GSI Commerce reported net revenues for the first quarter fiscal 2003 were $48.9 million for the first quarter of fiscal 2003, which represents a 53.1% increase compared to net revenue of $31.9 million for the first quarter of fiscal 2002. Comparable store sales increased approximately 5% from the first quarter of fiscal 2002 to the first quarter of fiscal 2003.
Comparable store sales are calculated based on Web sites that GSI Commerce has developed and operated for its partners for the entire periods for which the comparisons are made.
Net loss was $5.5 million for the first quarter of fiscal 2003 compared to a net loss of $5.3 million in the first quarter of fiscal 2002. Net loss per share was $0.14 for the first quarter of fiscal 2003 compared to net loss per share of $0.14 in the first quarter of fiscal 2002.
EBITDA loss was $2.9 million for the first quarter of fiscal 2003 compared to EBITDA loss of $3.3 million for the first quarter of fiscal 2002. EBITDA represents earnings (or loss) before interest income/expense, taxes, depreciation and amortization and stock based compensation. A reconciliation of EBITDA to net loss is contained later in this release.
Gross profit was $17.0 million and gross margin was 34.8% for the first quarter of fiscal 2003 compared to gross profit of $11.6 million and gross margin of 36.2% for the first quarter of fiscal 2002.
Operating expenses were $22.9 million for the first quarter of fiscal 2003 compared to $17.2 million for the first quarter of fiscal 2002. Operating expenses for the first quarter of fiscal 2003 primarily consisted of sales and marketing expenses of $12.7 million, product development expenses of $4.0 million, general and administrative expenses of $3.2 million, depreciation and amortization expenses of $2.7 million and stock-based compensation expenses of $0.3 million. This compares to sales and marketing expenses of $9.2 million, product development expenses of $2.3 million, general and administrative expenses of $3.3 million, depreciation and amortization expenses of $1.8 million and stock-based compensation expenses of $0.5 million for the first quarter of fiscal 2002.
Michael G. Rubin, Chairman and CEO of GSI Commerce, commented on the company’s first quarter results, saying, “GSI Commerce exceeded its expectations for net revenue, net loss and EBITDA loss in the first quarter of fiscal 2003. Strong sales growth reflected momentum from new and existing clients, although comparable store sales comparisons, which primarily reflect sports sites, were negatively impacted principally by sales of merchandise in fiscal 2002 related to the Salt Lake Winter Games. The year over year decline in gross margin rate was driven by mix changes, while operating expenses trended modestly better than our forecast.”
Mr. Rubin continued, “We are encouraged by the EBITDA improvement versus last year, following two consecutive quarters of negative EBITDA trends, particularly in the context of the substantial infrastructure investments that GSI Commerce has made over the last twelve months. With a strong first quarter behind us we remain positive on our outlook for 2003. Our revised guidance for the year includes not only the upside to our first quarter expectations but also a more favorable view on the balance of the year.”
During the first quarter of fiscal 2003, GSI Commerce did not purchase any shares in conjunction with the company’s $10 million stock repurchase program that was approved by the Board of Directors in June 2002 and does not anticipate purchasing additional shares at this time, although the authorization remains in effect should GSI Commerce determine to purchase shares in the future. GSI Commerce has been advised by certain of its major investors, directors and executives that they may from time to time purchase shares of GSI Commerce’s outstanding common stock on the open market at prevailing market prices or in privately negotiated transactions.
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 30, March 29,
2002 2003
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Revenues:
Net revenues from product sales $ 29,650 $ 44,173
Service fee revenues 2,275 4,706
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Net revenues 31,925 48,879
Cost of revenues from product sales 20,355 31,853
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Gross profit 11,570 17,026
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Operating expenses:
Sales and marketing, exclusive of
$252 and $229 reported below as
stock-based compensation,
respectively 9,192 12,721
Product development, exclusive of
$74 and $0 reported below as
stock-based compensation,
respectively 2,336 4,005
General and administrative, exclusive
of $206 and $59 reported below as
stock-based compensation,
respectively 3,302 3,178
Stock-based compensation 532 288
Depreciation and amortization 1,835 2,698
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Total operating expenses 17,197 22,890
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Other (income) expense:
Interest expense 132 -
Interest income (454) (381)
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Total other (income) expense (322) (381)
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Net loss $ (5,305) $ (5,483)
