Youth-oriented e-commerce and marketing company Alloy
Alloy's stock jumped more than 23% on trading that was 10 times, and then some, more than its recent daily average after the company reported quarterly revenues of $110 million, up 4% from last year -- a better than 11% increase in merchandise revenues (which made up about half of total sales) and decreased operating costs. (Gross margins did fall year over year as the company's promotional marketing, which supplements its retail, direct marketing, print media, and other marketing efforts, came under profit pressure.)
That the operating structure is improving following some substantial flux is very heartening indeed. (Check out our March article for more on the changes at Alloy.) And the company managed a net profit: It brought $2 million to the bottom line, a goodly improvement from last year's $6.8 million loss. All told, it's a marked improvement for a company that only in the summer ended suspense about when it would make some important Securities and Exchange Commission filings -- and whether it would maintain its Nasdaq listing.
Alloy's buff job started in September, when the company addressed some downbeat first-half numbers with plans to improve operations and profitability. Management also spoke of projected revenues of $400 million to $420 million and net losses of $0.45 to $0.55 per share at that time; it reaffirmed those numbers yesterday. All those numbers represent a substantial improvement from year-ago figures.
Given the evidence, it's not hard to understand why investors -- the kind who don't mind putting their money behind small, unprofitable companies showing tentative signs of improvement, which isn't everyone -- bought at its autumn lows. After its run of the last three months, however, it's less of a bargain but, it seems, also a substantially improved business.
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Fool contributor Dave Marino-Nachison doesn't own Alloy stock.
