Geeknet Announces Second Quarter 2014 Financial Results and Acquisition of Treehouse Brand Stores

FAIRFAX, Va., Aug. 1, 2014 /PRNewswire/ --Geeknet, Inc. (Nasdaq: GKNT), the parent company of online retailer ThinkGeek.com, today announced financial results for the second quarter ended June 30, 2014.  The company also announced the acquisition of substantially all of the assets and certain of the liabilities of Treehouse Brand Stores, LLC effective today for $1.5 million of initial cash consideration and total cash consideration of up to $3.5 million, to be paid based on the achievement of certain performance metrics.

Total revenue for the second quarter of 2014 was $23.4 million, an increase of 6% from $22.0 million in the second quarter of 2013.  Net loss for the second quarter of 2014 was $4.1 million or $0.62 per diluted share compared to net loss of $1.5 million or $0.23 per diluted share for the same period a year ago.  Adjusted EBITDA loss for the second quarter of 2014 was $3.0 million, compared to an adjusted EBITDA loss of $0.4 million for the same period a year ago.

Second Quarter Highlights:

• Wholesale revenue grew to $5.6MM, up 48% when compared to the second quarter of 2013
• We delivered over 474 new products to our customers, including 74 exclusive items
• Our conversion rate improved to 1.67% from 1.44% in 2013

"ThinkGeek grew revenue 6% in a competitive retail environment. We delivered strong growth from our GeekLabs exclusive products and our wholesale segment. Despite softer site revenues and pressure on margins this quarter, our entire team is focused on the upcoming fall and holiday seasons.  To celebrate our fifteenth anniversary, but more importantly to improve the customer experience, ThinkGeek has launched a major brand refresh campaign including the redesign of our web site," said Katy McCarthy, Chief Executive Officer.

"A critical element of our strategic plan is to build out our platform to increase the customer base.  Since 2009, Treehouse Brand Stores has worked directly with major video game publishers to engage fans with their unique and exclusive products. This acquisition enables Geeknet to establish official web stores under exclusive licenses while adding creative talent and expertise to our company," said McCarthy. "I am excited to join Geeknet and can't wait to work together to accelerate growth, while continuing to deliver even more of the unique merchandise our fans have come to expect," said Jed Seigle, President of Treehouse Brands.

Supplemental schedules of the Company's quarterly statements of operations and operational statistics are available on the Company's web site at investors.geek.net.

A conference call and audio webcast will be held at 11:00 am ET on August 1, 2014 and may be accessed by calling (877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting investors.geek.net. A dial in replay will be available from 4:00 PM ET August 1, 2014 until 11:59 pm ET August 3, 2014 by calling (855) 859-2056, with conference ID 73137452.

About Geeknet, Inc.

ThinkGeek, Inc., a wholly owned subsidiary of Geeknet, Inc. (NASDAQ: GKNT), is the premier retailer for the global geek community.  Since 1999, ThinkGeek has been creating a world where everyone can express their inner geek, embrace their passions, and connect with each other.  Our obsession is creating and sharing unique and authentic product experiences that stimulate our fans' imaginations and fuel their geek core.  We believe that there is a geek in everyone and that it should be celebrated.  Want to learn more?  Check out thinkgeek.com or geek.net.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, we also report adjusted EBITDA.  The method we use to calculate adjusted EBITDA is not in accordance with GAAP, is likely to differ from the methods used by other companies for similarly titled measures and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

We believe that adjusted EBITDA provides useful information to both management and investors and is an additional measurement which may be used to evaluate our operating performance. Our management and Board of Directors use adjusted EBITDA as part of their reporting and planning process and it is the primary measure we use to evaluate our operating performance.  In addition, we have historically reported adjusted EBITDA to the investment community.  We also believe that the financial analysts who regularly follow and report on us and the business sector in which we compete use adjusted EBITDA to prepare their financial performance estimates to measure our performance against other sector participants and to project our future financial results.

We define adjusted EBITDA as earnings or loss from continuing operations before interest and other expense, income taxes, stock-based compensation and depreciation and amortization.  Adjusted EBITDA excludes certain expenses that we believe are not directly related to our core operating results.  Although some of the items may recur on a regular basis, management does not consider activities associated with these items as core to its operations.  With respect to stock-based compensation, we recognize expenses associated with stock-based compensation that require management to make assumptions about our common stock, such as expected future stock price volatility, the anticipated duration of outstanding stock options and awards and the forfeiture rate.  While other forms of expenses (such as cash compensation, inventory costs and real estate costs) are reasonably correlated to our underlying business and such costs are incurred principally or wholly in the particular fiscal period being reported, stock-based compensation expense is not reasonably correlated to the particular fiscal period in question, but rather is based on expected future events that have no relationship (and in certain instances, an inverse relationship) with how well we currently operate our business.

NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, and involve risks and uncertainties. Forward-looking statements contained herein include statements regarding our strategic plan and future growth, as well as statements regarding the impact of our acquisition of the Treehouse Brand Stores business.  Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including: popularity and demand for our retail products; management's strategy, plans and objectives for future operations; employee relations and our ability to attract and retain highly qualified personnel; our ability to continue to invest in developing and acquiring new products; competition, competitors and our ability to compete; liquidity and capital resources; the outcome of any litigation to which we are a party; our accounting policies; sufficiency of our cash resources and investments to meet our operating and working capital requirements; our ability to successfully integrate the acquired assets and operations of Treehouse Brand Stores; our ability to realize the anticipated growth, synergies and other benefits from our acquisition of the Treehouse Brand Stores business; and our ability to retain relationships with key employees, vendors, licensors and customers of Treehouse Brand Stores.  Investors should consult our filings with the Securities and Exchange Commission, sec.gov, including the risk factors section of our Annual Report on Form 10-K for the year ended December 31, 2013, for further information regarding these and other risks of our business. All forward-looking statements included in this press release are based upon information available to us as of the date hereof, and we do not assume any obligations to update such statements or the reasons why actual results could differ materially from those projected in such statements.

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SOURCE Geeknet, Inc.