First-quarter sales down 14 percent for ShopNBC

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First-quarter sales down 14 percent for ShopNBC

May 20, 2009

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Eden Prairie, Minn.--Revenues declined 14 percent in the first quarter of 2009 for multi-channel retailer ShopNBC, which slashed its jewelry inventory in half during the period.

According to a release from the company, revenues in the first quarter of 2009 totaled $133.8 million, compared with $156.2 million in the first quarter of 2008.

Though sales were still down in the first quarter, ShopNBC's 14 percent decline is an improvement over the fourth quarter of 2008, when sales fell 35 percent.

In a conference call for investors held on Wednesday morning, ShopNBC President and Chief Executive Officer Keith Stewart said the company--which underwent a major restructuring, including his hire, in the beginning of the year--is on track for success, noting that it is a "whole new ballgame" at ShopNBC.

"The turnaround of ShopNBC's business is headed in the right direction," he said.

According to its earnings release issued late on Tuesday, ShopNBC's product mix in the first quarter was divided among watches, coins and collectibles (33 percent), followed by computers and electronics (29 percent) and jewelry (21 percent).

This represents a 51 percent drop in the amount of jewelry the multi-channel retailer carried, while the mix of computers and electronics was up 12 percent and watches, coins and collectibles rose 13 percent.

Stewart said in the conference call, however, that overall inventory in the first quarter was at its lowest level in six years, and that the company expects to increase inventory levels in the second quarter in categories including jewelry, home, fashion and beauty.

Operating expenses decreased $14.5 million during the first quarter, due to a lower headcount and reduced online marketing spend, among other factors.

Margins declined slightly, sliding from 32 percent to 31.5 percent.

ShopNBC expects margins to improve this year as it shifts its merchandise mix to home, fashion and beauty and repositions its core jewelry business around more moderately priced items, with higher margins and broader appeal, a strategy previously outlined by the company.

While it is shifting its product mix to lower-priced jewelry, ShopNBC noted that two jewelry sales--"Spring Forward with Invicta Watches," with orders of $10 million and top-selling items producing levels of $52,000-$84,000 per minute, and "Diamond Day," with orders of $4 million--were among its most successful sales events during the quarter.

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