ALLOY SHOWS LOSS, REVENUES SKYROCKET

Byline: Vicki M. Young

NEW YORK — Fueled by a successful holiday shopping season and increased sponsorships, teen destination site Alloy Online exceeded fourth-quarter expectations, reporting a lower-than-expected loss and an impressive revenue growth of 346 percent.
The company reported a $4.4 million loss for the quarter ended Jan. 31, 2000, compared with a $1 million loss in the year-ago period.
Excluding a charge for goodwill amortization in the quarter, the loss would have been $4 million, or 28 cents a share, 2 cents lower than the operating earnings per-share-loss analysts had predicted.
Revenue for the quarter grew to $15.7 million from $3.5 in the 1998 quarter. The company also said gross profit reached $9.2 million, or 58.5 percent of revenues.
In 1999, the company lost $14.9 million compared with a $6.4 million loss in 1998. Excluding the goodwill amortization in the fourth quarter and a one-time charge earlier in the year for the early retirement of debt, the 1999 loss would have been $14.3 million. Revenue in 1999 shot up 205 percent to $31.2 million versus $10.2 million in 1998, while the year’s gross profit hit 55.8 percent of revenues, or $17.4 million.
Matt Diamond, chairman and chief executive, said in a conference call last Thursday that the company has been building momentum since its May IPO.
Top performing categories were bottoms, outerwear and snowboarding equipment. The average order range was between $75 and $82 per transaction, Diamond said.
The chief executive also recapped some of Alloy’s initiatives, including strategic marketing alliances with Yahoo!, Excite and Microsoft Hotmail. The company unveiled its first television advertising campaign in the fall, which Diamond said was “well received.” Other 1999 initiatives include Alloy postcards, a Japanese version of the Web site and the creation of a teen auction site on the Web.
Head count at the Alloy increased from 25 in January 1999 to its current 120. Although the company’s apparel catalog helps drive Generation Y kids to the site, Diamond noted that the firm’s Alloy Entertainment operation is also giving the firm a stronger foothold in the entertainment and media fields. That presence, the ceo noted, establishes Alloy with a “foundation in the entertainment community to expand Alloy’s reach” and is a mechanism to get advertising on the site.
Sam Gradess, the firm’s chief financial officer, confirmed that the Liberty Digital deal to invest $54 million in Alloy is set to close in 30 days. Alloy had $33 million in cash at yearend and remains debt-free, Gradess said. He added that the Liberty Digital deal would give the company $85 million in cash and securities to fund growth opportunities.

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