Gaiam Inc. reported net revenue in the first quarter ended March 31 was flat with a year earlier at $37.6 million as it pruned catalog sales ahead of a massive launch of its yoga line at 1,100 Kohl's department stores that kicked off April 23.
Net revenues from sales of Gaiam-branded products decreased 2 percent to $34.5 million compared to the same year-ago quarter. Excluding planned declines in catalog sales, Gaiam Brand net revenue in the first quarter of 2015 increased 4 percent to $32.3 million. Sales to top 25 customers, excluding the company's largest customers, increased 13 percent.
"Our strategy to focus on Gaiam yoga, fitness and wellness continued to drive growth in the first quarter," said Lynn Powers, CEO of Gaiam. "However, as expected, the quarter was negatively impacted by $5 million in revenue due to the West Coast port disruption and continued stock level issues with our largest customer. Despite these external factors and excluding the planned declines in our catalog sales, Gaiam brand net revenue increased 4 percent. We expect the delayed revenues from the port issues to be resolved and recognized in our second quarter, and growth to accelerate in the remainder of 2015."
Kohl's launch underway
April 23rd marked the exclusive kick-off of Gaiam's new yoga apparel line at Kohl's.
"The launch in over 1,100 of their stores has exceeded our expectations and we've received tremendous media coverage, including The Today Show and E! Entertainment Television," said Powers. "Kohl's has done an exceptional job merchandising the product via branded store-within-store displays."
Gross profit in the first quarter of 2015 increased to $17.2 million compared to $17.0 million in the year-ago quarter. As a percentage of net revenue, gross profit was 45.8 percent compared to 45.3 percent in the first quarter of 2014. The 50 basis point improvement was driven by increased revenues from the high-margin Gaiam TV business.
Operating expenses in the first quarter of 2015 were $20.1 million compared to $19.5 million in the year-ago quarter. As a percentage of net revenue, operating expenses were 53.4 percent compared to 51.9 percent in the year-ago quarter. The increase was primarily due to increased marketing expenses for Gaiam TV.
Loss from operations in the first quarter was $2.9 million compared to $2.5 million in the year-ago quarter.
Net loss for the first quarter was $3.9 million or $(0.16) per share, compared to $2.1 million or $(0.09) per share in the year-ago quarter. The first quarter of 2015 included an unfavorable impact from foreign exchange of approximately $544,000 and approximately $466,000 from discontinued operations related to the sale of a business in a prior period. The year-ago period included approximately $438,000 of gains from the sale of investments.
At March 31, 2015, cash totaled $16.9 million compared to $15.8 million at December 31, 2014. The company continues to carry no debt.
Powers said Gaiam's athletic and children's yoga initiatives and improvements to online and mobile customer experiences are on track to roll out later this year.
"Given these initiatives, as well as our strong balance sheet, we are confident in our ability to drive growth and profitability in our Gaiam Brand in 2015 and beyond," she said.
Gaiam, Inc. makes and sells yoga, fitness and wellness products and content through approximately 38,000 retail doors, 18,000 store within stores, 5,000 category management locations, and e-commerce. Gaiam TV is a global digital subscription service with approximately 7,000 exclusive videos available for streaming and download.
