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EVINE Live Posts Second Quarter Loss

EVINE Live Posts Second Quarter Loss

But stock rebounds slightly on increased revenue.

The reinvention of Eden Prairie-based home shopping channel EVINE Live Inc. remains a work in progress. On Wednesday, the company reported a net loss of $3 million on revenue of $161.1 million for its second quarter ending on August 1.
 
Last year, activist investors targeted the company, which has posted a long history of losses and failed turnaround strategies. In a proxy battle, the activists succeeded in winning board seats and prompted the resignation of the company’s previous CEO, Keith Stewart. (The company, formerly ValueVision Media Inc., was renamed EVINE Live in November.)
 
But today, the company’s stock is in worse shape than when activists won their board battle. On Tuesday, the company’s stock closed at $1.96 per share. On June 18, 2014 – the day of the annual meeting, which shook up the company’s board – the stock closed at $5.01.
 
The stock is sharply down from its recent peak of $6.90 per share on January 9. The stock first dropped in May following disappointing first quarter results.
 
But despite posting another loss, Wall Street seems encouraged. The stock closed at $2.23 per share for the day, up more than 10 percent from Tuesday’s close.
 
“The two numbers we’re really focused on are revenue and EBITDA,” said Mark Argento, senior research analyst with Minneapolis-based Lake Street Capital Markets. EBITDA (earnings before interest, taxes, depreciation and amortization) is a measure of a company’s cash flow.
 
“They’re generating positive EBITDA,” said Argento.
 
Argento notes that company’s revenue of $161.1 million and adjusted EBITDA of $2.5 million for the quarter both exceeded expectations. The company’s revenue was up 3 percent compared to the same quarter a year ago, driven by increased sales in the beauty (up 23 percent) and fashion and accessories (up 17 percent) product categories.

“We’re definitely still believers. Any time there’s a transition of this magnitude, it always takes longer than anticipated,” says Argento, who has a “buy” rating on the stock.
 
New CEO Mark Bozek has been at the helm for 14 months. For the fiscal year that ended on January 31, 2015, the company reported sales of $674.6 million and a net loss of $1.4 million.
 
Under Bozek, the company continues to roll out many new proprietary brands. This weekend, Nicole Curtis, star of HGTV’s “Rehab Addict,” will debut Nicole Curtis Home, a line of tools and home improvement products, on the network.
 
The company is forecasting that it will be profitable in the fourth quarter, the key holiday shopping season for retailers. As outlined in the company’s statement on the second quarter numbers: “The company expects third quarter revenue to be relatively flat with prior year results, followed by fourth quarter sales growth and net income profitability.”
 
Argento acknowledges that the bumpy history of the company casts a long shadow.
 
“The one thing I’ve learned is that the baggage of the ValueVision years is significant. Nobody’s going to give these guys the benefit of the doubt,” says Argento. “We think these guys have got the right team.”