Varsity Group appears ready to do what many Internet startups have been unable to accomplish—turn a profit for the year.
Launched in 1997 as Varsity Books, the company reported net income of $2.1 million for the third quarter ended September 30, an increase of 109% over the comparable period in 2001. Revenue rose 53.2%, to $14.4 million. For the first nine months of the year, revenues increased 31.3%, to $15.5 million, and Varsity had net income of $1.4 million, compared to a net loss of $1.3 million last year. Varsity chairman and CEO Eric Kuhn said that based on its performance to date, "we anticipate achieving our first profitable fiscal year in 2002."
The company's recent success has been built around its eduPartners business, through which Varsity operates online bookstores for private middle and high schools, colleges and continuing education markets. Varsity earlier abandoned two other business models: one in which it sold textbooks directly to college students and a second in which it offered marketing services to companies trying to reach the college market. For the first nine months of the year, sales of textbooks online, as well as $1.2 million in shipping charges, accounted for all but $14,000 of Varsity's sales.
In the third quarter, Varsity ran online bookstores for more than 140 educational institutions, compared to 90 at the end of 2001. Growth plans call for adding more schools to its eduPartners program, and the company spent $2.1 million on marketing and sales in the nine-month period in an effort to attract new customers, a slight increase over last year. Overall, however, Varsity has significantly cut its expenses.
