January 19, 2001, 12:00 AM

SkyMall Pins Loss on Internet Investment

Don Davis

Editor in Chief

SkyMall Inc. says it lost $7.5 million, or 57 cents per share, during the first quarter, much of it attributed to building up its Web infrastructure. The figure is double last year's first-quarter loss. Last week, the specialty goods cataloger and e-retailer announced it would lay off 15% of its staff to bring costs in line and return to profitability.
     Meanwhile, first-quarter sales from its Web site grew nearly fivefold over the same period last year. Net merchandise sales from the Internet totaled $4.3 million or 34% of business-to-consumer net merchandise sales, compared to $825,000 or 9% in first quarter 1999.
     Overall, the specialty cataloger had net merchandise sales of $15.6 million during the period, up 59%. Total revenues in the first quarter rose 41%, to $20 million.
     The company says it took certain corrective actions in the first quarter focused on improving the mix of variable and fixed placement fees and discontinued a free shipping promotion. The company says it expects to increase margins by the second half of the year "to more historical levels."

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