Gaiam Inc. reported net revenue surged 27 percent in the second quarter as it began shipping an exclusive line of yoga apparel to Kohl's.
“Our strategy to focus on Gaiaim yoga, fitness and wellness continues to drive growth in our business,” said Lynn Powers, CEO of Gaiaim. “Our second quarter results included the successful April launch of our exclusive Kohl's apparel line, which continues to exceed our expectations. Excluding this new revenue stream along with sales from our largest customer, revenue from our top 25 customers increased 30%, demonstrating the strength of our brands beyond just apparel. Revenue from the Gaiaim branded business excluding our non-wholly owned subsidiaries was up 37% in the quarter.
“As we look to the second half of the year, we remain well-positioned to execute our major growth initiatives, which include apparel, wellness, as well as demographic and international expansion. We launched our kid's yoga line at Target in July and it is selling well. In addition, strong demand for our wellness line is expected to add between 500 and 1,000 new doors in the second half of the year, including Vitamin Shoppe. With our largest account back in stock, new line launches and continued strong sell through at our retail accounts, we are well-positioned for our fall/holiday season.”
Second Quarter 2015 Financial Results
Gaiam's net revenue in the second quarter of 2015 increased 27% to $41.1 million compared to $32.5 million in the same year-ago quarter. Gaiaim Brand net revenue in the second quarter increased 26% to $37.9 million compared to the year-ago quarter. Excluding planned declines in catalog sales, Gaiaim Brand net revenue in the second quarter of 2015 increased 35% to $36.2 million.
Gross profit in the second quarter of 2015 increased 18% to $18.2 million compared to $15.5 million in the year-ago quarter. As a percentage of net revenue, gross profit was 44.2% compared to 47.7% in the year-ago quarter due to apparel having lower gross margins than the legacy brand business.
Operating expenses in the second quarter of 2015 decreased 2% to $18.2 million compared to $18.6 million in the year-ago quarter. As a percentage of net revenue, operating expenses declined to 44.2% compared to 57.4% in the year-ago quarter due to the increase in revenue.
Income from operations in the second quarter was $23,000 compared to a loss from operations of $3.2 million in the year-ago quarter. The loss from operations for Gaiaim TV improved 44% to $1.1 million from $1.9 million in the year-ago quarter.
Net loss for the second quarter was $1.1 million or $(0.05) per share, compared to a net loss of $2.4 million or $(0.10) per share in the year-ago quarter. The second quarter of 2015 included approximately $1.1 million in costs associated with litigation from the sale of GVE Newco to Cinedigm in 2013. The year-ago period included approximately $1.0 million of gains from the sale of investments.
At June 30, 2015, cash totaled $18.4 million compared to $15.8 million at December 31, 2014. The company continues to carry no debt.
Gaiaim Chairman Jirka Rysavy stated: “We are pleased with the 27% internal revenue growth for the quarter and the year-to-date $10.4 million improvement in cash flow from operations. In addition, Gaiaim TV reached the breakeven point before the end of the quarter and we expect the third quarter to be profitable.”
With a wide distribution network that consists of approximately 38,000 retail doors, 18,000 store within stores, 5,000 category management locations, and e-commerce, Gaiam is dedicated to making yoga, fitness and wellness accessible to all. Gaiam TV, which the company is preparing to spin off, is a global digital subscription service with approximately 7,000 exclusive videos available for streaming and download.
