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ValueVision Media Inc. Reports Operating Results (10-Q)

December 09, 2010 | About:
10qk

10qk

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ValueVision Media Inc. (VVTV) filed Quarterly Report for the period ended 2010-10-30.

Valuevision Media Inc. has a market cap of $121.6 million; its shares were traded at around $3.71 with and P/S ratio of 0.2. VVTV is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Consolidated net sales for the fiscal 2010 third quarter were $132,283,000 compared to $119,441,000 for the fiscal 2009 third quarter, which represents an 11% increase. We reported an operating loss of ($3,596,000) and a net loss of ($5,814,000) for the fiscal 2010 third quarter. We reported an operating loss of ($11,571,000) and a net loss of ($12,919,000) for the fiscal 2009 third quarter.

Gross profit for the fiscal 2010 third quarter and fiscal 2009 third quarter was $47,049,000 and $39,667,000, respectively, an increase of $7,382,000, or 19%. Gross profit for the nine months ended October 30, 2010 and for the comparable prior year period was $139,942,000 and $123,416,000, respectively, an increase of $16,526,000, or 13%. The increase in the gross profits experienced during the quarter and year-to-date periods was driven primarily by merchandise margin improvements targeted in a majority of our key product categories and increased shipping and handling margins resulting from fewer promotions. Gross margin percentages for the third quarters of fiscal 2010 and fiscal 2009 were 35.6% and 33.2%, respectively, a 240 basis point increase. Gross margin percentages for the nine months ended October 30, 2010 and the comparable prior year period were 36.5% and 33.1%, respectively, a 340 basis point increase. The increase in the gross margin percentages experienced during the quarter and year-to-date periods was driven primarily by merchandise margin improvements targeted in a majority of our key product categories, increased shipping and handling margins resulting from fewer promotions and due to the impact of having a lower consumer electronics product mix during fiscal 2010.

Total operating expenses for the fiscal 2010 third quarter were $50,645,000 compared to $51,238,000 for the comparable prior year period, a decrease of 1%. Total operating expenses for the nine months ended October 30, 2010 were $158,914,000 compared to $157,403,000 for the comparable prior year period, an increase of 1%. Total operating expenses for fiscal 2009 includes a $1,867,000 charge related primarily to costs and the settlement associated with the termination of a former chief executive officer. Distribution and selling expense increased $978,000, or 2%, to $42,752,000, or 32% of net sales during the fiscal 2010 third quarter compared to $41,774,000 or 35% of net sales for the comparable prior year fiscal quarter. Distribution and selling expense increased $2,917,000, or 2%, to $133,815,000, or 35% of net sales during the nine months ended October 30, 2010 compared to $130,898,000 or 35% of net sales for the comparable prior year period. Distribution and selling expense increased on a year-to-date basis primarily due to a $3,734,000 increase in cable and satellite fees resulting from an increase in the number of homes during the year and certain contractual rate increases, partially offset by third quarter favorable retroactive billing adjustments from certain carriers. Distribution and selling expense also increased on a year-to-date basis as a result of increased credit card fees and bad debt expense totaling $2,235,000 due to the overall increase in net sales and order transactions over prior year. The distribution and selling expense increases during the year were offset by: decreases in customer service and telemarketing expense of $1,024,000 resulting primarily from efficiencies gained during the year in the areas of increased order process automation as well as reductions achieved in our average talk time for both order capture and customer service; decreases in advertising and promotion expense of $626,000; and decreases in third-party cable affiliation fees of $100,000.

General and administrative expense for the fiscal 2010 third quarter increased $181,000, or 4%, to $4,445,000, or 3.4% of net sales, compared to $4,264,000, or 3.6% of net sales for the fiscal 2009 third quarter. General and administrative expense for the nine months ended October 30, 2010 increased $807,000, or 6%, to $14,007,000 or 3.7% of net sales, compared to $13,200,000, or 3.5% of net sales for the comparable prior year period. General and administrative expense increased on a year-to-date basis over prior year primarily as a result of an increase in relocation expense associated with filling key positions and other salary related benefits totaling $807,000.

Depreciation and amortization expense for the fiscal 2010 third quarter was $2,997,000 compared to $3,507,000 for the fiscal 2009 third quarter, representing a decrease of $510,000, or 15%, from the comparable prior year fiscal quarter period. Depreciation and amortization expense for the nine months ended October 30, 2010 was $10,215,000 compared to $10,723,000 for the nine month comparable period representing a decrease of $508,000, or 5%, from the comparable prior year period. Depreciation and amortization expense as a percentage of net sales for the three month periods ended October 30, 2010 and October 31, 2009 was 2.3% and 2.9%, respectively. Depreciation and amortization expense as a percentage of net sales for the nine month periods ended October 30, 2010 and October 31, 2009 was 2.7% and 2.9%, respectively. The year-to-date decrease in depreciation and amortization expense relates to the timing of fully depreciated assets year over year.

For the fiscal 2010 third quarter, we reported a net loss available to common shareholders of $5,814,000 or $.18 per common share on 32,781,000 weighted average common shares outstanding compared with a net loss available to common shareholders of $12,919,000 or $.40 per share on 32,332,000 weighted average common shares outstanding in the fiscal 2009 third quarter. For the nine months ended October 30, 2010, we reported a net loss of $24,478,000 or $.75 per common share on 32,721,000 weighted average common shares outstanding compared with a reported net loss available to common shareholders of $5,865,000 or $.18 per share on 32,570,000 weighted common shares outstanding for the comparable prior year period. Net loss available to common shareholders for the third quarter of fiscal 2010 includes interest expense of $2,203,000, relating primarily to interest on our Series B Preferred Stock and the amortization of fees paid on our bank line of credit facility. Net loss available to common shareholders for the

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