Computer Literacy Is Busy Branding

Jim Milliot -- Publishers Weekly, 1/18/1999

Following the success of its public offering last fall (News, Nov. 30, 1998), Computer Literacy reported in its recent 10-Q filing with the SEC that it will continue to aggressively brand its site. For the nine-month period ended October 31, 1998, the company spent $6.8 million, 47% of total revenues, on sales and marketing. Computer Literacy made investments to increase its sales staff, stepped up its advertising efforts and added personnel to its marketing department.

Continued investments in its infrastructure pushed Computer Literacy's accumulated deficit to $10.4 million through October 31, and the company said it expects to incur additional operating losses for the foreseeable future.

One way Computer Literacy hopes to improve its margins is to buy more products directly from publishers; Ingram has traditionally accounted for approximately 30% of its purchases. The company acknowledged that it depends on Ingram and other vendors for rapid fulfillment of orders and expressed concern that, with Ingram's purchase by Barnes &Noble, its current vendors may not continue to sell Computer Literacy merchandise at current terms or that the company may not be able to establish new or extend current vendor relationships to ensure the purchase of merchandise in a timely fashion.

For the nine-month period, the company reported a net loss of $6.7 million on sales of $15.4 million. Sales in Computer Literacy's online store rose to $7.1 million from $1.7 million, while sales from its retail operations increased to $7.3 million from $5.4 million. Computer Literacy attributed the gain in its online business to increase awareness of its site, which has resulted in additional customers (52,576 at the end of October) as well as repeat business. International sales represented nearly 22% of revenues in the period.

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