A21/Superstock posts widening loss for 2006
The A21 Group’s 2006 results showed growing revenue due to acquisitions, but widening losses to go along with them. Revenue from the stock image licensing division of the company grew 25% from $9.6MM to $12MM from 2005 to 2006. Surprisingly, despite the company’s October ’05 acquisition of Ingram Publishing, its gross margin in the image licensing sector remained flat at about 68% year over year. Apparently, Ingram’s lower-priced CD and subscription product line had no impact on gross margins. The gross profit margin at the newly acquired consumer art business, ArtSelect, came in at only 55% giving the company a lower gross profit margin over-all of 62% in 2006 vs. 68% the previous year.
Operating profits fared no better, as Selling, General and Administrative expenses as well as depreciation and amortization remained steady as a percentage of gross revenue. As a result, A21’s operating profit margins also deteriorated. The company reported an operating loss of $7.5MM or -38% of gross revenue in 2006, compared to a loss of $2.6MM or -27% of gross revenue the previous year.
Despite these declining margins year-over-year, the company points out in a press-release about their 2006 results that it has improved its operations on a sequential quarterly basis. In a prepared release, CEO John Ferguson says “With six consecutive quarters of overall revenue growth, our strategic plan is progressing. Our goal is to use this momentum to accelerate growth in both established and emerging markets by investing in our businesses, by leveraging our outstanding brands in the U.S as well as around the world, and by introducing innovative new products. By building a platform that can quickly respond to the dynamic nature of our markets, we believe we can profitably grow and create value for our stockholders.”
Click here to view the original press release.
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