Gaiam Inc. reported net revenue reached $55.4 million in the quarter ended Dec. 31, 2014, up approximately $4.6 million, or 9.1 percent, compared to net revenue of $50.8 million in the prior-year period.

The Boulder, CO-based company said revenue grew approximately 15 percent year over year, excluding the impact of the company’s decision to focus on the Gaiam brand and not renew its Reebok license, which accounted for over $2.7 million in revenue in fourth quarter of 2013.

“We are seeing the results of our focus on our proprietary Gaiam brands in yoga, fitness and wellness,” said Lynn Powers, Chief Executive Officer of Gaiam. “Significant increases in our brand recognition and retail presence with partners such as Kohl’s and The Sports Authority led to strong sales growth across our Gaiam and SPRI branded products, as revenue for these products rose 56 percent for the fourth quarter and 36 percent for the full year. This growth was partially offset by our strategic decision to end a third-party brand accessory license in favor of focusing on developing our proprietary brands, and our decision to reduce catalog circulation to focus on digital consumer engagement.”

Gross profit for the 2014 fourth quarter improved to $25.0 million, or 45.1 percent of net revenue, compared to gross profit of $21.6 million, or 42.5 percent of net revenue, in the fourth quarter of 2013. The 260 basis point improvement in gross margin was driven by margin expansion in our Brand segment and increased revenues from our high-margin subscription business.

Operating expenses were 40.6 percent of net revenue in the 2014 fourth quarter, compared to 65.8 percent of net revenue in the fourth quarter of 2013. After excluding $10.1 million, or 19.8 percent of revenue, of non-recurring charges in the prior year period, operating expenses declined 540 basis points year over year, reflecting our reduced catalog circulation.

Gaiam’s operating income increased $14.3 million to $2.5 million for the three months ended Dec. 31, 2014, from an operating loss of $11.9 million. Operating income increased $4.3 million, from an operating loss of $1.8 million in the fourth quarter of 2013, excluding the charges related to restructuring and repositioning of the company.

The company recognized income tax expense of $0.7 million during the quarter related to its majority-owned subsidiaries. In the fourth quarter of 2013, the company recorded income tax expense of $23.2 million for tax valuation allowance against its net operating losses and the company continues to record a valuation allowance against its deferred tax assets. Although fully reserved on the balance sheet, Gaiam’s deferred tax assets remain available to offset future income tax liabilities.

Net income for the fourth quarter of 2014 from continuing operations was $1.2 million or $0.03 per share, excluding the net loss from discontinued operations of $3.3 million or $0.13 per share. Net loss for the 2014 fourth quarter was $2.4 million, or $0.10 per share, compared to a net loss of $30.4 million, or $1.29 per diluted share, for the fourth quarter of 2013. The net loss for the fourth quarter of 2013 included a loss from discontinued operations of $4.9 million, or $0.20 per share.

Powers said Gaiam is launching a range of initiatives in 2015 that will make yoga more appealing to a greater number of people.

“These exciting new initiatives include our Athletic Yoga line of programming and accessories developed for athletes and sports enthusiasts, new programming and accessories for children, a new line of apparel that will be available in over 1,100 Kohl’s stores this spring, and other enhancements to our digital presence that will further improve our online and mobile customer experience,” she said. “Bringing these products to market is expected to drive growth in 2015 and beyond as we leverage our existing base of best-selling products, large distribution network and strong brand affiliation and awareness with consumers.”

Gaiam Inc. distributes yoga, fitness and wellness products and content through a wide distribution network that consists of approximately 38,000 retail doors, 17,000 store within stores, 5,000 category management locations, and e-commerce, It's Gaiam TV digital subscription service offers approximately 7,000 exclusive videos available for streaming and download.

GAIAM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


(In thousands, except per share data)


 
 

 

 
 

 




Three Months Ended
December 31, 2014

Three Months Ended
December 31, 2013

Net revenue


$
55,376


100.0
%


$
50,759


100.0
%

Cost of goods sold


 
30,377
 

54.9
%


 
29,208
 

57.5
%












 

Gross profit



24,999


45.1
%



21,551


42.5
%

Selling and operating



19,941


35.9
%



20,301


40.0
%

Corporate, general and administration



2,587


4.7
%



3,043


6.0
%

Other general expenses



–


0.0
%



9,994


19.7
%

Transaction-related costs


 
–
 

0.0
%


 
76
 

0.1
%












 

Income (loss) from operations



2,471


4.5
%



(11,863
)

-23.3
%

Interest and other (expense) income



(492
)

-0.9
%



2,321


4.6
%

(Loss) gain on sale of investments


 
(55
)

-0.1
%


 
6,692
 

13.1
%












 

Income (loss) before income taxes and noncontrolling interest



1,924


3.5
%



(2,850
)

-5.6
%

Income tax expense


 
681
 

1.3
%


 
22,457
 

44.3
%












 

Income (loss) from continuing operations



1,243


2.2
%



(25,307
)

-49.9
%

Loss from discontinued operations


 
(3,273
)

-5.9
%


 
(4,851
)

-9.5
%












 

Net income (loss)


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