MKTG Services Inc. has reported a drop in third quarter revenue to $8.7 million from $45.8 million one year ago. Its net loss grew to $39.4 million from $12.9 million.
The relationship marketing company has limited capital resources and has incurred significant recurring losses and negative cash flows from operations. If the company is unable to raise needed financing operations may have to be scaled back or discontinued, the company said in its Securities and Exchange Commission third quarter filing.
The company has been actively consolidating its offices and infrastructure and reducing its workforce.
MKTG Services plans to "continue to dramatically cutting costs," during the fourth quarter, CEO Jeremy Barbera said in a statement.
Of the third quarter decrease, approximately $19.4 million is attributable to the sale of Grizzard Advertising Inc. in July 2001 to Omnicom Group Inc. About $3 million, or 10% of the loss, was caused by a decrease in list services and database marketing billing and the move of its telemarketing call center. The decrease in billings was a direct result of the weakened economy causing unexpected client cancellations, postponed fundraising campaigns and lost clients, the report said. The quarter ended March 2.
MKTG’s direct mail services unit manages about 676 list properties. They include Alvin Ailey Dance Theater, Christian Science Monitor, Guggenheim Museum, Kiplinger Publications and paralyzed Vets of America, according to sources.
MKTG Services, formerly Marketing Services Group Inc., purchased Stevens-Knox List Management in January 1999 and acquired mailing list firm the Coolidge Co. in April 2000.
During the third quarter, salaries and benefits of about $7.9 million decreased by $11.7 million or 6% over $19.6 million in the prior period. About $8.8 million is attributable to the sale of Grizzard, $2 million was a one-time of severance to an officer in the prior period and $.9 million was in decreased headcount in several areas of the company. Salaries and benefits for the nine-months ended March 31, 2002 were $27.2 million compared to $54.7 million during the same period one year ago.
At its fiscal year end June 1, the relationship marketing company reported $127 million in revenue and a net loss of $66.5 million. The firm expects the decline in revenue to continue through the fourth quarter.
The firm’s stock closed yesterday at 60 cents.
