November 20, 2007, 12:00 AM

E-commerce sales drop slightly at RedEnvelope

Despite a new e-commerce platform and its new approach to merchandising, web sales continue to lag at RedEnvelope Inc. for the first six months of the 2008 fiscal year. For the first six months of FY 2008, web sales dropped by about 6%.

Mark Brohan

Research Director

Despite a new e-commerce platform and approach to merchandising, web sales continue to lag at RedEnvelope Inc. for the first six months of the 2008 fiscal year.

The company, No. 120 in the Internet Retailer Top 500 Guide, doesn’t break out quarterly e-commerce sales. But for the first six months of FY 2008, RedEnvelope generated web sales of about $31.9 million, a decrease of 5.9% from web sales of $33.9 million in the prior year.

Overall RedEnvelope in the second quarter posted a loss of $10.3 million on revenue of $15.8 million vs. a net loss of $3.7 million on sales of $15.5 million in Q2 of FY 2007. For the first two quarters of the current fiscal year, the company recorded a net loss $13.9 million on sales of $40.4 million, compared with a net loss of $4.6 million on sales of $42.4 million in the first six months of FY 2007. The web accounted for 79% of all sales in the first half of FY 2008 vs. 80% in the prior year.

"Our second quarter results continue to reflect the challenges of our turnaround,” says RedEnvelope CEO John Pound. “The downdraft created by prior-year policies, in particular the erosion suffered in our customer file and response rates due to over promotion, has proven to be significant.”

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