Alloy Sees $300K Loss in Q2, but Reaches Revenue, Earnings Targets

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Hurt by higher operating expenses, Alloy Inc., New York, said yesterday that it had a slight loss in its second quarter, though it hit its revenue and earnings targets.

Revenues for the fiscal quarter ended July 31 jumped 55 percent to $80.5 million, mainly because of a 147 percent increase in sponsorship and other revenue. Merchandise revenue fell 5 percent to $30 million. The reduction was "primarily from a slight planned decline in retail catalog circulation as we reduced the number of retail catalogs circulated to prospects outside our database and non-buyers inside our database," the company said.

The net loss for the second quarter was $300,000 compared with net income of $500,000 during last fiscal year's second quarter.

"With the Delia's acquisition expected to close during the third quarter, our focus in our merchandising business will be on integrating operations and charting a course to begin realizing in 2004 the substantial synergies we expect to result from the acquisition," Alloy chairman/CEO Matt Diamond said in a statement.

As of July 31, Alloy's consolidated database of Generation Y consumers grew to more than 14.5 million names, of which 5.1 million were established buyers compared to 11.7 million names and 3.8 million established buyers as of July 31, 2002.

Total revenues for the six months ended July 31 increased 46 percent to $149.9 million compared with $102.4 million in the six months ended July 31, 2002. Net merchandise revenues for the six months ended July 31 of $60 million fell 4 percent compared with $62.6 million in the six months ended July 31, 2002.

Sponsorship and other revenues of $89.9 million for the six-month period were up 126 percent compared with $39.8 million for the comparable period last fiscal year. Gross profit for the six months ended July 31 increased to $70.8 million, or 47.2 percent of revenues, compared with $56.7 million, or 55.4 percent of revenues, for the comparable period in fiscal 2002.

Alloy said its operating expenses rose because of its enlarged sales force and staff, expenses from operations acquired within the last year, additional intangible asset amortization and stock-based compensation.


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