Online jewelry retailer Bidz.com Inc., said Tuesday that net revenues for the third quarter of 2008 increased 38.2 percent to $55.4 million, year-over-year.
However, net income for the period fell 8.3 percent to $3.3 million, compared to $3.6 million for the third quarter of 2007, and it cut it revenue forecast for the remainder of the year.
The Los Angeles-based company also said it generated $17.2 million in business-to-business revenue.
“We are fortunate to have had a successful quarter in what has been an increasingly difficult domestic environment for most retailers and consumer brands. Our ability to make adjustments to our operating model, including reducing variable costs in response to changes in consumer demand, is what enabled us to report third quarter earnings ahead of our guidance,” said David Zinberg, Bidz.com chief executive officer. “We have enough flexibility in our operating model to reduce variable costs when we see sales soften and increase spending when sales strengthen. We are also keenly focused on executing on our initiatives that will continue to enhance the Bidz.com customer experience in all areas, while capitalizing on the significant long-term opportunities for our business. As we have discussed often, our number one priority is meeting our profitability and EPS targets.”
The company, which offers its products through a live auction format as well as a fixed price online retail store, said that the third quarter, its operation produced the following:
The number of new buyers fell 2.4 percent to 54,072
The average selling price increased 1.2 percent to $175.
Average orders per day declined 9.1 percent to 2,453.
Average items sold per day declined 4.3 percent to 8,431.
The acquisition cost per new buyer stayed the same at $43.
Number of items sold per order increased 3 percent to 3.4.
In the third quarter, gross profit increased 4.7 percent to $13.3 million, year-over-year. Gross margin during the period was 24 percent, compared with 31.7 percent in the same period of 2007. The decrease in gross margin was primarily due to significant B2B merchandise sales that generate lower gross profit margin.
Operating expenses in the third quarter increased to $7.8 million compared to $7.5 million in the prior year period.
The company’s pre-tax income for the third quarter of 2008 was $5.5 million, compared to $5.2 million in the prior year period in 2007.
The company’s revenues for the nine months ended Sept. 30 increased 39 percent to $172.3 million, year-over-year. Gross profit increased 34.4 percent to $46.6 million. Gross margin for the nine-month period was 27.1 percent versus 28 percent in the nine months ended Sept. 30.
Income from operations in the first nine months of 2008 was $19.6 million or 11.4 percent of sales as compared to $12.6 million or 10.1 percent of sales in the same period a year ago.
The company’s pre-tax income for the nine-month period was $19.5 million, 57 percent higher than the $12.4 million reported in the prior year period.
As of September 30, 2008, the Company has $8.3 million in cash. In addition, it has working capital of $31.5 million, no long-term debt, and a zero balance on its $25 million line of credit. The company said it believes that its positive cash flow and revolving line of credit remains one of its core financial strengths.
The company’s board of directors earlier approved a share repurchase program in the amount of $20 million and the company has purchased and intends to continue to purchase shares of its stock from time to time whenever, in its opinion, the share price does not properly reflect the Company’s business results and future prospects. There is approximately $8 million remaining on the company’s approved share repurchase plan. It expects to continue to make additional share repurchases in the fourth quarter of 2008.
The company said it is taking a cautious approach by reducing its revenue estimates to reflect an expected short-term slow down in its overall business. For 2008, it expects revenue to be in the range of $215-$225 million down from $240-$245 million it previously said.