Backcountry.com Fate Back in Play

 

LINTA announced July 30 that it had agreed to sell its Provide Commerce floral and gifting businesses  to FTD Companies Inc for 10.2 million shares of stock and $121 million in cash. The transaction will give LINTA a 35 percent stake in the combined company.

 

 

LINTA still plans to create the QVC Group tracking stock, which will be comprised of its interests in QVC and HSN, but said it is reevaluating plans to for the Digital Commerce group, which it had planned to spin off as tracking stock to shareholders. The group was to include Provide Commerce, Backcountry.com, Bodybuilding.com, CommerceHub, Right Start, and Evite, along with cash and certain liabilities.
 

”In light of the pending Provide Commerce transaction, and other factors, Liberty is reevaluating the optimal structure and best alignment of the Liberty Digital Commerce Group assets,” Liberty Interactive said in a release. “As a result, the timing of the transition to the QVC Group has been delayed.”

 

 

LINTA does not break out revenue or EBITDA for its individual e-commerce businesses, but FTD disclosed July 30 that Provide generates more than $600 million in annual revenue, which equates to 36 percent of the segment’s 2013 revenue. In LINTA’s earnings calls last week, Maffei said Provide generated between 35 and 42 percent of the segment’s EBITDA in recent years. CommerceHub and Bodybuilding.com were the next biggest contributors, with each accounting for between 12.5 and 16 percent of segment EBITDA.

 

LINTA reported last week that the Digital Commerce Group again failed to meet expectations in the second quarter ended June 30, despite a 10 percent increase in revenues, which reached $481 million. While Provide Commerce, Backcountry.com and Bodybuilding.com all increased revenue, the increase came in below expectations due to soft demand for their products and slightly lower average order values, LINTA reported.

 

Adjusted OIBDA decreased 27 percent to $19 million due to increased technology and personnel costs to support revenue growth that did not materialize, slightly lower product margins, increased packaging costs, increased returns, and increased marketing spend that has not yielded expected sales growth. Operating income decreased $14 million to a loss of $16 million. The decrease in operating income was primarily attributable to the items discussed above, as well as slightly higher amortization and depreciation, the impairment of intangibles at Evite, somewhat offset by a decline in stock-based compensation based on slower than anticipated growth.

 

“The e-commerce companies did have a much better quarter on the top line but continue to struggle on the bottom line,” said Greg Maffei, president and CEO for LINTA. “Management teams at those companies, and we've changed out a few, remain focused on operations and executing on their plans for 2014.”