BabyUniverse loses $3.3 million in 2006 despite a 49.8% rise in sales
Net sales at BabyUniverse Inc. totaled $35.5 million in 2006, up 49.8% from $23.7 million in 2005. Net loss for the year was $3.3 million, compared to a net loss of $492,297 in 2005, the web-only retailer says.
For the fourth quarter ended Dec. 31, net sales totaled $8.7 million, up 6.1% from $8.2 million in the year-earlier period. The company had a $2 million net loss for the quarter, compared to net income of $42,252 in 2005’s fourth quarter.
The suspension of a fulfillment-related cost savings initiative contributed to the loss, the company says. That initiative would have required the execution of a long-term contract that would likely have reduced opportunities to merge with other partners, capital constraints that reduced inventory-driven organic growth opportunities, and high turnover and distraction of key management and operating personnel. Baby Universe is No. 235 in the Internet Retailer Top 500 Guide.
Those factors were directly responsible for both higher operating expenses and an unexpectedly low gross profit margin of about 25% in the fourth quarter, the company says.
“Notwithstanding our reported results, it is important to recognize that during the fourth quarter and subsequent weeks, we made significant progress on a valuation-focused transformation of our business,” says John C. Textor, chairman and CEO. “The company launched a meaningful content and new media property, BabyTV.com, in the final days of the fourth quarter. Already recognized as a compelling Internet property which combines elements of commerce and advertising through an integrated broadcast and social networking vehicle, we believe BabyTV.com is already positioned in 2007 to provide an attractive overall return on the investments we made in that property in 2006.”
BabyUniverse operates the web sites BabyUniverse.com and DreamTimeBaby.com.
BabyUniverse’s Georgianne Brown, president, mainstream e-commerce, is speaking at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose, in a session entitled Blending Video and E-Commerce.
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