Groove Community Update – CVSL & MARK
A quick update on two of our focus stocks –
CVSL reported Q3 earnings last week with revenue that topped our expectations, but a bottom line loss that was a little on the light side. Revenue for the quarter was approximately $37.0 million, up from approximately $24.0 million in the third quarter last year, an increase of 54.0%. Gross profit margin increased from 54.4% to 59.8%, but the company still reported a bottom line that was less than expected with a loss of 23 cents per share.
The situation at Longaberger continued to improve and this plus consistent results from Kleeneeze allowed the Home Decor segment to fare well quarter over quarter and show very strong year over year revenue growth.
Health and Wellness
AGEL and the Health and Wellness segment struggled in Q3, with revenue coming in 4% below Q3 2014, but we note that AGEL launched two very promising products at the very end of Q3. The timing was such only the week or so of sales following the launch would be included with Q3 results and early indications suggest both Caspi and Bio will be much more significant contributors in Q4.
Gourmet Food Products
Your Inspiration at Home continued its impressive growth trajectory, clocking in with sequential growth of over 30% and gross profit growth of over 15%. If YIAH can continue to grow at this rate, it will be one of the largest companies in the CVSL portfolio within a year.
In summary, CVSL’s results continued to show sequential improvement, with Q3 essentially proving that Q2’s bounce from the very challenging Q1 was not an aberration. Management’s turnaround efforts are demonstrably working and we are encouraged by the progress made thus far.
Remark Media –
Remark Media filed a form NT 10-Q to indicate their inability to file quarterly financials by the deadline, but we are expecting to see a filing by early next week. Though there are obviously many potential catalysts that could drive MARK shares higher, we remain cautious due to the enormity of the changes that will be reflected on the company’s balance sheet and income statement starting this quarter. While we recognize that the Vegas.com acquisition/merger will transform Remark’s income statement and balance sheet, we note that Remark is essentially a different company following this merger and we need to get a level of comfort with the new operations, capital structure, etc. before we could be more bullish again.