SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2000
SHOP AT HOME, INC.
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(Exact name of registrant as specified in its charter)
Tennessee 0-25596 62-1282758
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5388 Hickory Hollow Parkway, Antioch, Tennessee 37013
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(Address, including zip code, of principal executive office)
(615) 263-8000
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(Registrant's telephone number, including area code)
Item 5. Other Events
On April 14, 2000, Shop At Home, Inc. held a conference call with
certain financial analysts to announce and discuss the Company's third quarter
financial results. These results were filed with the SEC on the Form 10-Q filed
April 13, 2000. The Company has posted on its Internet site, collectibles.com
under the "About Us" section the transcript of this Conference Call. The Company
has elected to voluntarily file a copy of this transcript on this Form 8-K to
ensure that the contents of such conference call are fully disseminated and that
any investor of Shop At Home, Inc. has full access to such transcript. A
transcript of the April 14, 2000, Financial Conference Call is attached hereto
as Exhibit 99.1.
The Transcript of the April 14, 2000, Financial Conference Call
contains forward-looking statements within the meaning of Section 27A of
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including certain statements about the Company's anticipated future plans,
strategies and initiatives to increase the Company's revenues, profit margins
and gross profits, certain positive trends were noted that Management believed
would continue, and Management made certain predictions concerning the future
financial performance of collectibles.com and the Company. Actual results may
differ materially from these statements for a number of reasons as are discussed
from time to time in Shop At Home's SEC reports, including but not limited to
the registration statement filed on Form S-3 on July 1, 1999, the report on Form
10-K/A for the year ended June 30, 1999 (Business and Management's Discussion
and Analysis of Financial Condition and Results of Operations), the Form 10-Q's
for quarters since the 10-K/A was filed, and any recently filed 8-K forms.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHOP AT HOME, INC.
(Registrant)
By: /s/ George J. Phillips
-------------------------------
George J. Phillips
Vice President and General Counsel
Date: May 31, 2000
<PAGE>
SHOP AT HOME NETWORK
Moderator: Kent Lillie
April 14, 2000/8:00 a.m. CDT
Page 1
SHOP AT HOME NETWORK
April 14, 2000
8:00 a.m. CDT
Coordinator Good morning, and welcome to the Shop at Home
Network's third quarter earnings release conference
call. I would now like to introduce your moderator
for today's meeting, Dawn Woods, Vice President of
Corporate Communications and Treasurer. Ms. Woods,
you may begin when ready.
D. Woods Good morning, and welcome to Shop at Home's
third quarter conference call. Here with me on the
call this morning are Kent Lillie, the company's
President and Chief Executive Officer; Arthur Tech,
Executive Vice President and Chief Financial Officer;
John Robertson, Executive Vice President and Chief
Operating Officer for the Network; and Tim Engle,
President of collectibles.com.
Our release was sent out yesterday afternoon and the
10Q is now available on Edgar. After the
presentation, we will take questions about the
quarter's results for the Network and
collectibles.com. You may direct your questions to
any of those present.
Before we begin, I would like to say that any
statements made today on behalf of Shop at Home, with
regard to the expectation of future revenues,
earnings, coverage and other performance factors;
including any statements regarding the plans for the
objective of management for future operations; are
forward-looking statements for purposes of the SEC
statutes.
It is now my pleasure to introduce Kent Lillie.
K. Lillie: Good morning. I'm proud today to report that the
company continues to post outstanding results in
virtually all of our reporting metrics, including our
25th consecutive quarter of year-over-year revenue
growth. And that was at 44% [increase over last
year], a new record, as well as a third quarter
record EBITDA increase of 100% and a record total for
third quarter, which is our 17th quarterly
year-over-year improvement, once again demonstrating
that we can grow EBITDA at a rate faster than
revenue.
We also continue to show impressive gains in
household growth and revenue per household, the two
most important drivers in our core business. Further,
we now have four months of outstanding results from
collectibles.com, which is exceeding even our own
aggressive forecast and performing substantially
above the numbers estimated in our offering last
July.
Arthur Tek, the company's CFO, will highlight some of
the quarter's results.
A. Tek: Thanks, Kent. Revenues for the quarter ended March 31
were $53.6 million, a 44% increase over last year, as
Kent mentioned. The growth rate of 44% during the
quarter equals our long-term growth rate since 1997.
Also, we narrowly missed achieving an all time record
for quarter revenues. But in light of the fact that
the March quarter is the slowest for most retailers
and broadcasters, we think we did relatively well.
EBITDA for our core business, excluding
collectibles.com, doubled to $2 million from $1
million last year, thus increasing more rapidly than
revenue. Although collectibles.com recorded negative
EBITDA of $2.7 million, this was better than our
expectations.
We were particularly pleased with revenue growth on
the Web site. Net revenue was $1.5 million for the
quarter. Since the site launched in November, each
month has shown growth in sales.
Looking at our expenses, our gross margin decreased
to 36% as we sold more electronics and coins, which
have lower margins than most of our other products.
This change in merchandising mix is in response to
our customer's demand. We will strive to recoup lower
margins with higher revenues.
It is notable that our Web site margin is higher, at
38% versus 36% for the Company, reflecting the
margins we achieve on most collectibles products and
less emphasis on electronics.
Salaries and wages increased almost in proportion to
sales, excluding collectibles.com. We are investing
in the human capital needed to take our Company to
the next level.
Transponder and cable carriage costs decreased as a
percentage of sales, as we were able to utilize
approximately $600,000 of these payments for
advertising collectibles.com. We also continue to add
cable carriage on a cost efficient basis.
General and administrative expenses were up 79%, but
almost all of this increase was due to the addition
of collectibles.com. Depreciation and amortization
increased because of the acquisition in June of our
New York TV station and because of the new
enterprise-wide information system.
Interest expense increased because of $10 million in
bank debt outstanding. Net loss for the quarter was
$3.5 million or $.12 a share. Looking briefly at our
balance sheet, we added no new debt during the
quarter nor do we have any current debt payable other
than some small capital leases. Our working capital
at March 31 totaled $16.4 million, which we believe
is sufficient for our operations.
As Dawn mentioned, our 10Q was filed last night. To
calculate EBITDA by segment, look at note five and
simply add depreciation and amortization to operating
income. Kent.
K. Lillie: I think it's important to note that we're
releasing this quarter's results a full two weeks
ahead of our historical release date. The fundamental
reason is that thanks to our technology and business
groups and our new technology platform, we can.
Second, we're anxious to communicate to the market
our continued growing Network results and the
outstanding performance of collectibles.com. I would
also like to reemphasize that we have grown our
number of gross cable household reach to more than 58
million and our full-time equivalents to just under
25 million, at 24.6.
And that's as of the moment, which adds to our
position as one of the most powerful distribution
systems in the world, and to remind you that this
Network is one of the proprietary fundamentals to the
current and long-term success of collectibles.com in
our converged strategy.
I'm proud now to introduce John Robertson, who has
the sometimes daunting task of running our Network
operations.
J. Robertson: Thanks, Kent. As Arthur noted, the Network
results were very positive. In today's economy, I
think it's truly remarkable to find a business model
as solid as ours is that is posting growth in excess
of 40% in sales, and EBITDA that is doubling that
sales growth rate. Still, to my management
expectations, our organization must continue to make
improvements in margin and in our system
effectiveness.
First, regarding margin. Our gross margins for the
Network declined by just over one point. This was due
to a change in mix showing much higher growth rates
in coins and electronics growing faster than our
traditional growth category of sports.
We've had to merchandise to consumer demand. But we
have strengthened our organization in both the sports
and jewelry categories to be more effective with
these categories that we believe have huge potential
in the future.
Secondly, concerning our system, we continue to
realize the value of our world class technology
system. Yet, a full quarter had to transpire to allow
us to fully surface and quickly correct the one-time
cost that naturally progressed from the
enterprise-wide information system conversion, which
we launched on October 26. I remember that day. It
was my second day with the organization.
I remind you that we are a 24x7 business, and the
speed and effectiveness of our system conversion has
been outstanding. I'm proud of our people and the way
we've embraced this new technology.
But even with these challenges, we posted some very
noteworthy Network accomplishments. Revenue for our
five stations that we've owned and operated for at
least one year increased by 47%. This is a clear
indication that with our continued growth in
households, we can also grow our share of the
customer and our customer's loyalty.
This past quarter, we launched our Deal of the Day as
an effort to sell additional items to the households
over and above what they would normally buy during
that time slot. We also increased our sales capacity.
We implemented a new interactive voice response
system on the sales side and will soon implement the
same system on the service side to help our customers
serve themselves to their orders and to their order
related questions. Such technology improvements lower
the costs associated with each call dramatically.
It also improves our order taking productivity, in
this case by 44%. Additionally, we've added 32%
operator capacity with an overflow call center. We'll
soon increase our total sales center capacity by 47%.
I hope you can observe that we're ready to support
higher sales volumes that will result from an
increased broadcast reach.
But most noteworthy is our increase in sales
effectiveness. The rates for converting incoming
calls to orders have increased since December by 12%.
And the trend continues to rise even this month.
At the last call, we mentioned to you that we'd focus
on the product, the customer experience, and the
culture. Just to update you, since that call, we've
increased the number of vendors offered on the
Network by double digits. We've also continued to
improve our terms with each of our vendors and
strengthened our offering of exclusive product.
For the customer experience, we've launched several
database marketing efforts during the quarter, and
these initial tests have shown very promising
results. This quarter, we'll kick off with a very
aggressive database marketing plan to both the
Network and collectibles.com customers.
We continue to improve our customer service
effectiveness and our shipping and fulfillment
metrics, which lead to greater customer satisfaction
and repurchase rates.
Improving the customer experience, which is our
operational theme for this year, is truly a journey
and not a destination. We still have a ways to go to
meet my expectations in this area.
With respect to our culture, we have launched a new
training program to help broaden the skills,
leadership abilities, and growth for our employees.
We've also begun specific recruiting and retention
strategies to establish ourselves as the employer of
choice. We've added key team members and I believe
our leadership is the strongest it has ever been.
As we finish this fiscal year and begin a new one,
our management team has identified two key strategic
imperatives that must have our focus. First,
optimizing the supply chain. We're taking deliberate
steps to make our buyers more effective by process
improvements internally.
We're also continuing to increase the product variety
and our margins. Part of this is coming as a
byproduct of the exclusive vendor agreements that Tim
Engle and his team at collectibles.com are signing
up, for the Internet side. Also improvements are
coming from better sourcing because of our scale and
strength as a retailer.
Secondly, an imperative is to improve customer
satisfaction. We will improve our repurchase rates
through tighter quality control, merchandise analysis
that results from our state-of-the-art systems, and
product selections and more effective product
presentation.
We'll also improve our ability to solve customer
issues in the first phone call through better
processes and training and a comprehensive customer
contact management and service system.
In summary, our actual growth rates and our growth
potential are truly extraordinary. Margins are
improving on each product category and we have
significantly increased our infrastructure in order
to take more orders. These two factors, along with
the improvements I previously mentioned, will drive
greater gross profit.
Every day, we see and implement opportunities to
integrate the Network in collectibles.com into an
interactive shopping experience in a broadband
delivery environment. Kent.
K. Lillie: One of the most important results that John
mentioned was our improved sales on our own stations,
some of which we've operated and programmed for as
long as five years. A 47% year-over-year revenue
growth is outstanding, and would be in any business
sector further validation of the effectiveness and
cost efficiency of owning rather than renting a good
portion of our distribution system.
Incidentally, we've grown revenue in all six of our
markets, our owned and operated station markets, for
every quarter that we have owned each station. As
John mentioned, one of our most important goals for
the upcoming quarters is to begin to unlock the value
of our existing database of almost 2.5 million
customers, a tremendous asset that we're about to
mine.
Tim Engle now gets to report the excellent results of
our online business, collectibles.com.
T. Engle: With our first full quarter under our belts,
I'm pleased to announce that our gross sales for this
most recent quarter exceeded $1.8 million, up almost
1600% from last year. It also exceeded all Internet
sales for the past ten months combined, since the
launch of collectibles.com, by a factor of two times.
In fact, we were able to sustain month to month net
revenue growth at a rate of 19%. These results came
after being operational for just four months and as
we continue to operate in our beta launch mode.
Much of our success this quarter was accomplished by
continuing to optimize the convergence of both the
Internet and broadcast platforms, continued additions
to our exclusive agreements, expanded marketing
relationships, and our great employees.
Let's first review critical metrics. First and
foremost is revenue and gross profit. As part of our
$1.8 million in gross revenue, over $760,000 or 42%,
was shipped in March, speaking to the ramp up we were
experiencing with collectibles.com and our momentum
coming into the new quarter.
Most impressive is our average order was in excess of
$250. The ability to leverage this metric speaks to
the opportunity we have as we continue to build
traffic.
Additionally, we were able to achieve gross margins
of 38%, keeping our commitment to long-term
profitability and our ability to find a new standard
for e-tailers.
As we continue to sign more Internet exclusive
agreements with leading manufacturers and brands, we
anticipate maintaining, perhaps even improving
margins beyond our current performance.
Also, we would estimate that our browsers for third
quarter were 368,000 or 3.5 times December levels.
Additionally, our March browsers of 147,000
represented an increase of 41% over December.
Another dramatic improvement was in sales per
browser. During our first full month of operations in
December, we were very pleased to achieve and report
a sale per browser of $4.43. And I'm very delighted
to announce that we have continued to improve on this
critical measurement, increasing it to $5.22 for the
month of March, an increase of over 18%. We believe
that the ongoing improvements made to our site and
increased product selection have attributed to this
extraordinary number. It is our judgment that if we
can increase what our customers see and the length of
time they stay on our site, we will continue to show
impressive sales per browser results.
To that end, we have seen both page views and time
spent on the site increase since our launch in
November. Total page views have increased over 75%,
with page views per browser increasing 23%.
Additionally, time spent on the site in March was
17.5 minutes, up from the December average of 13.5
minutes.
Comparing this to the top 15 television Web sites,
collectibles.com posted third on a list, exceeding
such brands as NBC, ABC, CBS, CNN, and Disney. We
continue to see first time customer purchases on
collectibles.com.
In fact, last quarter, I reported that our first time
purchases were over 91%. This meant that we were
attracting buyers who had never bought from Shop at
Home or collectibles.com. For that first full quarter
of operations, we were able to improve this already
impressive number to 95%, reinforcing our belief that
with our powerful integrated platform, we can extend
our reach to an entirely new customer base and thus
increase total sales.
Now let's review some of the function of the site.
Much of our success in the above metrics is due to
continued improvements in function realized since our
launch in November. Our images are among the finest
on the Internet, including the addition of our large
view function that allows our customer to expand the
product image to almost screen size.
We continue to implement innovative and proprietary
video productions, blending exclusive product and
relevant content such as our promotion that blends
the excitement of the colorful rock band, Kiss in
their final farewell tour this summer with exclusive
products from Gartland USA.
Additionally, we have added an "e-mail to a friend"
function allowing anyone to send direct links of
product to a friend, thus encouraging referral-based
customer acquisition. We have added electronic
coupons, allowing for more effective marketing to our
customers, both Network and Internet. One of the
major changes this quarter was the redesign of our
front page, increasing the number of products shown
to our diverse audience. Also, as part of a major
marketing initiative, we have added function, which
allows other sites to come to collectibles.com and
apply for affiliate relationships, the results of
which I will speak to later.
Many of the features discussed in our last conference
call are on target and to be completed this quarter.
This would include Auctions, the Gift Registry, Wish
List, Category Community Pages, and improved search
engines. All have been designed and prioritized based
on the ability to drive greater sales.
I'd like now to discuss some agreements and our
marketing initiatives of this past quarter. As I
mentioned in our last call, one of the cornerstones
of collectibles.com strategy is to establish
exclusive agreements with manufacturers to build
traffic and protect retail margins.
To that end, I am pleased to announce that we have
signed over 55 exclusive agreements, an 83% increase
from our last call just a few short months ago.
Recent announcements include Fitz and Floyd,
Castart's popular Dreamcycles, Lee Middleton dolls
and Fleer, among others. In addition to manufacturer
agreements, we have announced an agreement with
Krause Publications, the leading publisher of
collectibles content in the country. With over 50
magazines and 700 reference books, Krause's is in a
position to provide collectibles.com with rich,
abundant content that will build a sense of
community.
Additionally, the relationship will allow
collectibles.com and Shop at Home to market special
product offers to their customers in a very targeted
approach.
An example of the potential the relationship brings
is the participation and prominence collectibles.com
will have in Krause's upcoming Rosemont collector
show in Chicago. This show is one of the largest
events in the country, attracting virtually every
manufacturer in the figurine/collectibles industry.
Recent marketing initiatives have been selected based
on their ability to attract a very specific type of
customer. As an example, collectibles.com's brand and
products are prominently displayed throughout
baseball season during a sports show on Fox Sports
Net, with households in excess of 66 million.
Additionally, relationships have been developed that
will allow our brand and products to be viewed by
millions of prospective Internet users, including the
upcoming Dick Butkus sports awards launching late
this month, and targeted e-mail campaigns with some
of the nation's largest sports gaming companies.
We made a commitment in our last call to launch and
have in place over 3,000 affiliate Web sites linked
to collectibles.com. We are well within our goal of
achieving that and exceeding that, with over 1,300
affiliates in the process of tying their viewers to
our sites as we speak.
To conclude, I would report that the state of
collectibles.com, and the convergence of both the
Network with our Internet strategy, is extremely
healthy and exceeding our initial expectations. We
are enthusiastic that this business model has now
been successfully validated, as reflected in our
recent results and of the relationships we have
formed today. Thank you. Kent.
K. Lillie: I'd like to emphasize that collectibles.com
growth is almost 20% compounded month to month since
we launched in December. And during that growth,
we're continuing to maintain what I believe is the
highest or among the highest gross profit margins in
business to consumer sales on the Internet, and again
with no apparent cannibalization of our existing
customer base.
Despite the continued high double digit top line
growth of our Network, collectibles.com should
comprise as much as 5% of our total sales for the
June quarter, as we continue to ramp revenue at an
accelerated pace.
In closing, I would like to say that we continue to
seek both directly and through our representatives,
new strategic and business relationships and will, of
course, report to the market when appropriate. In the
meantime, we will continue to prove our business
model and to become a leader in commerce in the new
converged medium.
The audio and text of this call will be posted on
collectibles.com, as soon as they are ready, from MCI
WorldCom. Thank you all for joining us this morning
and we'll now open this discussion to questions.
Coordinator: Our first question comes from Michael Legg from
Prudential Securities.
M. Legg: Good morning. Could you talk a little bit about
the Internet in general having impact on the
merchandise sales you saw on the broadcast platform
and what that might be doing to your gross profit
margin?
T. Engle: I'm not sure we understand the question, Mike.
M. Legg: The gross profit came in at 36%, which is on
the broadcast side, a little bit below last quarter.
When you look at all the different collectible sites
and things of that nature coming out on the Internet
from an e-commerce perspective, is that impacting the
mix that you're selling on the broadcast platform and
if so, what is it doing from a pricing pressure
perspective?
T. Engle: From a margin perspective, collectibles.com
over time will improve overall Network margins. Not
only our mix is going to be towards higher end margin
product due to our exclusive agreements we're
signing, but also just as we've become a larger
percentage of sales of the total company, you will
see margins improve. Does that answer your question?
M. Legg: I'm going to ask you from the other side. As
collectibles.com being one Internet site but your
competitive Internet sites also, as they're out there
doing as you're saying because the collectibles.com
is doing very well on a gross profit basis and
expecting to increase that, is that cannibalizing or
impacting the pricing that you are able to offer on
the broadcast side?
J. Robertson: Michael, this is John Robertson. I don't think that
that's why we're seeing an erosion of margin on the
Network side. I think we're seeing a little bit of
decline in margin on the Network side due to consumer
demand.
The release of the state quarter program has been an
incredible firestorm in the coin category. And I
think you will agree that overall, consumers are
still demanding the latest in technology and
gadgetry. Those are two categories that we represent
and support.
That's where we've seen the change in the mix. It's
just as a result of consumer demand.
T. Engle: As John mentioned, most of our margins are
beginning to increase again in most of our
categories. It's just that the lower margin
categories, coins and electronics, are a bigger
percentage of our overall sales. So it brings it down
... there. But that should stabilize at this point.
M. Legg: Tim, can you talk a little bit about what you're
expecting for the next 12 months on collectibles.com,
from both a revenue and a marketing spend
perspective?
T. Engle: From a marketing perspective, our strategy has always
been to create relationships with companies whose
customer base reflects a propensity to buy the
products that we sell. So you will see in the next
12 months, certainly in the next six months, we will
announce marketing relationships that will really
reflect that philosophy, going after very specific,
very targeted audiences so we can get higher
conversion rates when they do come into the site.
From a product perspective, we are going to continue
to, I think at an increasing rate, sign exclusive
agreements, because momentum begets momentum and
we're seeing that in the marketplace now, especially
over the last three months.
Since we've launched, I will tell you that the word
out on the street in the collectibles business is we
are the player and we are one of the largest
collectible Web sites out there today, if not the
largest collectible Web site. Certainly that gives us
a tremendous advantage. The other thing I'll mention
to you, Michael, is to be able to go out and speak
with manufacturers, with just relationships in the
marketing agreements and be able to tout and have
this converged strategy as our jewel, is
unbelievable. It really is a major advantage we have
in the marketplace, that no one is competing with me
against. I'm just not running into competition when I
walk into those venues.
A. Tek: And Michael, in terms of where we see it going from a
profitability point of view, our goal is to make
collectibles.com EBITDA positive within the next 12
months.
M. Legg: Where's your credit line at now, Art?
A. Tek: We have drawn $10 million and have $10 million
remaining.
M. Legg: Thanks a lot.
Coordinator: Our next question comes from Bill Meyers from
Robertson Stevens.
B. Meyers: Thanks. A couple of quick questions; the
first is sort of conceptual. With an increasing focus
on the collectibles.com portion of the business, have
you given any consideration to renaming the company,
seeing that there's a real disconnect between the
Shop at Home branded name and the collectibles.com
Web site?
K. Lillie: Bill, we continue to evaluate every
possibility to improve the performance of this
company and the perception of the company. So of
course we do. I read with interest your quote that
you think we should rebrand collectibles.com. I'm not
sure we're ready to do that yet particularly, with
all the heat that the dot-com world is under today.
But where we're going is a converged medium and that
changes the whole world of dot-com's and broadcast
and broadcast networks. So we're not looking
backwards for an identity. We're looking forward for
an identity.
B. Meyers: I'm just concerned that people don't
necessarily know that Shop at Home is also
collectibles and if they're watching Shop at Home,
they might not find collectibles.
K. Lillie: We agree to the challenge of marketing,
simultaneously, two brands. We clearly recognize
that. And we needed to get some performance under our
belts with collectibles.com before we really consider
some merged brand or merged name.
Obviously, we're the first mover in the collectibles
retail space of this size dot-com or dot BAM. So
there's an awful lot of opportunity there for us. And
something to do with that brand name is a likely part
of that branding strategy for the company.
B. Meyers: And then also with the collectibles.com
portion, where's the Yahoo agreement right now? Is
that still set to expire in May or have there been
discussions about extending that relationship?
K. Lillie: The Yahoo agreement?
B. Meyers Yes.
K. Lillie: Again, we don't speculate on pending business
agreements. So it would not be appropriate to comment
on that, I think, in this context.
B. Meyers: One quick question on the core business, has
there been any progress made on the conversion rates?
Or also, I guess, on the return levels on just Shop
at Home over the year, distributed business?
J. Roberson: Yes. I don't know if you heard my comment.
What is very impressive, I think this is a result of
both better training of our people and improved
technology. But our conversion rates for converting
incoming calls to orders increased since December by
12%. And we're continuing to see an increase even
this month, the month of April.
B. Meyers: So what is the current rate now? Is it sort of the
mid 50's? Is it close to 60?
J. Roberson: On the last week, we have a week, we reported this in
the last week. It was at 58%.
B. Meyers: Thanks very much.
Coordinator: Our next question comes from Mark Stimson from
Friedman, Billings and Ramsey.
M. Stimson: Good morning, gentlemen. Question back to
the margins. I think last quarter, you mentioned some
programs that you were going to put in place to
increase the number and I wondered if you're going to
keep with those or what other plans you have, I guess
just a little more detail on that, the core business
I guess.
J. Roberson: There's several things working there. First
of all, be clear that our margins in each category
are actually on the increase. And this is due to
better negotiation, better sourcing, maturing as a
retail organization.
I also hope that you're sensing what we're building
from a sales infrastructure point of view. We've
increased our pipeline for taking orders. We can now
work on lower price points.
This will reduce return rates. It will, I think,
improve margins, allow us to source more exclusive
and innovative product. So the capacity is there and
we're realizing even already some of the fruits of
that.
The drive there is increase total profit dollars.
That's simply a function of the mix that the
consumers choose from your offering.
M. Stimson: Then I think to collectibles.com, there was
something mentioned about Fox Sports Net, more of the
promotion, cross promote type of thing and I sort of
missed that. Could you give a little more detail on
that? I'd appreciate it.
T. Engle: That's basically what that is. There's a
segment of the sports industry called the Fantasy
Sports and Fox Sports Net runs on its Network. It's
regional throughout the country; on two times a week,
a 30-minute show with Goose Gossage this baseball
season, and we are a very prominent sponsor of that
show.
And by the way, we were able to leverage that
relationship with product too. So we were able to
give them product and not necessarily spend, leverage
our margin on product at retail value to help pay for
that show. So again, we're being smart with our
marketing dollars.
M. Stimson: And then also you mentioned too that you were ranked
third with something, I think.
T. Engle: We were ranked third in time spent on the
site. When you compare us to other broadcast
companies that move people to their sites, we were
third on a list of the top 15. I mean, I of course
interjected third into that list. But we were third
when you compared with time on the site.
M. Stimson: So who would be the ones that are kind of on either
side of you?
T. Engle: The ones that, the only two that beat us were,
I believe, Nickelodeon and ESPN. Then I mentioned
Disney; I didn't mention MTV, but CBS, Discovery
Channel, most of the big names.
M. Stimson: So you're ahead of those guys. Thank you very much.
K. Lillie: That's longer than we probably all would like
to have had in this call this morning. So thank you
for joining us. Feel free to call Dawn or Arthur
anytime today. Thank you all very much for joining
us.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995 - This Conference Call contains forward-looking statements within the
meaning of Section 27A of Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding projected
revenue and distribution growth, the future performance of Shop At Home, Inc.
and collectibles.com and the anticipated impact of new management initiatives.
Actual results may differ materially from those which may be identified for a
number of reasons as are discussed from time to time in Shop At Home's SEC
reports, including but not limited to the registration statement filed on Form
S-3 on July 1, 1999,, the report on Form 10-K/A for the year ended June 30, 1999
(Business and Management's Discussion and Analysis of Financial Condition and
Results of Operations), the Form 10-Q's for quarters since the 10-K/A was filed,
and any recently filed 8-K forms.