Acorn Posts Weak Q1 Revenue and Net Income
Acorn International, Inc. (NYSE: ATV) posted on Thursday of nearly halved revenues and net income for the first quarter.
The Shanghai-based marketing and branding company said in a statement today that revenue in the three months through March slipped to $8.03 million, down 7% year-over-year. Net income plummeted to $2.74 million compared with $4.79 million in the same period in 2019.
Acorn attributed the decrease to the impact of the Covid-19, as well as lower revenues from oxygen-generating products, relating to the sale of its subsidiary. In November, the company sold Zhuhai Acorn Electronic Technology Co., Ltd., which produces and sells Youngleda oxygen- products, for $1.45 million to an unrelated third party.
"Our results for the first quarter of 2020 reflect the impact of the COVID-19 crisis on our business," Jacob A. Fisch, the chief executive officer of Acorn, said in a statement today.
He added, "As previously disclosed, although we have seen some increased demand for certain products as more Chinese consumers are shopping from home, we have also experienced some demand reduction, supply-side disruption, and delivery challenges caused by COVID-19."
The poor results follow Acorn indefinitely suspending its quarterly dividend of 25 cents per share in March, on fears of the coronavirus. Also in the quarter, Acorn's chairman Robert Roche pulled an offer to buy all outstanding shares in the company for $19.50 per share in February. As of Thursday morning, Acorn's stock traded at $11.36 per share.
Operating for more than 20 years, Acorn sells its products mainly through online retail platforms but also does so through offline distribution and outbound marketing. According to the company, it has three aspects that support its growth, which include product division, content division, and influencer management division.
Acorn had cash and cash equivalents, with restricted cash of $13.9 million through March compared with $13.5 at the end of 2019. The stock will be worth monitoring looking ahead to see how it navigates this uncertain period.