RedEnvelope posts a moderate gain in FY 2007 web sales
Web sales rose by just 3% for RedEnvelope Inc. in fiscal 2007 while total sales grew by 7.2% at the direct marketer of gifts.
For the year, RedEnvelope, No. 120 in the Internet Retailer Top 500 Guide, posted e-commerce revenue of approximately $93.3 million, up 3% from about $90.6 million in fiscal 2006. However, total sales grew 7.2% to $121.3 million in FY 2007 from $113.1 million the prior year, resulting in a drop in the web portion of sales to 77% in FY 2007 from 80% last year.
The company reported a net loss of $3.5 million for FY 2007 vs. a net loss of $5.6 million in FY 2006. For the fourth quarter, RedEnvelope posted a net loss of $4.3 million on sales of $21.9 million, compared with a net loss of $4.5 million on sales of $22 million in the prior year. The net loss for Q4 includes additional stock option expenses of $696,000, the company says.
In FY 2007 RedEnvelope shipped about 1.4 million orders and attracted 514,000 new customers, which brings the total number of names in its marketing database to about 3.4 million.
The last year was difficult for RedEnvelope. Ken Constable, president and CEO since February 2006, resigned in April to pursue other business opportunities and was replaced on an interim basis by executive chairman John Pound. The company has yet to name a new permanent CEO, but is launching a longer-range plan to enhance sales and profits.
“RedEnvelope faltered because of unimaginative marketing and a lackluster assortment of merchandise,” Pound says. “The negative trends that can be seen in our fourth quarter results reflect an uninspired and unfocused creative message, an unfocused and tired product assortment; and a shift in our marketing focus away from the critical necessity of customer acquisition. In the third and fourth quarters of fiscal 2007 and year-to-date fiscal 2008, we were seeking out fewer new customers and conversion was down among both new and existing customers.”
To grow sales, RedEnvelope is redeveloping its brand message and creative vision and looking to enhance its product mix for the upcoming holiday shopping season, Pound says.
Though it has yet to provide full details, the company also is planning a major overhaul of its web site and catalog this fall. “In September, the look and feel of both our catalog and our web site will change significantly,” Pound says. “We will be once again a focused, aspirational brand.”
Back...
