Jane Elfers, President and Chief Executive Officer, said, "After a difficult start to the quarter, April sales improved significantly with the return of more seasonable weather. Our expenses throughout the quarter were well-controlled. We exceeded our earnings forecast for the first quarter and we are raising guidance for the year to reflect these improved results."
Elfers continued, "Customer response to our summer line has been positive, and we are well-positioned in key categories for back-to-school and holiday selling."
First Quarter 2013 Results
In the first quarter of 2013, net sales declined 3.5% to $423.2 million, compared to $438.5 million in the first quarter the prior year. Comparable retail sales declined 5.5%.
Gross profit declined 8.6% to $163.3 million, due to deleverage of fixed expenses on negative comparable retail sales and higher supply chain costs as the Company invested in its sourcing capabilities.
As a result of the Company's strong expense management, selling, general and administrative expenses declined 2.7% to $119.0 million during the first quarter of 2013. Adjusted SG&A declined 0.9% to $118.5 million.
Operating income was $28.5 million, compared to $37.1 million in the first quarter of 2012. Adjusted operating income was $28.4 million, compared to $42.7 million the previous year.
Net income and adjusted net income was $19.3 million, or $0.83 per diluted share, in the first quarter of 2013. This compares to GAAP net income of $24.7 million, or $1.00 per diluted share, in the first quarter of 2012, and adjusted net income of $28.3 million, or $1.14 per diluted share, the previous year.
Adjusted SG&A, adjusted operating income and adjusted net income are Non-GAAP measures. The Company believes the excluded transactions are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance.
The Company opened 20 stores and closed four, ending the first quarter with 1,111 stores.
Share Repurchase Program
The Company repurchased 512 thousand shares for approximately $24.2 million during the first quarter of 2013. At the end of the quarter, $56.2 million of the $100 million share repurchase program authorized in November 2012 remained available for future share repurchases.
The Company updated its guidance to reflect first quarter results and now projects that adjusted earnings per diluted share will be between $3.05 and $3.20 for fiscal 2013, assuming comparable retail sales are flat to slightly negative. This compares to its initial guidance of $2.90 to $3.10, assuming negative low-single digit comparable retail sales.
The Company provided initial guidance for the second quarter of fiscal 2013, and is forecasting an adjusted loss per share between $(0.50) and $(0.55), assuming flat comparable retail sales. This compares to an adjusted loss per share of $(0.62) in the second quarter of 2012.
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