News Flash

Outlook for fiscal 2012 is positive - Frederick's Chief

15 Jun '11

3 min read

Frederick's of Hollywood Group Inc announced financial results for its fiscal 2011 third quarter and nine months ended April 30, 2011.

Thomas Lynch, the Company's Chairman and Chief Executive Officer, stated, "While we are disappointed by the fiscal third quarter results, our outlook for fiscal 2012 is positive. Inventory is approaching appropriate levels, and we remain focused on our ongoing operating initiatives that will help us grow in the long term.

"Most recently, we strategically reorganized our merchandising and design team to strengthen our core retail operations and to provide our customers with more trend-right fashions. We are beginning to see the impact of these efforts in the current quarter. We are also continuing to explore licensing opportunities, both domestically and internationally."

Fiscal 2011 Third Quarter Compared to Fiscal 2010 Third Quarter:

• Net loss applicable to common shareholders was $387,000 or $(0.01) per diluted share, compared to net income of $218,000 or $0.01 per diluted share.
o Net loss from continuing operations was $367,000, compared to net income of $958,000.
o Net loss from discontinued operations, net of tax, decreased to $20,000 from $608,000.
• Adjusted EBITDA from continuing operations was $953,000 compared to $2,550,000. A reconciliation of GAAP results to Adjusted EBITDA from continuing operations, a non-GAAP measurement, is provided in the accompanying table.
• Net sales decreased 11.6% to $32,599,000 from $36,883,000.
o Total store sales decreased 12.7% to $19,610,000 while comparable store sales decreased 10.1%.
o Direct sales (catalog and website operations) decreased 12.1% to $10,526,000.
o Licensing revenue was $582,000 or 1.8% of total revenue.
o Other revenue, consisting of shipping revenue and commissions earned on direct sell-through programs, decreased 23.3% to $1,881,000.
• Gross margin, as a percentage of net sales, decreased to 38.3% from 41.5%.
• Selling, general and administrative expenses decreased by 10.0% to $12,485,000, or 38.3% of sales, from $13,874,000 or 37.6% of sales.

Fiscal Nine Months Ended April 30, 2011 Compared to Fiscal Nine Months Ended April 24, 2010:

• Net loss applicable to common shareholders was $4,871,000, or ($0.13) per diluted share, compared to a net loss of $9,097,000, or ($0.34) per diluted share.
o Net loss from continuing operations decreased to $3,458,000 from $3,950,000.
o Net loss from discontinued operations, net of tax, decreased to $1,413,000 from $4,754,000.
• Adjusted EBITDA from continuing operations was $755,000 compared to $1,187,000. A reconciliation of GAAP results to Adjusted EBITDA from continuing operations, a non-GAAP measurement, is provided in the accompanying table.
• Net sales decreased 10.4% to $93,798,000 from $104,740,000.
o Total store sales decreased 14.2% to $56,287,000 while comparable store sales decreased 11.4%.

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