SmarterKids.com, the Leading Online Education Store, Increases Q2 2000 Net Sales 422% Over Q2 1999 Company Makes Major Advances Towards Leadership in E-Learning Sector
NEEDHAM, Mass.–(BUSINESS WIRE)–July 26, 2000–SmarterKids.com (NASDAQ:SKDS), the leading online education store and resource
for parents, today announced that net sales for its second quarter 2000 were $1.53 million, an increase of 422% over second quarter 1999 net sales of $293,000.
Key Metrics for Q2 2000:
— Total net sales for the second quarter increased 422% over the second quarter
of 1999.
— Cumulative customers increased 10% during the second quarter to 229,000,
up from 206,000 in the first quarter of 2000.
— The number of children’s learning profiles registered at the site increased
12% during the second quarter to 140,000, up from 125,000 at the end of the
first quarter of 2000.
— Repeat customers accounted for 47% of total revenues during the second
quarter, up from 43% in the first quarter of 2000.
— Pro forma net loss, excluding stock compensation costs, for the second
quarter was $7.75 million, or $0.38 per share, compared to a pro forma net loss
of $4.22 million, or $2.54 per share for the same quarter one year ago.
David Blohm, president and chief executive officer of SmarterKids.com commented,
“SmarterKids.com’s goal is to be a leading e-learning and educational e-commerce
company. Over the last 2 1/2 years, we have made significant investments to
allow us to deliver on this goal. Our commerce and content capabilities receive
top rankings, helping build customer loyalty. Our product recommendation abilities
are unique and highly effective, and our team of teachers adds significant value
to our customers. During the second quarter, we made further progress toward
this goal by establishing powerful, new strategic alliances in e-learning, online
tutoring, and the education market. We dramatically increased site functionality,
won new customer satisfaction accolades, and launched a state-of-the-art fulfillment
center, while improving our metrics.”
Mr. Blohm concluded, “Looking ahead, our focus is on building shareholder
value by cost-effectively growing revenue, adding e-learning capabilities to
further enable us to address a child’s specific needs, and establishing key
alliances to add functionality for parents and teachers.”
Accomplishments
Throughout the second quarter, SmarterKids.com accomplished significant gains
in the following key areas.
— Established strategic alliances to advance SmarterKids.com’s e-learning
strategy, focusing on each child’s specific education needs.
— SmarterKids.com partnered with ChildU, a leading provider of Internet-based
distance learning for K-12 education, to offer ChildU’s “Learning Odyssey” distance-learning
curriculum to hundreds of thousands of customers, creating a new source of revenue
for both partners. Through this partnership, SmarterKids.com will also recommend
products to complement the ChildU learning program.
— SmarterKids.com selected Real Time Learning, a San Francisco based online
tutoring service, to offer these services for children in grades 3 through 12.
SmarterKids.com will also host a co-authored fee-based Parent Partners Program,
providing one-to-one consultations to help parents with specific issues related
to their children.
— SmarterKids.com formed an alliance with Education World, the Internet’s
largest and most widely recognized education- specific search engine and reference
site. Through one of the most trusted online resources, SmarterKids.com has
gained access to more than 500,000 educators. Education World will prominently
position SmarterKids.com as a key supplemental product provider on its “Marketplace”
and “School Fundraising” channels.
— ExpertCentral.com, the foremost online resource connecting people seeking
information with experts on any topic, selected SmarterKids.com as a strategic
partner. SmarterKids.com’s on-staff educators are ExpertCentral.com’s exclusive
educational resource, offering insight and advice to help parents.
— Greatly increased site functionality to effectively integrate content and
commerce, expand child profiling, increase profitability and offer a full range
of teacher- evaluated products.
— The Company launched its next-generation site design based on extensive
customer research. Already one of the most personalized sites in e-commerce,
the new design enhances ease-of-use, personalization, and the integration of
commerce and content.
— SmarterKids.com launched an Infant Store, offering hundreds of developmental
toys, games and books for children aged 0- 18 months. All of these items are
evaluated, selected, and reviewed by the Company’s early childhood experts to
ensure they are developmentally appropriate, stimulating, and fun.
— SmarterKids.com introduced the Web’s first “Early Development Checklists,”
the most comprehensive online tools for parents who wish to gauge their child’s
early development and find educational products uniquely suited for their child’s
level. Checklists cover five developmental areas for children from birth through
5 years of age.
— SmarterKids.com launched two new product categories: music/video and construction
toys. Offerings in these categories include popular brands such as: Barney,
Disney, Madeline, BRIO, K’Nex, LEGO Dacta, and Lincoln Logs.
— Received additional accolades for superior customer satisfaction, reinforcing
SmarterKids.com’s leadership in e- commerce.
— Based on extensive survey research, Harris Interactive (NASDAQ:HPOL) named
SmarterKids.com as the #1 toy e-tailer from which customers are “most likely
to repurchase” and “most likely to recommend.” Harris also recognized the Company
for offering the best customer service.
— Forrester PowerRankings(TM) found SmarterKids.com to be “the easiest-to-use
site, stocked with helpful information, like the suitability of a given toy
for a child.” Forrester ranked it #2 in the toys and games category, second
only to Amazon.com (NASDAQ:AMZN).
— SmarterKids.com was recognized as the #1 toy site for educational toy buyers
and best on-site resource by Gomez Advisors. Gomez reported “The Educational
Toy Buyer has found a destination. For the third quarter in a row, SmarterKids.com
proves its worth to this growing demographic of buyers, earning top ranking
for the Educational Toy Buyer and for the On-Site Resources category.”
SmarterKids.com replaced Amazon.com in the latter category.
— Launched a new distribution facility helping to ensure efficiency, scalability,
and continued superior customer experience.
— SmarterKids.com completed, and transferred all fulfillment operations to
its new state-of-the-art distribution center. The leased 140,000 square-foot
warehouse and shipping facility optimizes the potential of digital technology
and space design to ensure customer satisfaction and streamline fulfillment
costs.
About SmarterKids.com, Inc.
SmarterKids.com, Inc. (NASDAQ:SKDS), the leading educational store on the
Web, is dedicated to helping parents help their children learn, discover, and
grow. The site offers the Internet’s most personalized shopping experience,
matching a child’s learning style and needs with teacher-reviewed toys, games,
books, software, music, and videos. The company features specialty centers for
special needs and gifted children, the Grade Expectations! guide to education
standards, and thousands of educational products and services for children ages
infant through 15. Together with its partners, ChildU, Education World, Homeroom.com,
Lightspan (NASDAQ:LSPN), National Computer Systems (NASDAQ:NLCS), and Real Time
Learning, SmarterKids.com offers leading educational resources and exceptional
online tutoring services to parents, children, and educators. SmarterKids.com
was rated the #1 educational toy site according to Gomez Advisors and was found
by Forrester’s PowerRankings(TM) to be the easiest-to-use site in the Toys and
Games category. SmarterKids.com is headquartered in Needham, Mass. More information
on the Company can be found at www.smarterkids.com.
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of Section 21E of the Securities and Exchange Act of 1934. Investors
are cautioned that statements in this press release which are not strictly historical
statements, including, without limitation, statements regarding current or future
financial performance, management’s plans and objectives for future operations,
product offerings and services, management’s assessment of market factors, as
well as statements regarding the strategy and plans of the Company and its partners,
constitute forward-looking statements which involve risks and uncertainties.
Actual results could differ materially from the forward-looking statements.
Risks and uncertainties which could cause actual results to differ include,
without limitation, risks and uncertainties associated with a limited operating
history under a new business model, the ability to achieve profitability, the
funding of ongoing operations, the fluctuation of operating results, the ability
to meet consumer demand, securing quality merchandise on acceptable commercial
terms, management of growth, introduction and market acceptance of new product
offerings and services, and reliance on only two delivery service providers,
United Parcel Service and the United States Postal Service, competition, dependence
on proprietary technology, downturns in economic conditions generally and in
the market for online retail products, development of the Internet infrastructure
and legal uncertainties concerning the Internet. For a more detailed description
of the risk factors associated with the Company, please refer to the Company’s
Annual Report or Form 10K dated March 30, 2000 on file with the Securities and
Exchange Commission. -0-
SMARTERKIDS.COM, INC.
STATEMENT OF OPERATIONS
(Unaudited-In Thousands except per share data)
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Net revenues $ 1,528 $ 293 $ 2,997 $ 387
Cost of revenues 1,149 210 2,250 279
Gross profit 379 83 747 108
Operating expenses:
Marketing and sales 7,144 3,690 14,444 5,713
Development 821 396 1,786 763
General and
administrative 816 244 1,722 399
Stock compensation 336 196 514 580
Total operating
expenses 9,117 4,526 18,466 7,455
Loss from operations (8,738) (4,443) (17,719) (7,347)
Interest income
(expense), net 654 28 1,482 52
Net loss $ (8,084) $(4,415) $(16,237) $ (7,295)
Basic and diluted
net loss per common
share $ (0.39) $ (2.66) $ (0.80) $ (4.43)
Weighted average shares
used in computing basic
and diluted net loss
per common share 20,504 1,661 20,406 1,646
Pro Forma results (Note 1)
Pro forma net loss,
excluding stock
compensation costs $ (7,748) $ (4,221) $ (15,722) $ (6,717)
Pro forma basic and
diluted net loss per
common share, excluding
stock compensation
costs $ (0.38) $ (2.54) $ (0.77) $ (4.08)
Note 1: Pro forma results shown above are presented for informational purposes
only and are not prepared in accordance with generally accepted accounting principles.
These results present the operating results of SmarterKids.com, excluding charges
of $336,000, $196,000, $514,000, and $580,000 for the three months ended June
30, 2000 and 1999 and the six months ended June 30, 2000 and 1999, respectively,
related to stock compensation.
SMARTERKIDS.COM, INC.
BALANCE SHEET
(Unaudited-In Thousands)
June 30, December 31,
ASSETS 2000 1999
Current assets:
Cash and short term investments $ 41,500 $ 67,356
Inventory 6,624 8,902
Other current assets 2,354 2,535
Total current assets 50,478 78,793
Property and equipment, net 5,310 2,421
Other assets 1,447 1,121
$ 57,235 $ 82,335
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,246 $ 10,996
Accrued expenses 3,382 6,699
Deferred revenue and other current
liabilities 884 972
Total current liabilities 8,512 18,667
Capital lease obligations, net of
current portion 946 34
Total liabilities 9,458 18,701
Stockholders' equity:
Common stock and additional paid-in capital 112,084 113,110
Deferred stock compensation (4,974) (6,286)
Accumulated deficit (59,333) (43,190)
Total stockholders' equity 47,777 63,634
$ 57,235 $ 82,335
Contact:
SmarterKids.com, NeedhamBill Shelton
Director of Investor Relations
(781) 292-7030
or
Morgen-Walke Associates, New York
Stacey Bibi/Shannon Moody/
Natasha Boyden
(212) 850-5600
