- Stable financial position with approximately $31.2 million in positive working capital
- Maintains profitability through careful expense management
- Federal District Court denied plaintiff's motion for Class Action Certification in "Marla Tidenberg v. Bidz.com" and litigation settled
- Launched deal with Aramex to offer effective shipping services to customers in 15 Middle East countries
- Zero balance on line of credit, with a current cash position in excess of $3 million
- Share repurchase to continue
- Successful launch of Modnique.com
- Successful launch of Layaway Plan
CULVER CITY, Calif., March 9, 2010 (GLOBE NEWSWIRE) -- Bidz.com (Nasdaq:BIDZ), a leading online retailer of jewelry, announced results for the fourth quarter and full year ended December 31, 2009.
Net revenues for the fourth quarter of 2009 were $27.5 million, compared with $35.1 million reported in the fourth quarter of 2008. During the quarter, the Company reported B2B sales of $2.4 million, compared with no sales in the prior year period. Net revenues for the fourth quarter were adversely affected by the migration of the Company's proprietary enterprise operating system to a Microsoft Dynamics AX ERP system, due to some unexpected difficulties during the implementation.
The Company's revenues for the twelve months ended December 31, 2009 were $110.4 million, compared with $207.4 million reported for the twelve months ending December 31, 2008. The Company believes the overall decrease in net revenues was primarily a result of declines in consumer spending caused by the financial and economic crisis that began in 2008, which disproportionately affected jewelry spending. The Company's domestic and international sales in 2009 represented 68.3% and 31.7%, respectively, compared with 76.1% and 23.9%, respectively, in 2008. The top five international markets in 2009 represented Canada, Australia, Saudi Arabia, The United Arab Emirates and Spain.
In the fourth quarter 2009, gross profit was approximately $8.1 million, compared with $12.1 million in the fourth quarter of 2008. Gross margin in the fourth quarter of 2009 was 29.6%, within the Company's guidance range, compared with 34.4% in the same period of 2008. The decrease in gross profit as a percentage of sales was primarily due to lower gross margins from B2B revenues, partially offset by higher gross margins from the Company's online revenue. Gross profit for the full year ended December 31, 2009 was $33.7 million, compared with $58.7 million in the prior year period. Gross margin for the full year ended December 31, 2009 was 30.5% compared with 28.3% for the same period last year.
In the fourth quarter, the Company also saw improvements in its key revenue metrics. During the quarter, the average selling price per order increased over 11.8% to $189 from $169, average items sold per transaction increased approximately 28.7% to 4.3 items and the Company's acquisition cost per new buyer decreased by 9.4% to $48 from $51.
| Auction Metrics | Three Months Ended December 31, | ||
| 2009 | 2008 | % Change | |
| Number of new buyers | 45,405 | 59,485 | -23.7% |
| Average selling price per order (gross) | $189 | $169 | 11.8% |
| Average orders per day | 1,564 | 2,462 | -36.5% |
| Average items sold per day | 6,773 | 8,287 | -18.3% |
| Average items sold per transaction | 4.3 | 3.4 | 28.7% |
| Acquisition cost per new buyer | $48 | $51 | -9.4% |
| Gross Margin $ per average order | $56 | $58 | -3.8% |
"While our revenues continue to be impacted by the recession and its effect on consumer spending, particularly in the jewelry sector, we are continuing to enhance our product offerings at compelling values in an entertaining interactive format, " said Leon Kuperman, the Company's President and Chief Technology Officer. "In addition, we are carefully managing our operating expenses, margins, and inventory in order to preserve and enhance our financial strength and continue to capitalize on our long-term opportunities and prudently invest in our business. We are also continuing to make progress in stabilizing our business by providing our customers with high quality products at a compelling value and demonstrating our ability to enhance our position in this environment. As we look ahead, we are keenly focused on achieving strong revenue growth, profitability and leveraging our model to deliver higher earnings, cash flow and shareholder returns."
General and administrative expenses for the fourth quarter were $5.2 million, compared to $4.4 million in the prior year period. Sales and marketing expenses for the quarter were $2.2 million, compared with $3.0 in the prior year period. Total operating expenses in the fourth quarter 2009 were flat at $7.6 million, compared with the prior year period. Net operating income for the fourth quarter of 2009 was $0.6 million or 2.0% of sales, compared to $4.5 million or 12.8% of sales in the fourth quarter of 2008. The Company's income tax expense decreased to $0.2 million in the fourth quarter of 2009, compared to $1.6 million in the prior year period, and the effective tax rate was 43.9% versus 35.1% in the same period of 2008.
Net income for the fourth quarter of 2009 was approximately $0.3 million, or $0.01 per fully diluted share, on 22.1 million weighted average shares outstanding, compared to net income of $2.9 million, or $0.13 per fully diluted share, on 23.3 million weighted average shares outstanding in the same period of 2008.
The Company's pre-tax income for the twelve months ended December 31, 2009 was $4.3 million compared with $24.0 million in the prior year period. The Company's income tax expense decreased to $1.8 million in full year of 2009 from $9.6 million in the prior year period and the effective tax rate increased to 42.4% from 40.0%. Net income for the full year of 2009 was $2.5 million, or $0.11 per fully diluted share, on 22.5 million weighted average shares outstanding, compared to $14.4 million, or $0.57 per fully diluted share, on 25.1 million weighted average shares outstanding, in the same period of 2008.
As of December 31, 2009, the Company had approximately $1.1 million in cash. Additionally, the Company had $31.2 million in positive working capital, no long-term debt and a balance of $2.9 million under its line of credit. Since the end of the quarter, the Company has paid down the line of credit and currently has no balance outstanding, as well a current cash position in excess of $3.0 million. The Company believes that cash and cash equivalents currently on hand and cash flows from operations will be sufficient to continue its operations and to pursue its growth strategy for the foreseeable future.
The Company announced on March 1, 2010 that the plaintiff in the case titled "Marla Tidenberg v. Bidz.com, Inc." has agreed to dismiss her case against the Company with prejudice. The Company is pleased to have put this chapter behind them and return its focus to its business. The Company always maintained that the claims were entirely without merit and the outcome is a victory for both the Company and its stockholders.
The Company also announced last month the successful launch of Modnique, its exclusive private sale shopping site for members-only, offering authentic premium brand name merchandise. Modnique offers its members exclusive access to 24-72 hour sales events on designer apparel, accessories, shoes, houseware and much more at price points up to 85% off of retail. The first sales event featured Ed Hardy products and since has featured private sales for brands such as Calvin Klein, Heys, Maurice Lacroix, ST DuPont, Modern Amusement and many more.
David Zinberg, Chief Executive Officer of Bidz.com, commented, "The Modnique platform is a logical evolution for our existing business given Bidz's existing online infrastructure and the strong relationships we have with premium designer brands, as well as millions of monthly visitors to our websites. We have a dedicated team and facility in place and the site's main goal is to offer quality designer brand name merchandise to our customers at an excellent value that is well below retail."
The Company recently implemented a layaway plan that allows customers to make a purchase and then pay for it over a 5 month period. This program began in December and the Company expects to have approximately $1.5 million in sales in Q1 that it will not book until the product is paid for in full, which will not happen until Q2 2010 and Q3 of 2010. The Company stated that as customers become increasingly aware of this program, it would expect to see increases on a quarterly basis.
In addition, the Company hired a new General Manager for Buyz.com, who brings over 20 years of experience in retail jewelry. The team is currently working on new growth initiatives, and the Company is confident that by adding an experienced and dedicated person to head this effort, it will see improved results for this division of the business.
The Company also announced the launch of a multi-year agreement with Aramex to offer more effective shipping services to its customers in 15 Middle East countries. Aramex brings convenient, express shipping services that meet all of its customers' needs, including up to the minute tracking information and 24 hour in-language customer service.
Mr. Zinberg continued, "I am pleased to report that we are beginning to see positive momentum in both our core business and many of our newer initiatives. Since the end of the quarter our business Bidz.com site has increased activity and conversions and our Modnique.com site is off to a good start. Given these trends, as well as somewhat improved overall economic climate, I believe that we will soon be seeing improved financial results."
As of December 31, 2009, the Company has spent a total of $18.4 million to cumulatively repurchase 3.3 million shares at an average price of approximately $5.56 per share since the inception of its stock repurchase program in June, 2007. The Company intends to continue to make additional share repurchases based upon market conditions, stock price and other considerations.
Business Outlook/Guidance
The Company is introducing new revenue guidance for the first quarter of 2010 of $26-$28 million, gross profit margin of approximately 24-26%, as the Company will push for market share to get back on a growth curve, and expects pre-tax income to be approximately breakeven.
Investor Conference Call
Bidz.com's quarterly earnings conference call is scheduled to begin later today (March 9, 2010) at 1:30 p.m., Pacific Time. The call will be open to all interested investors through a live audio Web broadcast via the Internet on the investor relations section of the Company's website at http://investors.bidz.com/.
For those unable to participate during the live broadcast, the webcast will be archived for 90 days and a replay will be available beginning Tuesday, March 9, 2010 at 7:30 p.m. ET through March 23, 2010 at 12:00 a.m. ET. To access the replay, dial 800-406-7325 (U.S.) or 303-590-3030 (International), and use passcode: 4243146.
About Bidz.com
Bidz.com, founded in 1998, is a leading online retailer of jewelry. Bidz offers its products through a live auction format as well as a fixed price online retail store, Buyz.com. Bidz.com's auctions are also available in Arabic, German and Spanish. To learn more about Bidz.com visit its website at www.globenewswire.com/newsroom/ctr%3Fd=185163%26amp;l=3%26amp;a=www.bidz.com%26amp;u=http%253A%252F%252Fcts.businesswire.com%252Fct%252FCT%253Fid%253Dsmartlink%2526url%253Dhttp%25253A%25252F%25252Fwww.bidz.com%2526esheet%253D5957032%2526lan%253Den_US%2526anchor%253Dwww.bidz.com%2526index%253D1">www.bidz.com. Bidz also operates Modnique, a division of Bidz.com, an exclusive private sale shopping site for members-only, offering authentic premium brand name merchandise. Modnique offers its members exclusive access to 24-72 hour sales events on designer apparel, accessories, shoes, and houseware and much more at price points up to 85% off of retail. To learn more about Modnique visit its website at www.globenewswire.com/newsroom/ctr%3Fd=185163%26amp;l=3%26amp;a=www.modnique.com%26amp;u=http%253A%252F%252Fwww.modnique.com">www.modnique.com.
Safe Harbor Statement
This press release includes forward looking statements about the Company's estimated revenue and earnings within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including statements regarding the Company's future financial position, business strategy and plans and objectives of management for future operations, are forward looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions, as they relate to the Company, are intended to identify forward looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect the Company's financial condition, results of operations, business strategy and financial needs. Risks and uncertainties include that our common stock is subject to short selling and trading, and prices of our stock may be volatile; that we are subject to "prank" bidding; that we may face increasing costs to acquire new customers; the ability of the Company to attract customers to its website and offer attractive products; the ability to maintain profit levels while expanding international sales; the ability to detect fraud if we fail to maintain an effective system of internal controls; the ability to maintain our website, electronic data processing systems, and systems hardware; the ability to forecast accurately net revenue and plan for expenses; that we do not have a guaranteed supply of jewelry products and that we have a heavy concentration of inventory purchased from our top two suppliers; the ability to protect our intellectual property rights; and potential litigation and government enforcement actions that may result from our prior securities offerings. Please refer to Bidz.com's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Bidz.com undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.
| Bidz.com, Inc. | ||
| Balance Sheets | ||
| (in thousands, except share data and per share) | ||
| December 31, | ||
| 2008 | 2009 | |
| Assets | ||
| Current assets: | ||
| Cash | $4,456 | $1,121 |
| Accounts receivable | 698 | 447 |
| Inventories, net of reserves of $820 and $1,767 at December 31, 2008 and 2009, respectively | 37,657 | 40,961 |
| Other receivable (includes related party amounts of $102 and $179 at December 31, 2008 and 2009, respectively) | 1,041 | 1,454 |
| Current deferred tax assets | 1,950 | 1,400 |
| Other current assets | 582 | 3,774 |
| Total current assets | 46,384 | 49,157 |
| Long term deferred tax asset | 84 | 663 |
| Property and equipment, net | 1,672 | 1,202 |
| Intangible asset | 161 | 240 |
| Deposits | 104 | 157 |
| Total assets | $48,405 | $51,419 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Revolving credit line | $ -- | $2,898 |
| Accounts payable (includes related party amounts of $1,364 and $1,513 at December 31, 2008 and 2009, respectively) | 9,636 | 12,159 |
| Accrued expenses | 3,091 | 2,291 |
| Deferred revenue | 872 | 632 |
| Total current liabilities | 13,599 | 17,980 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Preferred stock: par value $0.001; authorized 4,000,000 shares; none issued and outstanding at December 31, 2008 and 2009, respectively | -- | -- |
| Common stock: par value $0.001; authorized 100,000,000 shares; issued and outstanding 22,917,918 and 22,114,257 at December 31, 2008 and 2009, respectively | 23 | 22 |
| Additional paid in capital | 24,520 | 20,293 |
| Employee share purchase receivable | (708) | (308) |
| Retained Earnings | 10,971 | 13,432 |
| Total stockholders' equity | 34,806 | 33,439 |
| $48,405 | $51,419 | |
| Bidz.com, Inc. | ||||
| Statements of Income | ||||
| (in thousands, except share and per share data) | ||||
| Years Ended December 31, | Three Months Ended December 31, | |||
| 2008 | 2009 | 2008 | 2009 | |
| Net revenue: | ||||
| Merchandise sales | $177,089 | $106,043 | $35,078 | $24,971 |
| Wholesale merchandise sales (includes related party amounts of $0, $0 and $2,403 for the years ended December 31, 2007, 2008 and 2009, respectively) | 29,886 | 4,009 | 0 | $2,414 |
| Other revenue | 435 | 342 | 61 | 102 |
| 207,410 | 110,394 | 35,139 | 27,487 | |
| Cost of revenue | 148,688 | 76,667 | 23,064 | 19,345 |
| Gross profit | 58,722 | 33,727 | 12,075 | 8,142 |
| Operating expenses: | ||||
| General and administrative | 21,209 | 19,444 | 4,355 | 5,192 |
| Sales and marketing | 12,681 | 9,140 | 3,037 | 2,172 |
| Depreciation and amortization | 690 | 795 | 185 | 222 |
| Total operating expenses | 34,580 | 29,379 | 7,577 | 7,586 |
| Income from operations | 24,142 | 4,348 | 4,498 | 556 |
| Other income - interest income | 40 | 1 | 16 | -- |
| Other expense - interest (expense) | (182) | (74) | (6) | (42) |
| Income before income tax expense | 24,000 | 4,275 | 4,508 | 514 |
| Income tax expense | 9,597 | 1,814 | 1,584 | 226 |
| Net income | $14,403 | $2,461 | $2,924 | $288 |
| Net income per share available to common shareholders - basic | $0.61 | $0.11 | $0.13 | $0.01 |
| Net income per share available to common shareholders - diluted | $0.57 | $0.11 | $0.13 | $0.01 |
| Weighted average number of shares outstanding - basic | 23,798,338 | 22,517,367 | 23,312,209 | 22,114,441 |
| Weighted average number of shares outstanding - diluted | 25,069,509 | 22,517,367 | 23,313,289 | 22,114,441 |
| Bidz.com, Inc. | ||
| Statements of Cash Flows | ||
| (in thousands) | ||
| Years Ended December 31, | ||
| 2008 | 2009 | |
| Cash flows provided by (used for) operating activities: | ||
| Net income | $14,403 | $2,461 |
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
| Depreciation and amortization | 690 | 795 |
| Change in inventory reserve | (255) | 947 |
| Impairment in employees share purchase receivable | 256 | 400 |
| Stock-based compensation | 641 | 844 |
| Changes in assets and liabilities: | ||
| (Increase) decrease in assets: | ||
| Accounts receivable | 1,555 | 251 |
| Inventories | 19,284 | (4,251) |
| Other receivable | 1,961 | (413) |
| Current deferred tax assets | 171 | 550 |
| Other current assets | (204) | (3,192) |
| Deposits | -- | (53) |
| Increase (decrease) in liabilities: | ||
| Accounts payable | (16,414) | 2,523 |
| Accrued expenses | (1,418) | (800) |
| Deferred revenue | (2,028) | (240) |
| Net cash provided by (used for) operating activities | 18,642 | (178) |
| Cash flows provided by (used for) investing activities: | ||
| Capital expenditures | (1,058) | (404) |
| Proceeds from sale of fixed asset | 19 | |
| Net cash used for investing activities | (1,039) | (404) |
| Cash flows provided by (used for) financing activities: | ||
| Revolving credit line | (5,924) | 2,898 |
| Long term deferred tax assets | 45 | (579) |
| Issuance of common stock | 5 | -- |
| Employees share purchase receivable | 122 | -- |
| Retirements of common stock from net vesting of restricted stocks | (10) | (8) |
| Proceeds from exercise of stock options | 2,095 | -- |
| Retirements of common stock from net exercise of stock options | (2,480) | -- |
| Tax benefit from stock based compensation | 716 | (70) |
| Purchase of treasury stock | (12,524) | (4,994) |
| Net cash provided by (used for) financing activities | (17,955) | (2,753) |
| Net increase (decrease) in cash | (352) | (3,335) |
| Cash, beginning of year | 4,808 | 4,456 |
| Cash, end of year | $4,456 | $1,121 |
| Supplemental disclosure of cash flow information: | ||
| Interest paid | $182 | $74 |
| Income taxes paid | $9,874 | $2,550 |
| Supplemental disclosure of non-cash investing and financing activities: | ||
| Retirement of property and equipment | $9 | $-- |
| Retirement of treasury shares | $13,410 | $4,994 |