Lillian Vernon Corp. reported revenue for the second quarter 2003 of $36.1 million. This compares with $36.8 million last year.
The net loss for the quarter, ended Aug. 24, 2002, was $6.1 million, compared to $3.4 million for the same quarter in 2002. The net loss increase was due to several factors, including the postal rate increase in July, the Rye, NY-based company said in a statement.
Lillian Vernon also implemented a new program to reward distribution center employees for improving efficiency. While the initial costs associated with the implementation of this pay-for-performance program of about $600,000 after taxes were recognized in the second quarter, most of the savings to be derived from the program will be recognized in the company’s peak season, during the second half of the fiscal year. There was also a $900,000 paper price collar contract charge in the second quarter, according to the company.
Revenue for the six months ended Aug. 24 were $72.9 million, compared to $76.5 million last year. A planned 10% reduction in catalog circulation during the first half of fiscal 2003 contributed to the lower revenue in the company’s off season, the statement explained. Average revenue per catalog, however, increased by 7.6%.
The net loss for the six months was $10.9 million, compared to $7.3 million the previous year. The loss included financing charges of $1.9 million after taxes to record the change in the fair market value of the company’s paper price collar contract, according to the statement.
“The company’s financial position remains strong,” the statement said. “Cash and investments are $13.8 million [as of the end of the second quarter] and there was no debt outstanding.”
Chairman and CEO Lillian Vernon pointed out, in the statement, that the Web site performs above expectations with a 70% increase in online orders over last year. “For the fall, we will continue to emphasize our new product offerings and value pricing,” she said.
The company has formed a strategic relationship with online shopping portal MSN, and a co-branded Lillian Vernon MasterCard will be introduced in October.
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