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 Breaking Headlines


GSI Has Record Q1 Revenues; Loss Is Reduced

APRIL 28, 2004 -- GSI Commerce increased its net revenues 36% to $66.3 million and reported a net loss of $4.0 million, or $0.10 per share, decreasing the company's net loss by $1.5 million, or $0.04 per share, compared to last year's first fiscal quarter. For the same comparable periods, adjusted EBITDA, a non-GAAP financial measure, improved by approximately $1.8 million to a loss of $1.1 million, and net merchandise sales, also a non-GAAP financial measure, rose 59% to $85.9 million. Net revenues were $66.3 million, a 36% increase.

Net revenues from product sales generated by the company's sporting goods category were $33.5 million, which was a 37% increase. Net revenues from product sales generated by the company's other merchandise categories were $23.3 million, which was an 18% increase compared to $19.8 million for the first quarter of fiscal 2003. Service fee revenues increased 100% to $9.4 million.

Net merchandise sales were $85.9 million, a 59% increase. Net merchandise sales represent the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through the GSI Commerce platform, whether or not the company is the seller of the merchandise or records the full amount of such sales on its financial statements.

Net merchandise sales from the sporting goods category increased 44% to $35.1 million. Net merchandise sales from the company's other merchandise categories increased 71% to $50.8 million from $29.8 million in the first quarter of fiscal 2003. Net merchandise sales and net revenues from product sales for the company's other merchandise categories included $735,000 and $8,000 for Q1 2003 and Q1 2004, respectively, related to the jewelry business of Ashford.com, which the company sold in December 2002.

The company had a net loss of $4.0 million was an improvement of approximately $1.5 million compared to the net loss of $5.5 million for the first quarter of fiscal 2003.

The company showed a $0.04 per share improvement with a net loss per share of $0.10 for the first quarter of fiscal 2004 compared to net loss per share of $0.14 for the first quarter of fiscal 2003.

The company showed a $1.8 million improvement in adjusted EBITDA, with an adjusted EBITDA loss of $1.1 million in the first quarter of fiscal 2004 versus an adjusted EBITDA loss of $2.9 million in the first quarter of fiscal 2003. Adjusted EBITDA represents earnings (or losses) before interest income/expense, taxes, depreciation, amortization, and stock-based compensation.

The company's gross profit improved 45% to $24.8 million. Gross margin improved to 37.4% for the first quarter of fiscal 2004 from 34.8% in Q1 2003, an increase of 260 basis points.

Total operating expenses were $29.1 million for the first quarter of fiscal 2004, an increase of 27% compared to $22.9 million for the first quarter of fiscal 2003. Total operating expenses, as a percentage of net revenues, decreased to 44% from 47% in the first quarter of fiscal 2003.

The company's cash, cash equivalents, short-term investments and marketable securities at the end of fiscal 2004's Q1 were $51.9 million compared to $69.5 million at fiscal 2003 year end, a decrease of $17.6 million, which was attributable to the expected seasonality of working capital. Cash, cash equivalents, short-term investments and marketable securities at the end of fiscal 2004's Q1 increased $623,000 compared to the $51.9 million at the end of fiscal 2003's Q1.

The company's inventory at the end of Q1 was $21.1 million compared to $22.9 million at fiscal 2003 year end, a decrease of $1.9 million. Comparing inventory at the end of fiscal 2004's Q1 to the end of fiscal 2003's Q1, inventory decreased $4.0 million to $21.1 million from $25.1 million.

"GSI Commerce had an excellent first quarter of fiscal 2004," said Michael Rubin, COB/CEO of GSI Commerce. "We generated substantial revenue growth and added meaningful improvement to the bottom line. The revenue growth exceeded our guidance, and we delivered bottom-line results that came in at the high-end of our guidance, as we continued to focus strategically on investing to build a foundation for the planned growth of our business. We remain confident in our financial outlook for the year and, more importantly, with our long-term prospects."




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