Gaiam Inc. reported its launch at more than 1,000 Kohl's and Bed Bath & Beyond department stores enabled it to grow 140 percent faster in the third quarter ended Sept. 30 than it would have otherwise.
“We continue to execute our vision to make yoga, fitness and wellness accessible to everyone,” said Gaiam CEO Lynn Powers. “Our exclusive Kohl's apparel line drove our strong third quarter performance and the rollout continues to exceed our expectations. Excluding these incremental sales along with sales to our largest customer, revenue from our top 25 customers increased 10 percent, demonstrating the strength of our brands beyond apparel.
Gaiam Brand net revenue in the third quarter increased 24 percent to $47.8 million compared to the year-ago quarter. Excluding planned declines in catalog sales, Gaiam Brand net revenue in the third quarter increased 29 percent to $46.4 million.
“The positive momentum in our business is expected to continue as we add over 1,000 store-within-store locations in the fourth quarter, including Bed Bath & Beyond. With our largest account back in stock, the strong demand for our wellness products and continued strong sell-through at our retail accounts, we are well-positioned to drive sustained growth in 2015 and beyond.”
Gross profit increased 21 percent to $21.9 million compared to $18 million in the year-ago quarter. As a percentage of net revenue, gross profit was 42.6 percent compared to 43.7 percent in the year-ago quarter due to apparel having lower gross margins than the legacy brand business.
Operating expenses in the third quarter of 2015 decreased 7 percent to $18.6 million compared to $19.9 million in the year-ago quarter. As a percentage of net revenue, operating expenses declined significantly to 36.3 percent compared to 48.3 percent in the year-ago quarter due to a reduction of marketing expenses in Gaiam TV and the improvement in operating leverage from the strong revenue increase.
Income from operations in the third quarter improved $5.2 million to $3.2 million compared to a loss from operations of $1.9 million in the year-ago quarter. In the Gaiam TV segment, income from operations was $0.2 million compared to a loss from operations of $2.3 million in the year-ago quarter.
Net income from continuing operations for the third quarter was $1.9 million or $0.08 per share, compared to a loss of $2.9 million or -$0.12 per share in the year-ago quarter.
At Sept. 30, 2015, cash totaled $20.1 million compared to $15.8 million at December 31, 2014. The company remains debt-free
Gaiam TV rebranding accelerated
Gaiam TV net revenue increased 37 percent to $3.5 million in the third quarter of 2015.
“As planned, our Gaiam TV segment operated profitably during the third quarter, which provides a glimpse into the underlying profitability of our Brand segment,” said Gaiam Chairman Jirka Rysavy.
Gaiam TV was recently asked to become partners with Apple TV and an additional top-tier distribution platform. Gaiam TV has decided to accelerate its name change and rebranding to “Gaia” into the fourth quarter from 2016 and delay the timing of the spinoff. The new Gaia branding premiered last week on Apple TV. Gaiam TV is also implementing closed captioning of its titles during the fourth quarter in preparation for the launch on the new platforms, as well as a base for translation into various languages. The rebranded Gaia website will be launching later this month under the URL www.gaia.com.
Gaiam believes that it has substantially completed the regulatory filings and related steps required prior to the spinoff transaction, and Gaiam TV is in the process of Nasdaq registration in anticipation of the spinoff.
| GAIAM, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2014 |
||||||||||||||
| Net revenue | $ | 51,300 | 100.0 | % | $ | 41,256 | 100.0 | % | |||||||
| Cost of goods sold | 29,447 | 57.4 | % | 23,238 | 56.3 | % | |||||||||
| Gross profit | 21,853 | 42.6 | % | 18,018 | 43.7 | % | |||||||||
| Selling and operating | 14,472 | 28.2 | % | 17,070 | 41.4 | % | |||||||||
| Corporate, general and administration | 4,072 | 7.9 | % | 2,801 | 6.8 | % | |||||||||
| Other general expenses | 61 | 0.1 | % | 71 | 0.2 | % | |||||||||
| Income (loss) from operations | 3,248 | 6.4 | % | (1,924 | ) | -4.7 | % | ||||||||
| Interest and other expense, net | (370 | ) | -0.8 | % | (173 | ) | -0.4 | % | |||||||
| Income (loss) before income taxes and noncontrolling interest | |||||||||||||||
