Gaiam Inc. generated $74.5 million in sales during fourth quarter 2008, compared with $81.8 million in fourth quarter 2007. The company recorded a $30.3 million loss during the quarter, compared with $4.2 million in net income a year earlier. The company’s quarter and year ended on Dec. 31.
The company took $42.3 million in goodwill impairment charges during the quarter, but also realized $11.7 million from a minority interest in subsidiaries.
For the year, Gaiam generated $257.2 million in revenue, down slightly from the $262.9 million in 2007. The impairment charges led to a $35.6 million net loss for the year, compared with net income of $8.5 million a year earlier.
According to the transcript of an analysts’ call, direct to consumer revenue dipped from $132.5 million in 2007 to $129.8 million. During the quarter, direct-to-consumer revenue fell from $41 million a year ago to $30.4 million, in part due to its decision to reduce catalog circulation by 30%, as well as overall economic conditions.
Gaiam creates and markets a variety of personal development, wellness, spirituality, ecological lifestyle and conscious community offerings, as well as children’s programs and music and spoken-word CDs, as well as print content.
The Eavesdropper’s Take: According to an earnings conference call transcript, CFO Vilia Valentine said the company has scaled back from investing in typically high margin direct response TV advertising during 2008 due to the high cost of media during the election and holiday seasons. Company president Lynn Powers indicated the catalog cutbacks amounted to 2.5 million books, reflecting a move away from mail prospecting to online prospecting. Web-based prospecting yields similar response rates, greater flexibility and costs that are half of direct mail, Powers added. Look for the company to expand internationally: According to Powers, Gaiam will target Asia and Europe. It will also focus on increasing online dating and fitness DVD sales, as well as focus on subscription-based offerings.
