Revenue growth slowed to the mid-single-digit range at Backcountry.com in the third quarter, or well below the average for U.S. online retailers during the period.
“We had mid single digit growth at Provide and Backcountry during off quarters for both of them,” said Greg Maffei, president and CEO of Liberty Interactive Group, which reports results at the two business under its e-commerce business segment. “Their businesses are stronger either leading into their winter season for Backcountry or into the Mother’s day and Valentines for Provide.”
Preliminary estimates from the U.S. Census Bureau peg average, adjusted non-store retailer sales growth in the third quarter at 9.7 percent, but that number includes sales through catalog, television and Internet channels. Well Fargo estimates Internet sales grew in the mid-teens range during the quarter.
The third quarter is traditionally one of th slowest at Backcountry.com, which is the nation’s largest pure-play, full-price, online retailer of specialty, human-powered outdoor recreation products. Provide operates floral, gourmet foods, candy and other gifting sites.
Overall sales at Liberty Interactive’s e-commerce businesses increased 7 percent during the quarter ended Sept. 30, compared to 11.9 percent in the third quarter of 2012. Sales growth was partially driven by continued discounting to manage inventory to appropriate levels. Results varied dramatically from business to business. Sales increased 38 percent at CommerceHub, which provides drop shipping and other fulfillment services to hundreds of major retailers, and 27 percent at Bodybuilding.com. Sales declined at gift retailer RedEnvelope.com and BuySeasons Inc., which drop ships costumes, party supplies and seasonal décor for retailers.
Adjusted OIBDA decreased $9 million to a loss of $5 million, compared with a profit of $4 million a year earlier. Increased discounting, promotional spending and credit card chargebacks drove the losses. Operating income improved by 18 percent to a loss of $46 million as less significant impairments during offset greater depreciation, amortization and stock compensation costs.
Liberty Interactive plans to spin off its e-commerce businesses next year to unlock shareholder value. Under the plan, the company break out results for its QVC and HSN business separately from the e-commerce business. QVC Group common stock would trade under the symbols QVCA and QVCB symbols, while the other e-commerce businesses would become part of a new tracking stock called Liberty Digital Commerce Group, which would trade under the symbols LDCA and LDCB.
“We believe the recently announced tracking stock structure will unlock the value of Liberty's assets,” wrote Wells Fargo Senior Analyst Matt Nemer. ”The core QVC asset trades at nearly a 50% discount to industry peer HSNI (on a price to free cash flow basis), despite having what we view as an increasingly promising long-term agenda. In addition, the new Liberty Digital Commerce tracker isolates the high growth e-commerce businesses that are often ignored by the Street.”