Sales down 50 percent for Bidz.com

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Sales down 50 percent for Bidz.com

May 06, 2009

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Culver City, Calif.--Sales declined 49.6 percent in the first quarter of 2009 for Bidz.com, as the macro-economic environment continues to impact sales for the online auction and retail company.

According to a release issued by Bidz.com, net revenue for the first quarter, ended March 31, totaled $31.2 million, compared with $61.9 million in the first quarter of 2008.

Sales in the United States accounted for 69.7 percent of Bidz.com's business, while international sales totaled 30.3 percent.

Gross profit in the first quarter totaled $10.2 million, compared with $18 million in the first quarter of 2008, according to the release.

Gross margins, however, increased 12.4 percent, from 29.1 percent in the first quarter of 2008 to 32.7 percent in the first quarter of 2009, an increase the company credits to "continued careful management" of the amount of auctions and an increase in sales of brand-name merchandise purchased by Bidz.com in closeouts.

The first-quarter sales decline follows a fourth quarter in which the company--one that had been growing rapidly since its 1998 launch--saw sales decrease 44 percent.

Despite sliding sales, Bidz.com President Leon Kuperman said in the release that the company is confident it is making the right choices to position itself for long-term success.

"Given the current environment, and the abundance of high-quality branded closeout inventory available in the market, we have reduced the need to manufacture product and are actively buying closeouts of both luxury brand-name jewelry and accessories such as handbags, wallets and scarves at extremely low prices," he said. "While the macro-environment remains weak, we expect to continue to profitably manage our business, leverage our proprietary auction infrastructure and take advantage of the many current opportunities to purchase brand-name items. We remain focused on further increasing our awareness and relevance to our customers by providing quality goods at tremendous values."

In the first quarter, Culver City, Calif.-based Bidz.com, which also operates fixed-price online retail store Buyz.com, bought the brands of defunct manufacturer The Colibri Group for $6 million, and then sold the brands to manufacturer The Richline Group, a Berkshire Hathaway Co., for an undisclosed sum.

Moving forward, the release states that Bidz.com expects revenue to be lower in the second and third quarters, as this is seasonally the weakest period for jewelry sales.

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