Profit falls short at ValueVision; shares sink 29%

President cites supply-chain trouble; analysts remain bullish on the stock.

By THOMAS LEE, Star Tribune

August 17, 2011 at 2:42AM

Analysts who cover retailer ValueVision Media Inc. think investors should buy the company's stock. Investors Tuesday clearly disagreed.

Shares of ValueVision, which operates the ShopNBC brand, dropped nearly 29 percent Tuesday after the company reported a wider-than-expected second-quarter loss. ValueVision stock closed at $3.70, down $1.50; it was the largest daily loss among Star Tribune 100 companies.

The home-shopping retailer, based in Eden Prairie, lost $4.5 million, or 9 cents a share, compared with a loss of $7.7 million, or 24 cents a share, during the same period a year ago. Wall Street had expected a loss of just under 5 cents a share, according to Bloomberg News.

Still, the smaller numbers didn't dampen analysts' enthusiasm for ValueVision, which has steadily marched toward profitability after years of shaky finances and management turmoil. NBCUniversal, the company's largest shareholder, owns about 14 percent of the company.

"We think it's great progress despite what the stock says," Neely Tamminga, an analyst for Piper Jaffray & Co., said during the conference call.

Mark Smith, an analyst with Feltl & Co., issued a research report Monday that reiterated the firm's "strong buy" rating on the stock even as he trimmed his sales and profit forecast for the second half of the year and fiscal 2012.

"Management's strategy of expanding the product offerings and boosting active customers is working and producing impressive results," Smith wrote.

But the company fell short of even Smith's reduced forecasts. He had predicted the company would earn an operating profit of $2 million based on sales of $141.3 million. ValueVision reported an operating profit of $1.1 million on sales of $132.1 million.

During the conference call, ValueVision President Robert Ayd said problems with a supplier hurt sales of consumer electronics. The supplier, which he did not name, ultimately liquidated last month.

"It hurt us dramatically," Ayd said. "We got hammered because of this supply-chain disruption."

But Ayd called the problem a "speed bump" and said consumer electronic sales returned to double-digit growth in July.

ValueVision had also hoped to announce a partnership with a major retailer during the call. But talks are still ongoing, executives say.

Thomas Lee • 612-673-4113

about the writer

about the writer

THOMAS LEE, Star Tribune

More from Business

Edwin Schall got a dollar from a passerby as he held out a pan t get money for food along Nicollet Ave. ] (KYNDELL HARKNESS/STAR TRIBUNE) kyndell.harkness@startribune.com In downtown Minneapolis, Min. Tuesday, June 3, 2014. A new campaign in Minneapolis wants to end panhandling. The "Give Real Change Campaign" which has billboards in Downtown Minneapolis, is telling residents to end panhandling and give to a charitable organization instead. ORG XMIT: MIN1406031618130714
.