iMedia Brands Inc (IMBI) 2003 Q2 法說會逐字稿

Today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Listeners are cautioned that such forward-looking statements may contain risks and uncertainties that could significantly affect the actual results from those expressed in any such forward-looking statements. More detailed information about these risks and uncertainties is contained in ValueVision Media's filings with the SEC.

I would now like to turn the call over to ValueVision Media's chairman and CEO, Gene McCaffery.

Okay, thank you. And thanks for attending the call. I'm sitting with Dick Barnes, our chief operating and Chief Financial Officer. Let me go through some highlights without being too redundant. Our sales for the quarter were up 12 percent. You noticed that our Internet sales were up again significantly in the mid 30 percent range. Our margins improved a little bit and that has to do with some mix issues that I will talk about. Our EBITDA was kind of at the high-end of our range at $3.6 million, and as you could probably tell by looking at our G&A that we are continually funding and investing in merchandise staffing particularly in -- and jewelry as well as non-jewelry merchandise organization and senior merchandise management under Liz Haesler. And you can see that we estimated that was going to probably cost 3 or $4 million this year and over the course of the year, and that is about what it looks like it is going to run. It was up about $1 million for the quarter. Our distribution costs were up about $1.5 (ph) million for the quarter, or about 10 percent. You have got a six-month half-year summary here that shows that our sales for the six months were up about 10 percent.

We also remember that in third-quarter last year, the quarter we are going into, we did have a call or two this morning about whether or not our guidance for third quarter was conservative. As you remember, it was last year in third quarter that we started to have all the difficulty where our margin came in extremely low. Our operating expenses came in extremely high, and while I don't have the number in front of me, I think we lost somewhere, Dick? 8, $9 million?

We actually had an EBITDA loss in Q3 last year about $9 million.

So we look at the third quarter as a great opportunity and we would look to significant improvement in the quarters going forward. If you talk about -- is it a little conservative, yes, it probably is. Outside influences always a cause for our concern, but I would say generally that we feel pretty good about our business and our profitability going forward. Non- jewelry in the quarter, non-computer non-jewelry actually improved from about 10 percent of our mix to just under 15 percent of our mix, and most of that was done in the home area, which had some positive effect on our margins.

We have had quite a few calls on Shop and Style. Shop and Style, just to summarize, ran in four markets this month. We have had a lot of requests for sales performance. We will not be releasing the sales performance for the project or for the markets, however I would say to you that I believe it is fair to say that NBC and us collectively feel that the results of further opportunity and we will be looking at that opportunity and where we think we should go next. And there are a lot of questions. No one has ever done this before and the markets are all different. Some of the markets were markets that we are in and some of the markets were markets we were not in. There is the shelf format from an entertainment standpoint. There's the frequency of how often the show might run. There is times of the day. As you know, we generally did it following the Today Show. So there's a lot of information, a lot of sales, a lot of ratings by market to consider. I would say that we found out a lot and NBC and some dedicated senior management here at ValueVision have been assigned to work on the project going forward.

Another question that has come up quite a bit is the CEO search. Obviously we are actively pursuing the CEO search. It has been going forward; we have been talking to a number of candidates. We do have some candidates now scheduled -- we are looking at scheduling candidates to move them through the entire board process from the committee that was set up. I believe that we have some promising prospects. It is difficult for me to give you a date as to when that is going to happen. It will happen as quickly as the Board feels it is appropriate to select a CEO, but I would say generally that it is going pretty well. And we do have some good people to consider. With that, Dick, do you have any comments?

No, I really have nothing to end. Let's go to the questions.

All right, why don't we go right to the questions and we will take the first question.

At this time we are ready to begin the question-and-answer portion. (OPERATOR INSTRUCTIONS) Our first question comes from Mr. Rob Brown.

Rob Brown of Craig Hill and Capital. The question is given the third-quarter guidance, are you still comfortable or what do you think about the full year in terms of meeting your revenue range of -- I think you said before 630 to 615 revenue, and about 25 to $30 million in EBITDA? Is that still attainable?

That is the range we are looking at, exactly. We feel pretty good about it.

Okay, good. And did you have any repurchase activity in the quarter?

Rob, it's Dick here. We had a very small amount and we repurchased about $200,000. That's about it. We didn't do anything after the first weeks of May.

Okay, good. And one further question about your subscriber growth for the year. Was that trending with expectation in the quarter and how do you see it going out for the rest of the year?

It is within our expectations, and its well within our guidance that we proposed for what we think the year's going to bring in. Again, I say this every time and it might be a little boring to those of you who continue to hear it, but we accumulate 0.5 million, 1 million, 1.5 million every month or every couple of months and we continually work on a larger deal and the larger deals only come when they come. And we continue to work on that in conjunction with in coordination with NBC cable and David Zaslav's folks, but we think we are fine within the projections.

As far as the actual numbers, we entered the quarter with 53 million. The original guidance we put out was 54 to 56 the end of the year, so I would say we do feel pretty comfortable with that.

One last question here, I wanted to just ask about the promotional environment. Is it trending similar to the beginning of the year? Have you slowed off on the promotions? Maybe you could give a little color on how the promotional environment is laying out.

I'd say I think it is probably moderate. We are not overly promotional and we are not -- I think the retail is pretty good in July or generally good in July; it was really the first month that retail had any decent numbers. We had a pretty good July. We had some promotion in there. And I would say the promotional activity is average. I don't expect that our promotional activity is going to have a negative impact on our margin growth.

Okay, great. Thank you.

Our next question comes from Mr. David Brenner. (ph)

A couple quick questions. I noticed you had a gain on conversion of some securities that looked to be around $350,000. I wonder if you could just comment on what that was. And also had a question on how the Boston TV station was going, wondering if you are seeing any trends, from a TV station to the cable network, anything that is going on up there.

David, it's Dick. On the gain loss, we in the -- towards the tail end of the quarter divested our public company holdings in two companies, PAX Network so we had some period of time, and another company called IRN or IRN Networks that we had a strategic relationship with a couple of years ago. So the net of those two ended up with a $350,000 gain. As it relates to the Boston station, we closed that deal March or April -- am losing track of time here. Additionally we saw a bit of a downward tip only because you have channel changes and such, but we have seen that improving recently as well. And it is doing all right.

Great, and any update on how discussions with Comcast being the largest operator out there are going?

I would hesitate to have any comment on that. Going back to that whole issue of I am working with -- I am personally working with and talking to NBC. It is complicated from the standpoint that everybody has interests. It's not just us going and talking to people. Everybody has interests which will probably play to our advantage. And I guess I am uncomfortable making any general comments about that until such time we either have something more definitive.

Okay, thanks very much.

(OPERATOR INSTRUCTIONS) I am currently showing no further questions.

Okay, thank you very much. I appreciate your interest.