Business news: Liberty Interative Reports Rising Paid Search, Markdowns Hurt Q4 E-commerce Income

Liberty Interactive Group’s e-commerce businesses, which include controlling interests in Backcountry.com and Bodybuilding.com, reported a big drop in income in the fourth quarter and full year of 2012. Although revenues grew 5 percent during the quarter, its various online banners had to spend more on paid search, boost promotions to move seasonal inventory and saw advertising revenues drop as more sales were made through the mobile channel.

LINTA reported revenues at its e-commerce segment increased 5 percent to $451 million in the fourth quarter ended Dec. 31 and increased 11 percent to $1.5 billion for the year. The increase in fourth quarter revenue was due to increased marketing efforts driving additional traffic, greater conversion resulting from site optimization, broader inventory offerings and a lift in sales from discounted pricing of seasonal inventory.

Adjusted OIBDA (operating income before depreciation and amortization) for the e-commerce segment decreased 29 percent to $35 million for the quarter and 22 percent to $96 million for the year. The decrease in adjusted OIBDA was the result of increased spending in paid search as a percentage of revenue, increased promotional activity to move seasonal inventory resulting in lower gross margins and lower advertising revenue due to pricing and a shift to mobile applications.

The unit generated an operating loss of $39 million in the quarter, compared to a operating income of $30 million a year earlier and swung from a profit of $55 million in 2011 to a loss of $81 million in 2012. The decrease in operating income was primarily due to an impairment of goodwill and other intangibles at Celebrate Interactive and Evite as a result of continued declining operating results and unfavorable trends during 2012.

LINTA’s e-commerce businesses include Backcountry.com, Bodybuilding.com, Celebrate Interactive ((including Evite, gifts.com and Liberty Advertising), CommerceHub, MotoSport, Provide Commerce, Right Start. The company reports results for its QVC and investments in other ventures separately.

(- Source SportsOneSource ) 

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