November 7, 2008, 12:00 AM delivers mixed Q3 results

In Q3 Inc. increased sales by 8.4% but its net loss widened by 50%. For the first nine months, sales are up by 10% while the e-retailer’s net loss has improved by 5.5% to $8.6 million from $9.1 million a year ago. Inc. increased sales but also widened its net loss in third quarter.

For the third quarter ended Sept. 28, grew sales by 8.4% to $87.8 million from $81 million in the prior year while the online retailer’s net loss widened by 50% from $2.4 million in the third quarter of 2007 to $3.6 million. The third quarter loss includes $1.7 million in accelerated non-cash marketing expense, $800,000 related to consulting services, and $1.8 million in non-cash stock-based compensation expense, the retailer says.

"We posted a solid third quarter, with strong beauty growth, record gross margins, and adjusted EBITDA improvement of 76% over the prior year period,” says CEO Dawn Lepore. Total orders for in the third quarter grew by 7% to approximately 1.3 million, while the number of new customers served increased by 6% to about 325,000. “Overall beauty revenues increased over 20% from the prior year period, aided by 32% growth in our business,” says Lepore.

In the third quarter, spent 12.4% of total revenue - $10.9 million – on fulfillment and order processing and $7.9 million, or 9% of all revenue, on marketing and sales and $6 million – 6.8% of revenue – on general and administrative expenses.

For the first three quarters of the year,, No. 41 in the Internet Retailer Top 500 Guide, recorded a net loss of $8.6 million on sales of $272.6 million vs. a net loss of $9.1 million on revenue of $248 million in the prior year.

For the fourth quarter, is expecting net sales in the range of $94 million to $99 million and net income in the range of $400,000 to $1.9 million.


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