Red Envelope Trims Losses

Things are looking up at Red Envelope (Nasdaq: REDE). The gifts cataloger’s fourth-quarter net revenue slipped less than 1%, to $21.9 million, compared to $22.0 million a year ago. For the period ended April 1, the net loss was $4.3 million compared to a net loss of $4.5 million after the fourth quarter last year.

But for the fiscal year, revenue rose 7.1%, to $121.3 million, up from $113.2 million after last year. Net loss for the fiscal year fell to $3.5 million, compared with a net loss of $5.6 million in the 2006 fiscal year. Revenue per order grew 8.1%, to $85 compared to $79 in fiscal 2006.

Red Envelope’s executive chairman John Pound was upbeat regarding the San Francisco-based company’s strategic goals. “This year we are moving aggressively to demonstrate the true long-term potential of the brand,” he said in a release. “The negative trends that can be seen in our fourth-quarter results reflect three core legacies of last year. They are: an uninspired and unfocused creative message (as manifested in both our catalogs and our Website); an unfocused and tired product assortment; and a shift in our marketing focus away from the critical necessity of customer acquisition.”

Since Pound assumed his role at Red Envelope about 90 days ago, “we have focused on an intensive assessment of the state of the business and on developing a key set of strategies to re-invigorate the brand and drive it forward,” he said. “As a result of that process, we believe we know what we need to do to drive the business effectively.” Included among the company’s business strategies is to more effectively drive demand through the Website, rather than primarily through catalog distribution.

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