GSI Commerce Inc. saw revenues increase 1.8% to $190.3 million in the third quarter, above its guidance range of $181 million to $186 million. The net loss was reduced to $9.4 million, or 18 cents a share, from $14.2 million, or 30 cents, a year ago. Comparable store growth, where GSI has visibility into transaction volumes, improved sequentially from the first half of the year, reaching mid-single digit year-over-year growth.
Product sales declined 11% to $90.8 million, reflecting the switch to a non-seller record model with Dick's Sporting Goods and the decline in sales of owned electronics products. Service fees increased 17.5% to $99.5 million as a result of comparable store growth, new e-commerce clients, and growth in marketing services. Notably strong e-commerce services categories included apparel and health and beauty. Overall sales were impacted by the absence of revenues from Linens 'N Things, BabyCenter, and Woolworth's.
On a conference call with analysts, GSIC said its financial results exceeded expectations. Four new e-commerce deals were signed in North America and one for international since its second-quarter release. GSI's international channel overall has signed new agreements with e-commerce components in 2009. Five new Web stores were also launched over the period, including Eastern Mountain Sports.
The company also reached an agreement to acquire Retail Convergence Inc., which operates the invitation-only e-commerce site RueLaLa.com as well as SmartBargains.com. The company will pay $180 million in cash and stock, and another $170 million in the future if certain performance targets are met through 2012.
The transaction is expected to add to GSI's adjusted earnings in 2010 and Retail Convergence is expected to generate $15.0 million of non-GAAP income from operations with revenue of $230 million in 2010.
