Concepts Direct, Inc. Reports Third Quarter and Fiscal Year-to-Date 2000 Sales and Earnings Results.
Business Editors
LONGMONT, Colo.--(BUSINESS WIRE)--Nov. 7, 2000--Concepts Direct,
Inc. (Nasdaq:CDIR) announced today its results and results of its
subsidiaries for the quarter and nine months ended September 30, 2000.
Sales for the quarter ended September 30, 2000, were $11,391,000,
a 1% increase from sales of $11,252,000 for the same period in 1999.
On a consolidated basis, the Company posted a net loss of $2,838,000,
or $0.57 per share during the third quarter of 2000 compared to a net
loss of $736,000, or $0.15 per share, for the same period in 1999.
Due to the Company's discontinuance of the BOTWEB operation, the
net loss figures included losses from continuing and discontinued
operations. The Company posted a net loss from continuing operations
of $2,162,000, or $0.43 per share for the quarter, compared to a net
loss from continuing operations of $622,000 or $0.12 per share in the
same period in 1999. The Company reported a loss from discontinued
operations of $676,000 or $0.13 per share for the third quarter of
2000 compared to a loss from discontinued operations of $114,000 or
$0.03 per share for the third quarter of 1999.
For the nine months ended September 30, 2000, sales were
$35,311,000, a 1% increase over sales of $34,866,000 for the same
period in 1999. The Company reported a net loss of $6,443,000 or $1.29
per share, compared to a net loss of $1,917,000 or $0.39 per share for
the same period of 1999. The Company posted a net loss from continuing
operations of $3,675,000, or $0.74 per share for the quarter, compared
to a net loss from continuing operations of $1,773,000 or $0.36 per
share in the same period in 1999. The Company reported a loss from
discontinued operations of $2,768,000 or $0.55 per share for the third
quarter of 2000 compared to a loss from discontinued operations of
$144,000 or $0.03 per share for the third quarter of 1999.
Results for the quarter and nine month periods ended September 30,
2000, included $850,000 of restructuring costs associated with the
Company's discontinuance of the operations of BOTWEB, Inc. and the
scaling back of the operations of iConcepts, Inc.
The 2000 results reflect an assumed zero percent income tax rate,
based on the Company's expectations that anticipated consolidated
losses for the balance of the year will not be deductible in the
current year for tax purposes.
J. Michael Wolfe, President and Chief Executive Officer, commented
that "during the past several months we have successfully dealt with a
series of issues facing our Company. Most important, we have addressed
our liquidity concerns by completing a sale/leaseback on our building
and entering into an agreement to sell approximately 100 acres of
undeveloped land held by the Company. When fully completed I
anticipate that the cash generated from these transactions will result
in our possessing a strong balance sheet and having sufficient cash to
not only fund ongoing operations but to also fund planned growth
initiatives."
"During the third quarter we also successfully addressed the
negative cash drain associated with our subsidiary companies. In July
and August, we completed a series of events that will result in
substantial cash savings. These included over $2 million per year in
labor savings and another $1.8 million per year in annualized
expenditures to third parties for infrastructure enhancements. In
addition, we eliminated all expenditures associated with marketing
programs for BOTWEB. Our BOTWEB subsidiary has been shut down and the
remaining assets and employees of our iConcepts subsidiary are now
fully focused on the support of our catalog and Internet retailing
efforts. All of iConcepts' Internet retailing sites have been folded
into the parent company, although NewBargains.com is the only site
that we are actively marketing at the present time."
Mr. Wolfe added: "Clearly our focus during the third quarter was
on dealing with the Company's liquidity concerns, and our financial
results reflect this focus. We took a series of one-time write downs
to reflect the current status of our subsidiary companies. With
respect to our core business, the quarter reflected a measure of
softness to our catalog mailings early in the quarter (July) and what
appears to be a late start on the fall buying season for several of
our September catalogs. While virtually all of our September campaigns
have improved during October and early November, these sales came in
too late to have a positive impact on our third quarter.
"Looking ahead, we have rededicated the focus of our management
team to building our core catalog and Internet retailing business. We
have traditionally had a strong catalog business and now we have
supplemented that with outstanding Internet retailing capabilities for
our catalog brands. The strength of our brands combined with our
excellent operational infrastructure and extensive database gives us
an outstanding platform from which to grow ...and we look forward to
using these assets to energize our core business in a dynamic
fashion."
Mr. Wolfe concluded by stressing that "as we put our various
capital and liquidity concerns behind us, we anticipate refocusing on
our Colorful Images business and on our niche-oriented business
segments. The success of Colorful Images along with the great progress
we've seen in our Snoopy(TM) etc. and Collectibles niche businesses
gives us a strong base from which to build, and we intend to
capitalize on these strengths and to leverage our business
accordingly."
Recap of Third Quarter Financial Results by Company
The following is a recap of sales and expense activity for the
third quarter of 2000 for the three companies included in the
consolidated Concepts Direct, Inc. financial results. Sales and
expenses are shown with the appropriate company. The related party
line items refer to charges between related companies for services
provided to other related companies.
*T
Concepts Direct,
Inc. iConcepts, Inc. BOTWEB, Inc.
--------------- -------------- ------------
Sales to Third
Parties $11,113,000 $278,000 $0
Sales to Related
Parties 67,000 382,000 0
Total Sales 11,180,000 660,000 0
Expenses from
Third Parties 11,562,000 1,288,000 243,000
Expenses from
Related Parties 304,000 72,000 73,000
Restructuring Costs 0 417,000 433,000
Total Expenses 11,866,000 1,777,000 749,000
Operating Loss (2000) (686,000) (1,117,000) (749,000)
Operating Loss (1999) (521,000) (298,000) (173,000)
*T
Following are a series of observations and comments regarding our
business units and key business developments:
Colorful Images:
Colorful Images suffered from a slow spring selling season
(April-June), recovered nicely in the summer period (July and August),
but then got off to a slow start for the fall selling season. Our
September Colorful Images campaigns got off to a slow start but have
come on fairly well during October and early November (but, obviously,
too late to have any impact on third quarter results). Our October
campaigns appear to be strong.
Key developments regarding our Colorful Images concept include the
following:
-- The top segments (representing about 1 million names) of our
Colorful Images database have performed quite well
throughout the spring and summer months. It has been the
second and third million name segments from our database
that have shown pockets of weakness -- especially during
the April-June period.
-- The news associated with our Colorful Images prospecting
efforts is quite good. Our prospecting volumes have
steadily increased, and the results associated with these
mailings have been excellent. Prospecting volume for the
third quarter of 2000 was up 14% vs. the prior year.
-- ColorfulImages.com came on-line October 23 and we are very
encouraged by the early results. With virtually no
advertising and no listing of the URL in any of our
catalogs yet, the site has registered over 14,000 visitors and
over $40,000 in total sales in its first 15 days of operation.
We are very encouraged by both these statistics as well as the
early feedback we are receiving from our customers.
Linda Anderson:
Our Linda Anderson concept has had a degree of difficulty during
the past several months. The combination of a smaller 12-month
customer file (resulting from decreased prospecting), poor prospect
results and an apparent soft consumer market for gift, table top and
collectible merchandise have led to this circumstance. This concept,
too, suffered from a very soft spring and early summer period. We are
encouraged by our early fall results to Linda Anderson, but it is far
too early to judge what type of fall selling season this concept may
experience.
Snoopy(TM) etc.:
We are quite pleased with our efforts related to Snoopy(TM) etc.
Both customers and prospects performed well during the third quarter,
as they have throughout 2000. During the quarter we tested our first
Snoopy(TM) microniche mailing featuring a collectible Snoopy(TM)
snowglobe and the results are outstanding. In addition,
Snoopystore.com came on-line on October 20, 2000, and we are very
encouraged by the early results.
Collectibles:
We are also quite pleased with the news related to our
Collectibles concept. This concept showed considerable strength for
the third consecutive quarter and has begun generating notable
positive contribution for our Company. The customer base continues to
perform extremely well for our Collectibles microniche program which
has become the driver for the concept's success. It is the view of
management that the progress demonstrated by both Collectibles and
Snoopy(TM) validates our niche strategy and gives us considerable
optimism regarding our ability to extend this strategy.
The Music Stand:
The Music Stand has been the weakest performer among our five
catalog concepts. After a fairly solid second quarter, the Music Stand
suffered from a disappointing third quarter. As was the case last year
for this catalog, the holiday selling period appears to be off to a
strong start. This catalog, which we began mailing in Fall 1999 after
acquiring it in the summer of 1999, appears to be even more seasonal
than our other concepts. We have not fully understood the seasonality
of this business during the first three quarters of this year, but we
will make adjustments to our mailing plan (both mail dates and
circulation volumes), as we develop our 2001 business plan.
NewBargains.com:
Given the events associated with our Company over the past several
months, we have curtailed our plans to aggressively grow our
NewBargains.com Internet liquidation site. After a careful evaluation
of the site's performance, we have decided to reposition
NewBargains.com to focus on liquidating moderately discounted excess
inventory from our other catalog and Internet sites. Much of the very
old, most steeply discounted merchandise available at NewBargains.com
has been sold and we do not intend to acquire additional liquidation
inventory in substantial volumes in the short term. NewBargains.com
has proven to be an effective way to liquidate our excess merchandise.
Moreover, the customer base that we have developed for NewBargains.com
has proven to be loyal and receptive to ongoing marketing efforts.
We believe we have developed a meaningful asset in the
NewBargains.com web initiative. Its focus going forward will be to
ensure that we can effectively liquidate merchandise from our other
retailing properties and -- at some point in the future when our
Company's liquidity issues are fully resolved -- we may investigate
various ways that we can make the investment necessary to grow this
concept into a meaningful business unit.
Sales
Company sales were up 1% vs. the same period last year. This
growth was primarily driven by Colorful Images, which had a
circulation increase of 18% and Snoopy(TM) etc., which was up by 169%.
These circulation increases slightly offset the significant
circulation decreases experienced by Linda Anderson (down 32%),
Collectibles (down 60%) and the Music Stand (down 26%).
Gross Profit Margin
The gross profit margin for the catalog business improved to 41.9%
in the third quarter of 2000 compared to 35.9% in the same quarter
last year. The primary reason for this improvement is the significant
increase in sales of personalized paper products, driven by the
Company's increased focus on its Colorful Images concept.
Management
It was reported in our second quarter press release that Phillip
A. Wiland, founder and Chairman of the Board, had been diagnosed with
early stage prostate cancer and was scheduled for surgery in August.
We are pleased to announce that Mr. Wiland's surgery was successful
and he is well on his way to making a full recovery. Mr. Wiland will
continue in his role as Chairman.
About Concepts Direct, Inc.
Concepts Direct is a direct marketing company focused on building
and managing customer relationships through its catalogs and Internet
retailing initiatives. The Company sells primarily personalized paper
products and a diverse line of merchandise, including gift items, home
decorative items, collectibles and apparel. Concepts Direct sells its
merchandise primarily via the Colorful Images, Linda Anderson,
Snoopy(TM) etc., Linda Anderson's Collectibles and the Music Stand
catalogs. In addition, the Company owns and operates numerous web
sites, including www.ColorfulImages.com, www.LindaAnderson.com,
www.SnoopyStore.com, www.theMusicStand.com and www.NewBargains.com.
Concepts Direct designs and manufactures many of its own products
and also purchases a variety of merchandise from outside vendors and
suppliers. The Company operates on a policy of guaranteed customer
satisfaction and is committed to providing excellent customer service.
Headquartered in Longmont, Colorado, the Company houses all of its
direct marketing operations in Longmont, and sells its products
primarily in the United States.
Cautionary Statement
This press release contains certain forward-looking statements as
such term is defined in the Private Securities Litigation Reform Act
of 1995. Company statements that are not historical facts, including
statements about the Company's expectations, beliefs, plans and
objectives, are forward-looking statements and involve various risks
and uncertainties, including the risks associated with starting new
businesses. Additional discussion of factors that could cause actual
results to differ materially from management's expectations, beliefs,
plans and objectives is contained in the Company's SEC filings.
-0-
*T
Selected Key Statistics -- Concepts Direct, Inc.
(in thousands except percentages and average order amounts)
Concepts Direct Catalog
Business Statistics:
Q3-00 Q2-00 Q1-00 1999
Approximate Catalogs
Circulated (1)(8)
----------------------------------------------------------------------
Colorful Images 9,636 7,604 8,284 26,550
Linda Anderson 1,398 534 1,887 9,701
Snoopy etc. 548 534 180 1,579
Linda Anderson's Collectibles 176 399 469 2,085
the Music Stand 463 448 425 1,202
Total 12,221 9,519 11,245 41,416
Customer Database Size (2)(9)
----------------------------
Colorful Images 9,287 9,144 9,037
Linda Anderson 795 770 750
Snoopy etc. 225 214 193
Linda Anderson's Collectibles 202 196 188
the Music Stand 2,147 2,141 2,135
Total 11,844 11,652 11,523
Active Customers (3)(9)
----------------------------
Colorful Images 1,087 1,060 1,054
Linda Anderson 134 149 167
Snoopy etc. 44 41 39
Linda Anderson's Collectibles 42 46 48
the Music Stand 52 49 43
Total 1,293 1,293 1,295
Average Order Amount
----------------------------
Colorful Images $27 $27 $27 $28
Linda Anderson $58 $58 $57 $58
Snoopy etc. $76 $75 $73 $64
Linda Anderson's Collectibles $55 $56 $57 $61
the Music Stand $58 $58 $58 $55
Catalog Merchandise Mix (4)
----------------------------
Personalized Paper Products 54% 45% 45% 41%
Other Merchandise 46% 55% 55% 59%
Catalog Customer Marketing (6)
----------------------------
Sales 8,296 8,146 9,563 37,521
Related Advertising Expense 2,651 2,280 2,273 9,228
Advertising as % of Sales 32.0% 28.0% 23.8% 24.6%
Catalog Prospect Marketing (7)
----------------------------
Sales 2,365 2,240 2,821 16,760
Related Advertising Expense 1,279 1,088 1,158 7,163
Advertising as % of Sales 54.1% 48.6% 41.0% 42.7%
E-Commerce Sales
----------------------------
LindaAnderson.com 77.9 80.4 103.8 286.5
theMusicStand.com 31.7 43.0 27.8 77.9
Financial Statistics
----------------------------
Gross Profit Margin (5)(10) 41.9% 40.7% 41.7% 35.3%
SG&A Costs As A Percent of
Sales (10) 48.0% 41.6% 36.6% 39.4%
Concepts Direct Catalog
Business Statistics:
Q4-99 Q3-99 Q2-99 Q1-99
Approximate Catalogs
Circulated (1)(8)
----------------------------------------------------------------------
Colorful Images 5,329 8,152 6,361 6,708
Linda Anderson 3,001 2,073 1,520 3,107
Snoopy etc. 150 204 361 864
Linda Anderson's Collectibles 430 444 551 660
the Music Stand 580 622 0 0
Total 9,490 11,495 9,092 11,339
Customer Database Size (2)(9)
----------------------------
Colorful Images 8,899 8,640 8,507 8,293
Linda Anderson 713 644 595 513
Snoopy etc. 176 164 150 122
Linda Anderson's Collectibles 176 161 146 122
the Music Stand 2,127 2,110 0 0
Total 11,338 11,121 8,979 8,956
Active Customers (3)(9)
----------------------------
Colorful Images 1,024 1,170 1,331 1,429
Linda Anderson 185 255 287 308
Snoopy etc. 41 56 60 57
Linda Anderson's Collectibles 49 81 89 92
the Music Stand 37 142
Total 1,282 1,611 1,660 1,758
Average Order Amount
----------------------------
Colorful Images $27 $28 $29 $29
Linda Anderson $57 $58 $59 $59
Snoopy etc. $66 $62 $62 $62
Linda Anderson's Collectibles $58 $62 $62 $63
the Music Stand $58 $49
Catalog Merchandise Mix (4)
----------------------------
Personalized Paper Products 40% 45% 40% 38%
Other Merchandise 60% 55% 60% 62%
Catalog Customer Marketing (6)
----------------------------
Sales 14,372 7,531 7,472 8,146
Related Advertising Expense 3,276 1,934 1,958 2,060
Advertising as % of Sales 22.8% 25.7% 26.2% 25.3%
Catalog Prospect Marketing (7)
----------------------------
Sales 5,622 3,274 3,446 4,418
Related Advertising Expense 2,138 1,294 1,677 2,054
Advertising as % of Sales 38.0% 39.5% 48.7% 46.5%
E-Commerce Sales
----------------------------
LindaAnderson.com 250.7 34.9 0.9
theMusicStand.com 77.9
Financial Statistics
----------------------------
Gross Profit Margin (5)(10) 29.4% 35.9% 35.8% 39.6%
SG&A Costs As A Percent of
Sales (10) 32.1% 40.5% 43.6% 41.3%
Selected Key Statistics -- Concepts Direct, Inc.
(in thousands except percentages and average order amounts)
Consolidated Company Statistics
Balance Sheet Information Q3-00 Q2-00 Q1-00 1999
----------------------------------------------------------------------
Cash $ 0 $ 0 $ 0
Deferred Advertising 4,811 3,369 2,804
Inventories 5,545 5,941 5,664
Property and Equipment 10,706 11,880 12,232
Long Term Liabilities 5,421 4,531 4,627
Total Liabilities 18,282 15,650 13,481
Stockholders' Equity 7,446 10,283 12,133
Effective Income tax rate 0% 0% 0% -20%
--------------------------------
Balance Sheet Information Q4-99 Q3-99 Q2-99 Q1-99
----------------------------------------------------------------------
Cash $1,231 $ 0 $ 481 $ 3,402
Deferred Advertising 2,115 4,256 2,726 3,088
Inventories 5,221 9,115 8,933 9,256
Property and Equipment 12,484 12,328 11,807 12,691
Long Term Liabilities 4,818 5,681 5,881 5,967
Total Liabilities 12,305 15,545 12,296 12,687
Stockholders' Equity 13,889 15,572 16,307 17,036
Effective Income tax rate 4% -34% -34% -34%
-------------------------------
(1) Includes approximate number of catalogs mailed and catalogs
distributed in product shipments. Microniche mailings are attributed
to the related catalog title.
(2) Approximate size of proprietary customer database, including
customers, catalog requesters, gift recipients and catalog referrals,
at period end.
(3) Approximate number of prior 12-month buyers at period end.
(4) Estimated percentage of Company catalog sales attributable to
major merchandise categories.
(5) Net Sales less product cost, order fulfillment cost and order
shipping cost.
(6) Gross catalog sales and the related advertising expense to
customers of the same catalog title, prior to refunds.
(7) Gross catalog sales and the related advertising expense to
individuals not previously classified as customers of the catalog
title, prior to refunds.
(8) Catalogs distributed in the last 2 days of June 1998 are
included in 3rd Qtr. counts: 4,085,000 Colorful Images, 1,419,000
Linda Anderson, 463,000 Snoopy, etc. and 597,000 Linda Anderson's
Collectibles
(9) Counts for a period may vary from one report to another due to
factors such as elimination of duplicate customer records, elimination
of undeliverable address records, changes in classification, etc.
(10) Certain historical amounts have been restated to conform to
the current financial presentation.
--30--tav/dx*
CONTACT: Concepts Direct, Inc., Longmont
Mike Wolfe, 303/772-9171
MWolfe@ConceptsDirectInc.com
KEYWORD: COLORADO
INDUSTRY KEYWORD: E-COMMERCE INTERNET MANUFACTURING RETAIL
EARNINGS
COPYRIGHT 2000 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
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