Holiday Sales Drive RedEnvelope to Profitability in Third Quarter

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Multichannel specialty gift retailer RedEnvelope Inc. said yesterday that thanks to a strong holiday season it achieved profitability in its fiscal third quarter ended Dec. 31, the start of the company's third year in business.


Gross merchandising margins were more than 50 percent during the holiday season, the company said. RedEnvelope expects revenue for its fiscal year 2002, which ends March 31, to reach $50 million, up 67 percent from last year. It also said it is on track to be profitable for fiscal year 2003, which ends March 31, 2003.


"After a sluggish November, RedEnvelope experienced extraordinary post-Thanksgiving sales momentum, which resulted in two 'million-dollar' days in December," said Martin McClanan, the company's CEO. "The strong consumer demand came with minimal discounting, contrary to the industry trend of promotions this holiday season..."


RedEnvelope said its catalogs drove more than half its sales last year. The company saw strong sales across all categories. Its proprietary items, which account for half its merchandise, were key drivers of its sales. Average order value was close to $80.


The company said its customer base nearly tripled to 750,000 last year. In December, Web site traffic rose 30 percent.


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