CVSL Issues First-Quarter Results, Misses Estimates
Dallas-based CVSL Inc. (NYSE MKT—CVSL) posted a net earnings loss in the first quarter amid efforts to revive the Longaberger business and execute an ongoing acquisition strategy.
CVSL completed the acquisition of health and household brand Kleeneze, one of the U.K.’s oldest and most prominent direct selling companies, at the end of the quarter. Taken into account, Kleeneze’s first-quarter performance significantly boosted top-line growth.
Combined quarterly revenue for Kleeneze and CVSL rose 20 percent to $32.0 million in the first three months of 2015. Reported revenue fell 27.9 percent across CVSL’s other business units.
On a pro forma basis, the direct selling group posted a net loss of $5.2 million, or 17 cents a share. On average, analysts had expected a loss of 7 cents a share. Gross margin increased to 60.6 percent from 51.3 a year ago.
The biggest factor in CVSL’s results was an ongoing turnaround at The Longaberger Co., said CVSL Vice Chairman and CFO John Rochon Jr., who took on leadership of the struggling household brand when CEO Tami Longaberger resigned earlier this month. “At Longaberger, we spent the first two years solving fundamental problems that we inherited. We had to focus on reducing bloated SG&A costs and paying off bank debt to bring Longaberger out of danger. Now, we’ve begun turning our attention to stabilizing the revenue line.”
The latest turnaround measures are aimed at reestablishing Longaberger as a premium brand by putting a halt to heavy discounting, reining in inventory and closing the brand’s outlet stores.
In the report, CVSL management also noted that Your Inspiration At Home, a maker of spices and other gourmet food items, is tracking to exceed $15.6 million in revenue this year. When CVSL acquired the Australian brand in May 2010, annual revenue was about $1.3 million.
