On Jun 27, 2014, we issued an updated research report on
On Apr 30, this leading provider of personalized products posted
first quarter 2014 results. Loss of 82 cents compared favorably
with the Zacks Consensus Estimate of a loss of 93 cents and
management's expectation of a loss of 86 cents to 92 cents per
share, owing to a better-than-expected top line. However, the loss
was wider than the year-ago loss of 33 cents due to higher
Net revenue increased 17.5% year over year to $137.1 million and
was ahead of the Zacks Consensus Estimate by approximately 1.6%,
attributable to the strong performance of the Consumer segment.
Revenues also beat management's guidance range of $132.0-$135.0
In the quarter, the total number of customers was 2.6 million,
reflecting an increase of 13.7% from the prior-year quarter. Total
orders generated were 3.9 million, up 13.0% year over year. Average
order value was $33.76, up 5.0% year over year, driven by
promotional strategies and integrated marketing campaigns adopted
by the company.
Overall, we are encouraged with the company's innovation program.
The company has introduced several exciting new products, styles,
and premium options to its existing portfolio of high-quality
personalized products and brands. These continued innovations and
investments in consumer oriented programs are expected to improved
traffic trends going forward, thereby adding to the top and bottom
Further, Shutterfly is geared to beef up its mobile-related
offerings with smartphones and tablets dominating the market.
Apart from new product offerings, the company intends to improve
operational efficiency and open new manufacturing facilities or
consolidate the existing ones for future expansion.
Moreover, the company is focused on increasing manufacturing and
operational capabilities and expanding its portfolio through
strategic acquisitions. We are encouraged by the company's
opportunistic acquisitions and improved offerings in the growing
mobile e-commerce segment.
However, the company expects to report a loss in 2014 due to the
termination of the Costco partnership. Though the company intends
to reinvest funds elsewhere, it does not expect to generate the
same efficiencies in other channels as in the Costco partnership.
Also, depreciation and equipment costs for expansion and
acquisition of manufacturing facilities are expected to affect
profitability in 2014.
The company presently has a Zacks Rank #3 (Hold). Some better
ranked stocks in the sector include
China Distance Education Holdings Limited
Everyday Health, Inc.
). While Yelp, Inc. sports a Zacks Rank #1 (Strong Buy), China
Distance Education Holdings and Everyday Health hold a Zacks Rank
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