Gaiam Inc. said net revenue for the first quarter ended March 31, 2010 increased 11.2% to $62.2 million from $55.9 million recorded in the same quarter last year.
Gross profit increased to $32.2 million, or 51.8% of net revenue, for the first quarter of 2010, from $31.0 million, or 55.4% of net revenue, during the comparable quarter last year. The change in gross margin primarily resulted from increased revenues in the lower margin solar segment.
Selling and operating expenses decreased to $29.8 million, or 47.9% of net revenue, during the first quarter of 2010, from $33.9 million, or 60.7% of net revenue, during the same quarter last year. The 1,280 basis point improvement was the result of leveraging sales growth, reducing payroll costs and optimizing the direct-to-consumer segment through further catalog prospecting reductions.
Corporate, general and administration expenses decreased to $3.0 million, or 4.8% of net revenue, during the first quarter of 2010, from $3.3 million, or 5.8% of net revenue, during the same quarter last year. The decrease was mostly the result of reductions in payroll and related expenses.
Operating loss for the first quarter of 2010 was $600,000, a $5.6 million improvement from an operating loss of $6.2 million during the same quarter of last year. The net loss was $300,000, or 1 penny per share, during the quarter, compared to a net loss of $3.1 million, or 13 cents per share, during the same quarter last year. For the first quarter of 2010, the company generated $2.1 million in cash from operations and at the end of the quarter Company had $48.1 million in cash and no debt.
“Our focus on growth strategies and cost saving initiatives enabled us to deliver a significant improvement in results in a seasonally weak quarter,” commented Lynn Powers, Gaiam’s President & CEO. “While our earnings are typically concentrated in the latter half of the year, we will continue to drive down costs and add new content and products that diversify our offerings, ultimately lessening this seasonality impact on our business model over time. We have already begun to see the benefits from adding non-theatrical content with Discovery and we will leverage our success in fitness with the exciting launch of Reebok accessories and content beginning in June, expanding our store within store presentation at Target by an additional 12 feet.”
“As previously stated, our goals for 2010 are to generate double digit internal revenue growth, improve bottom line results and expand our market share in non theatrical media,” said Jirka Rysavy, Chairman. “We are pleased with the quarter, as it was especially strong for our business segment, where our success in non theatrical media helped produce over 20% growth in sales to retailers. Our strong expansion in several media categories during the quarter boosted Gaiam’s market share in the non-theatrical DVD segment (Nielsen Videoscan) to 10%, improving our ranking to number four and, for the first time, finishing the quarter ahead of The Walt Disney Company.”