Navarre posts $47.7 million loss for fiscal Q3
Company has already made moves to improve earnings
By Susanne Ault -- Video Business, 2/6/2009
FEB. 6 | Citing the deteriorating economy, Navarre Corp. fell into the red for its fiscal 2009 third quarter.
The distributor posted a net loss of $47.7 million for the three months ended Dec. 31. That compares with a $4 million net income gain for the same period for the prior year.
Revenue fell 21% to $171.6 million.
Navarre has already cut its workforce to counteract this financial slide, management said. This reduction amounted to 50 employee cuts, representing about 8% of Navarre’s staff.
The company expects to save more than $4 million in its next fiscal year.
"During the third quarter, we experienced a revenue decline due primarily to the impact of the economic downturn,” Navarre CEO Cary Deacon said. “In response, we have taken a number of steps to protect future earnings, including a reduction to the company's workforce. This resulted in a $1.1 million cash restructuring charge for severance and is anticipated to result in approximately $4.2 million in cost savings in fiscal year 2010.”
Additionally, Deacon noted that Navarre exited its BCI Eclipse label licensing business and is no longer involved with the children’s DVD market, in further efforts to stem losses.
It took an $8.8 million non-cash write-down relating to older licenses of children’s properties.
Following the 2008 holiday sales season, Navarre management believes consumer buying has slowed and these actions will best position the company for the coming months.
Navarre’s publishing division, which includes its anime subsidiary Funimation, fell 22% in sales over fiscal 2008 to $24.6 million.
The company’s distribution business, which includes both proprietary and non-proprietary retail fulfillment, decreased 21% to $162.9 million.
Within distribution, computer software sales were especially impacted, noted Navarre management, because of Circuit City’s bankruptcy. Sales dropped 22% in the quarter.
"With the strategic restructuring steps that the company has undertaken, we are well positioned to face this difficult economic environment,” said Deacon. “We expect to generate cash from earnings and to continue reducing debt during the fourth quarter of the 2009 fiscal year.”
