GSI Commerce said it lost more money on operations despite a 36%
increase in net revenues to $186.8 million in the third quarter ended
Sept. 27.

GSIC, which runs e-commerce sites for a variety of major retailers
and brands, said its loss from operations was $16.5 million compared to
$11.5 million in the same quarter a year ago. Net revenues reached
$186.8 million, up from $137.3 million. Much of the gain came from an
84% increase in service fee revenues GSIC earns for managing other
companies e-commerce operations. By comparison, net revenues from
product sales rose 11.8% to $102.1 million.

GSIC’s net loss was $12.8 million, or 27 cents per share, compared to $6.1 million, or 13 cents per share.

“Our third quarter performance was strong,” said Michael G. Rubin,
chairman, president and CEO of GSI. “We achieved excellent results
through the first nine months of the year and we believe we are on
track to meet our bottom line guidance for the year, albeit with
slightly lower, but still strong revenue growth, offset by better than
planned operating margins.”

Fiscal Year 2008 and Fourth Quarter Guidance

The company provided the following guidance for fiscal year 2008:

  • Net revenues are expected to be in a range of $950.0 million to $985.0 million.
  • Loss from operations is expected to be in a range of $6.5 million to $9.5 million.
  • Capital expenditures are estimated to be approximately $65.0
    million, and include approximately $57.0 million related to the base
    business and approximately $8.0 million of acquisition-related
    integration capital expenditures.

The company provided the following guidance for fiscal 2008 fourth quarter:

  • Net revenues are expected to be in a range of $375.0 million to $410.0 million.
  • Income from operations is expected to be in a range of $42.0 million to $45.0 million. 
                        GSI COMMERCE, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                    (Unaudited)

                           Three Months Ended           Nine Months Ended

                      September 29,  September 27, September 29, September 27,
                          2007           2008          2007          2008
    Revenues:
      Net revenues from
       product sales      $91,298     $102,139       $289,053      $332,314
      Service fee
       revenues            45,987       84,655        125,780       243,232

        Net revenues      137,285      186,794        414,833       575,546

    Costs and expenses:
      Cost of revenues
       from product sales  65,258       73,089        207,843       236,950
      Marketing            10,329       11,412         32,259        40,141
      Account management
       and operations,
       inclusive of $774,
       $1,373, $2,084
       and $3,818 of
       stock-based
       compensation        36,992       58,732        100,543       175,339
      Product development,
       inclusive of
       $395, $705, $1,026
       and $1,788 of
       stock-based
       compensation        15,925       25,736         44,737        73,356
      General and
       administrative,
       inclusive
       of $1,006, $2,473,
       $2,708 and $6,721
       of stock-based
       compensation        11,198       17,487         31,014        51,820
      Depreciation and
       amortization         9,129       16,868         23,744        49,503

        Total costs and
         expenses         148,831      203,324        440,140       627,109

    Loss from operations  (11,546)     (16,530)       (25,307)      (51,563)

    Other (income) expense:
      Interest expense      2,075        2,594          3,842         7,118
      Interest income      (3,342)        (190)        (7,025)       (1,397)
      Other expense, net       28          480             51           833

        Total other
         (income)
         expense           (1,239)       2,884         (3,132)        6,554


    Loss before
     income taxes         (10,307)     (19,414)       (22,175)      (58,117)
    Benefit for
     income taxes          (4,221)      (6,575)        (8,711)      (16,753)

    Net loss              $(6,086)    $(12,839)      $(13,464)     $(41,364)

    Basic and diluted loss
     per share             $(0.13)      $(0.27)        $(0.29)       $(0.88)