Gaiam Inc. (Nasdaq:GAIA) 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.
Quarterly net revenue increased 24 percent to $51.3 million, compared to $41.3 million a year ago. Gaiam Brand increased 24 percent to $47.8 million and Gaiam TV net revenue increased 37 percent to $3.5 million.
Yet the company swung to a quarterly net loss of $8.8 million after paying a $10.7 million settlement to Cinedigm Corp., which had accused Gaiam of misleading financials in a 2013 deal to buy Gaiam’s home enteratainment division.
“Gaiam entered into the settlement to eliminate the uncertainty and risk inherent in any litigation, significantly reduce the professional fees and costs that the litigation would require, and significantly reduce the distraction imposed by the process on management,” officials said. “The company believes it has adequately accrued for the pending arbitration and does not expect any material additional settlements beyond the current estimate.”
Outside of those charges, Gaiam’s net income from continuing operations for the third quarter came in at $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.
“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 will continue to eye the retail front as its catalog sales are declining, officials said.
“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,” Powers said. “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.”
Third-quarter gross profit increased 21 percent to $21.9 million compared to $18 million in the year-ago quarter. Operating expenses in the third quarter of 2015 decreased 7 percent to $18.6 million due to a reduction of marketing expenses in Gaiam TV.
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 was recently asked to become partners with Apple TV and an additional top-tier distribution platform, and with that officials have 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. The rebranded Gaia website will be launching later this month at 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.
–David Clucas
