Sales slow at ValueVision Media
Shares of Eden Prairie, Minn.-based ValueVision Media, Inc. (Nasdaq: VVTV) are heading down on news that a slowdown in sales growth caused the direct marketing company to lower its guidance for fiscal year 2007 and cut jobs.
Revenues for the first fiscal quarter of 2007 ended May 5 were $188 million, an increase of 5% compared with revenues of $179 million a year earlier, the company said after Thursday’s close.
“Our sales growth slowed to less than 10% for the first time in several quarters,” CEO William Lansing said. “The quarter had a strong start, but slowed in the last six weeks, driven by across-the-board softness in consumer demand.”
Lansing added that ValueVision is now focusing on simplifying operations and reducing its cost base.
“In light of our first quarter results, we have taken decisive steps to improve the financial performance of our company and maximize long-term shareholder value,” he said.
To that end, ValueVision said that it has begun a consolidation of its distribution operations into a single warehouse facility and plans on cutting 170 jobs, or 12% of its workforce.
The company reported that it expects its restructuring activities, which also include the closing of two outlet stores, to cost $2 million to $3 million during fiscal 2007 and generate on-going annualized savings of over $10 million.
The decline in sales growth also forced ValueVision to issue a downwardly revised guidance for fiscal 2007. The company now expects earnings before interest, taxes, depreciation and amortization expenses to be between $15 million and $20 million, down from a previous estimate of earnings in excess of $20 million.
ValueVision broadcasts its product offering 24/7 through its ShopNBC channel, which is available in 60 million homes. The company announced that it has agreed with NBC Universal to extend the ShopNBC brand license through May 2011.
At 1:43 p.m. ET shares were down $0.40, or 4%, to $10.00. The 52-week high is $14.12, established on Nov. 15, 2006. The 52-week low of $9.72 was set on May 16.
