob Ayd, President, added: "Areas of opportunity for 2011 include our Jewelry & Watches and Health & Beauty businesses where new product assortments have been achieving strong customer response while generating attractive margins. Home & Electronics should play an important role in revenue and new customer growth as we expand merchandise offerings in both hard and soft home categories. Fashion & Accessories remains a small but attractive business that we expect will scale over time. Importantly, our growth objectives are now being supported by a stronger working capital position that resulted from the equity and debt financings completed in Q4. This incremental capital gives us greater flexibility in our merchandising strategies as well as in managing inventory and customer payment terms to maximize revenue and profitability."

Q4 Highlights

ValueVision's Q4 net sales improvement reflected strong performances in Home & Electronics as well as Health & Beauty, as the company allocated more programming time to these categories. Home & Electronics sales growth was led by strong holiday demand for large screen TVs and GPS devices that carry higher average sales prices and lower gross profit margins, but generated strong sales and gross margin dollars on a per minute basis. Return rates continued to decrease in the quarter on a year-over-year and sequential basis, reflecting the benefit of improved order fulfillment processes, continued enhancements in customer service, and the benefit of lower average price points.

Customer Activity

New and active customer trends improved 10.9% and 12.0%, respectively, in the 12 months ended January 29, 2011, versus the prior year, outpacing the 3.9% growth in average homes to 76.4 million. Customer trends showed modest improvements on a sequential 12-month basis for the period, as the company focused airtime on proven items that resonated strongly with customers in Q4 2010.

Liquidity and Capital Resources

ValueVision made substantial progress in expanding its working capital base during Q4 2010, ending the year with working capital of $81.6 million as compared to $37.1 million in Q3 2010 and $53.4 million at year-end 2009. The company secured $25 million via a 5-year term loan in November 2010 and raised net proceeds of $17 million in a December stock offering.

Conference Call / Webcast Information:

The conference call is today, Thursday, March 17 at 11:00 a.m. ET.

Webcast/Web Replay: https://e-meetings.verizonbusiness.com/emeet/join/index.jsp

Conference #: 1548956 / Passcode: SHOPNBC; archived for 30 days

Telephone: 800-988-9672 / Passcode: SHOPNBC; keypad: 7467622

Telephone Replay: 800-262-4859 / Passcode: 81810; available for 30 days

Adjusted EBITDA

EBITDA represents net loss for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The company defines Adjusted EBITDA as EBITDA excluding non-operating gains (losses); non-cash impairment charges and write-downs; restructuring, and chief executive officer transition costs; and non-cash share-based compensation expense. The company has included the term "Adjusted EBITDA" in our EBITDA reconciliation in order to adequately assess the operating performance of our "core" television and internet businesses and in order to maintain comparability to our analyst's coverage and financial guidance, when given. Management believes that Adjusted EBITDA allows investors to make a more meaningful comparison between our core business operating results over different periods of time with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric measure to evaluate operating performance under its management and executive incentive compensation programs. Adjusted EBITDA should not be construed as an alternative to operating income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies.

Forward-Looking Information

This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and accordingly are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer spending and debt levels; interest rates; competitive pressures on sales, pricing and gross profit margins; the level of cable and satellite distribution for the company's programming and the fees associated therewith; the success of the company's e-commerce and new sales initiatives; the success of its strategic alliances and relationships; the ability of the company to manage its operating expenses successfully; the ability of the Company to establish and maintain acceptable commercial terms with third party vendors and other third parties with whom the Company has contractual relationships; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting the company's operations; and the ability of the company to obtain and retain key executives and employees. More detailed information about those factors is set forth in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The company is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

About ValueVision Media / ShopNBC

ValueVision Media, Inc. (NASDAQ: VVTV) is a premium interactive retailer bringing high-quality merchandise to customers via TV, Internet and mobile, under the "ShopNBC" brand. At the end of fiscal year 2010, the ShopNBC television network reached over 78 million homes via cable and satellite and is streamed live at www.ShopNBC.tv. Over 1.1 million active customers have utilized ShopNBC in the categories of Home & Electronics, Health & Beauty, Fashion & Accessories, and Jewelry & Watches, yielding revenues in excess of $560 million (over $230 million or 41.2% of which are Internet-based). Via the Company's "ShopNBC Anywhere" initiative, customers can interact and shop via TV, phone, mobile devices and online at www.ShopNBC.com and via Facebook, Twitter and YouTube.

For more information, please visit www.ShopNBC.com.

 
                          
                         VALUEVISION MEDIA, INC.                          
                             AND SUBSIDIARIES                              
                        CONSOLIDATED BALANCE SHEETS                        
              (In thousands except share and per share data)               
        
                                                January 29,   January 30,
                                                    2011          2010
                                                ------------  ------------ 
                                                (Unaudited)

                    ASSETS
Current assets:
   Cash and cash equivalents                    $     46,471  $     17,000
   Restricted cash and investments                     4,961         5,060
   Accounts receivable, net                           90,183        68,891
   Inventories                                        39,800        44,077
   Prepaid expenses and other                          3,942         4,333
                                                ------------  ------------ 
     Total current assets                            185,357       139,361

Property and equipment, net                           25,775        28,342
FCC broadcasting license                              23,111        23,111
NBC Trademark License Agreement, net                     928         4,154
Other assets                                           3,188         1,246
                                                ------------  ------------ 
                                                $    238,359  $    196,214
                                                ============  ============ 

       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                             $     58,310  $     58,777
   Accrued liabilities                                43,405        26,487
   Current portion of accrued dividends                1,355             -
   Deferred revenue                                      728           728
                                                ------------  ------------ 
     Total current liabilities                       103,798        85,992

Deferred revenue                                         425         1,153
Long term payable                                      4,894         4,841
Term loan                                             25,000             -
Accrued Dividends - Series B Preferred Stock           6,491         4,681
Series B Mandatorily Redeemable Preferred Stock       
 $.01 par value, 4,929,266 shares authorized;
 4,929,266 shares issued and outstanding              14,599        11,243
                                                ------------  ------------ 
     Total liabilities                               155,207       107,910

Commitments and Contingencies

Shareholders' equity:
   Common stock, $.01 par value, 100,000,000
    shares authorized; 37,781,688 and 
    32,672,735 shares issued and outstanding             378           327
   Warrants to purchase 6,014,744 shares of
    common stock                                         602           637
   Additional paid-in capital                        337,421       316,721
   Accumulated deficit                              (255,249)     (229,381)
                                                ------------  ------------ 
     Total shareholders' equity                       83,152        88,304
                                                ------------  ------------ 
                                                $    238,359  $    196,214
                                                ============  ============ 

                          
                          VALUEVISION MEDIA, INC.                          
                             AND SUBSIDIARIES                              
                  CONSOLIDATED STATEMENTS OF OPERATIONS                    
              (In thousands, except share and per share data)              
                                (Unaudited)                                

            
            
                              Three Months Ended     Twelve Months Ended 
                            ----------------------  ---------------------- 
                              January     January     January     January
                                29,         30,         29,         30,
                               2011        2010        2011        2010
                            ----------  ----------  ----------  ---------- 
Net sales                   $  178,836  $  155,285  $  562,273  $  527,873
Cost of sales                  119,250     104,929     362,744     354,101
                            ----------  ----------  ----------  ---------- 
    Gross profit                59,586      50,356     199,529     173,772
     Margin %                     33.3%       32.4%       35.5%       32.9%

Operating expense:
  Distribution and selling      47,682      47,117     181,536     178,015
  General and
   administrative                5,164       5,173      19,171      18,373
  Depreciation and
   amortization                  2,943       3,597      13,158      14,320
  Restructuring costs              292       1,588       1,130       2,303
  CEO transition costs               -          65           -       1,932
                            ----------  ----------  ----------  ---------- 
     Total operating
      expense                   56,081      57,540     214,995     214,943
                            ----------  ----------  ----------  ---------- 
Operating income (loss)          3,505      (7,184)    (15,466)    (41,171)
                            ----------  ----------  ----------  ---------- 
Other income (expense):
  Interest income                    -          17          51         382
  Interest expense              (3,646)     (1,600)     (9,795)     (4,928)
  Debt extinguishment           (1,235)          -      (1,235)          -
  Gain on sale of
   investments                       -           -           -       3,628
                            ----------  ----------  ----------  ---------- 
     Total other expense        (4,881)     (1,583)    (10,979)       (918)
                            ----------  ----------  ----------  ---------- 
Loss before income taxes        (1,376)     (8,767)    (26,445)    (42,089)

Income tax (provision)
 benefit                           (14)        (66)        577          91
                            ----------  ----------  ----------  ---------- 

Net loss                        (1,390)     (8,833)    (25,868)    (41,998)

Excess of preferred stock
 carrying value
 over redemption value               -           -           -      27,362
Accretion of redeemable
 Series A preferred stock            -           -           -         (62)
                            ----------  ----------  ----------  ---------- 
Net loss available to
 common shareholders        $   (1,390) $   (8,833) $  (25,868) $  (14,698)
                            ==========  ==========  ==========  ========== 

Net loss per common share   $    (0.04) $    (0.27) $    (0.78) $    (0.45)
                            ==========  ==========  ==========  ========== 

Net loss per common share
 ---assuming dilution       $    (0.04) $    (0.27) $    (0.78) $    (0.45)
                            ==========  ==========  ==========  ========== 

Weighted average number of
 common shares outstanding:
     Basic                  35,140,671  32,442,541  33,326,200  32,537,849
                            ==========  ==========  ==========  ========== 
     Diluted                35,140,671  32,442,541  33,326,200  32,537,849
                            ----------  ----------  ----------  ----------



                          VALUEVISION MEDIA, INC.                          
                             AND SUBSIDIARIES                              
                                                                           
              Reconciliation of Adjusted EBITDA to Net Loss:               
                                                                            
                                Three Months Ended     Twelve Months Ended
                                --------------------  --------------------  
                                 January    January    January    January
                                   29,        30,        29,        30,
                                  2011       2010       2011       2010
                                ---------  ---------  ---------  --------- 

Adjusted EBITDA (000's)         $   8,046  $  (1,259) $   2,351  $ (19,411)
Less:
     Non-operating gain on sale
      of investments                    -          -          -      3,628
     Debt extinguishment           (1,235)         -     (1,235)         -
     Restructuring costs             (292)    (1,588)    (1,130)    (2,303)
     CEO transition costs               -        (65)         -     (1,932)
     Non-cash share-based
      compensation                 (1,236)      (675)    (3,350)    (3,205)
                                ---------  ---------  ---------  --------- 
EBITDA (as defined) (a)             5,283     (3,587)    (3,364)   (23,223)
                                ---------  ---------  ---------  --------- 


A reconciliation of EBITDA to
 net loss is as follows:

EBITDA, as defined                  5,283     (3,587)    (3,364)   (23,223)
Adjustments:
Depreciation and amortization      (3,013)    (3,597)   (13,337)   (14,320)
Interest income                         -         17         51        382
Interest expense                   (3,646)    (1,600)    (9,795)    (4,928)
Income taxes                          (14)       (66)       577         91
                                ---------  ---------  ---------  --------- 
     Net loss                   $  (1,390) $  (8,833) $ (25,868) $ (41,998)
                                =========  =========  =========  =========


(a) EBITDA as defined for this statistical presentation represents net 
income (loss) for the respective periods excluding depreciation and 
amortization expense, interest income (expense) and income taxes.  The 
Company defines Adjusted EBITDA as EBITDA excluding non-operating gains 
(losses); non-cash impairment charges and writedowns, restructuring and CEO 
transition costs; and non-cash share-based compensation expense.

    Management has included the term Adjusted EBITDA in its EBITDA 
reconciliation in order to adequately assess the operating performance of 
the Company's "core" television and Internet businesses and in order to 
maintain comparability to its analyst's coverage and financial guidance 
when given. Management believes that Adjusted EBITDA allows investors to 
make a more meaningful comparison between our core business operating 
results over different periods of time with those of other similar 
companies. In addition, management uses Adjusted EBITDA as a metric measure 
to evaluate operating performance under its management and executive 
incentive compensation programs.  Adjusted EBITDA should not be construed 
as an alternative to operating income (loss) or to cash flows from 
operating activities as determined in accordance with GAAP and should not 
be construed as a measure of liquidity.  Adjusted EBITDA may not be 
comparable to similarly entitled measures reported by other companies.

Contact Information

  • Contact:
    Investor / Media Relations:
    Anthony Giombetti
    ValueVision Media, Inc.
    agiombetti@shopnbc.com
    (612) 308-1190

    Investors:
    Norberto Aja, David Collins
    Jaffoni & Collins
    vvtv@jcir.com
    (212) 835-8500