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ValueVision Media (VVTV)
Q1 2014 Earnings Call
May 22, 2013 4:30 pm ET
Teresa Dery - Senior Vice President, General Counsel and Corporate Secretary
Previous Statements by VVTV
» ValueVision Media Management Discusses Q4 2012 Results - Earnings Call Transcript
» ValueVision Media's CEO Discusses Q3 2012 Results - Earnings Call Transcript
» ValueVision Q2 2009 Earnings Call Transcript
William J. McGrath - Chief Financial Officer and Executive Vice President
G. Robert Ayd - President
Carol Steinberg - Chief Operating Officer
Mark E. Smith - Feltl and Company, Inc., Research Division
Alex J. Fuhrman - Piper Jaffray Companies, Research Division
Gregory J. McKinley - Dougherty & Company LLC, Research Division
Gunnar Hansen - Sidoti & Company, LLC
Wilson S. Jaeggli - Southwell Management, L.P.
Good afternoon, and welcome to the ValueVision Media Fiscal 2013 First Quarter Conference Call. [Operator Instructions] This call is being recorded for instant replay. I would now like to turn the call over to Teresa Dery, Senior Vice President and General Counsel at ValueVision. You may begin.
Thank you, operator, and good afternoon. I'm joined today by Keith Stewart, CEO; Bill McGrath, EVP and CFO; Bob Ayd, President; Carol Steinberg, COO; and other members of the senior management team.
Comments on today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope or similar expressions. Listeners are cautioned that these forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such statements. More detailed information about these risks and uncertainties and related cautionary statements is contained in ValueVision's SEC filing.
In addition, comments on today's call may refer to adjusted EBITDA, a non-GAAP financial measure. For reconciliation of adjusted EBITDA to our GAAP results and a description of why we use adjusted EBITDA, please refer to our Q1 2013 news release available on the Investor Relations section of our website. All information in this conference call is as of today, and the company undertakes no obligation to update these statements. I will now turn the call over to Keith.
Keith R. Stewart
Thank you, Teresa, and thank you all for joining us on the call today. We remain highly committed to continue improving our financial performance, while at the same time, positioning our company for a long-term sustained growth.
During the first quarter, we built upon the momentum created in 2012 and continued to make solid progress across many key areas to drive our business, including posting for the fourth consecutive quarter of positive adjusted EBITDA. I'm pleased with continued improvement in our financial results, as well as our overall operations. The team will share more details and highlights from the first quarter in just a moment.
More than ever, I'm energized about where we are today and the opportunities that lie ahead. Over the past few years, there's been continued progress made in broadening the product mix, expanding and optimizing our distribution footprint, lowering our operating costs, elevating our customer experience and building a talented team of employees.
Today, our network broadcasts into over 85 million homes. We have an active base of 1.2 million customers. Our retention rates are at an all-time high. Our customers are purchasing more frequently. We are digitally connected to them and they are more engaged than ever than ever across our multi-channel retailing platforms of television, Internet, mobile and social media. Our focus on delivering exceptional customer experience has never been higher. The progress made in these areas has paved the way to make this the right time to take control of our brand.
After many months of research and preparation with brand consultants, today, we announced the plans of the transition of ShopNBC to ShopHQ, occurring over the course of the fiscal year. Through this rebranding effort, we will further reinforce our commitment to our customers as a trusted company and a trusted brand. We'll continue to offer new and differentiated products. We'll inform, entertain and educate them. And most importantly, we'll continue to earn their trust and their loyalty. It's a time of positive change at our company, and we're committed to continuing the progress.
With that, I'll turn the call over to Bill, who will highlight our Q1 financial performance. Bob will address our sales and merchandising initiatives, Carol will provide an update and progress made through our operations and discuss the launch of the ShopHQ brand in more detail. Bill?
William J. McGrath
Thanks, Keith. First quarter sales increased 11% to $151 million from $137 million in the first quarter of 2012. Sales growth was driven by strong performance in the Home & Consumer Electronics and the Fashion & Accessories categories.
Gross profit grew 12% to $57 million versus $51 million in the same quarter last year. Gross margin for Q1 increased slightly to 37.7% from 37.4% in Q1 despite the higher mix of Home & Consumer Electronics, which carry lower gross margins than our other categories. The improvement in gross margin was driven by less markdown activity and fewer shipping promotions during the quarter.
Operating expenses in Q1 were $55 million, a 2% decrease from Q1 last year. As a percentage of sales, operating expenses represented 37% of sales compared to 41% in the same quarter last year. Variable expenses as a percentage of sales decreased by 70 basis points to 7.5% in Q1 2013 versus 8.2% in Q1 2012. The improvement reflects favorable transaction costs and lower bad debt expense.