Shortfalls at Backcountry.com and Bodybuilding.com contributed to flat sales and a big swing in operating earnings at Liberty Interactive Corp.’s e-commerce businesses segment in the first quarter.
Liberty Interactive reported that both companies increased spending on technology, marketing and personnel to support anticipated growth that did not materialize during the quarter ended March 31. Product margins at the two businesses were also slightly lower due to increased packaging costs.
The disappointing performance contributed to flat sales at Liberty Interactive’s e-commerce businesses unit, which includes seven other companies that sell a variety of products online. Combined sales of the businesses reached $461 million, essentially unchanged from $460 million in the same quarter a year earlier. The flat sales were attributed in part to winter storm Pax, which delayed Valentine’s Day deliveries of products shipped by Provide Commerce, which owns online stores that sell flowers, jewelry, food baskets and other gifts.
Adjusted operating income before depreciation and amortization (OIBDA) at LINTA’s e-commerce businesses decreased 41 percent to $23 million, or 5.0 percent of revenue, off 350 basis points from a year earlier. Operating income swung from a profit of $19 million in the first quarter of 2013 to a loss of $1 million due to the issues mentioned above as well as higher stock-based compensation and slightly higher amortization and depreciation.
Liberty Interactive’s board continues to evaluate a plan to spin off its e-commerce businesses into a separate tracking stock that would trade under the name Liberty Digital Commerce. The stock would track results at Provide Commerce, Backcountry.com, Bodybuilding.com, CommerceHub, Right Start, and Evite. Liberty Interactive, meanwhile, would retain its flagship QVC, Inc. business, its 38 percent interest in HSN, Inc., along with cash and certain liabilities of those companies and change its name to The QVC Group.
