Overview of Results
Net income for the second quarter of 2013 was $3.4 million or $0.08 per diluted share compared to net income of $2.3 million or $0.05 per diluted share in 2012. Second quarter 2012 adjusted net income was $1.0 million or $0.02 per diluted share.
For the first six months of 2013, net income was $18.1 million or $0.41 per diluted share compared to $13.1 million or $0.30 per diluted share in the same period in 2012. First half 2012 adjusted net income was $11.8 million or $0.27 per diluted share.
EBITDA for the second quarter was $12.8 million compared to $9.4 million ($7.3 million as adjusted - see Note 2) in 2012. EBITDA for the first six months of 2013 was $44.0 million compared to $33.5 million ($31.4 million as adjusted) in 2012.
Comments on Results
"Our second quarter same store sales increase of 6.4 percent was driven by our great merchandise, brands and pricing" said Jay Stein, Chief Executive Officer. "We've said for a long while that increases in sales and margin will leverage against our lean expense structure resulting in higher earnings growth. This is now happening."
Total sales for the second quarter of 2013 increased 3.8 percent to $291.0 million, while comparable store sales increased 6.4 percent. For the first six months of 2013, total sales increased 3.8 percent to $612.3 million, while comparable store sales increased 3.6 percent.
Gross profit for the second quarter increased to $80.3 million or 27.6 percent of sales from $73.8 million or 26.3 percent of sales in 2012. Gross profit for the first six months of 2013 increased $12.6 million to $178.3 million or 29.1 percent of sales from $165.7 million or 28.1 percent of sales in 2012. The increase in the gross profit rate was primarily the result of lower markdowns and slightly higher markup.
Selling, general and administrative ("SG&A") expenses for the second quarter were $74.5 million or 25.6 percent of sales compared to $70.0 million or 25.0 percent of sales in 2012. Second quarter 2012 adjusted SG&A expense was $72.1 million or 25.7 percent of sales.
The $2.4 million increase over 2012 adjusted SG&A expenses were primarily due to higher depreciation expense, higher compensation costs, including $0.8 million in incentive compensation paid based on our higher stock price, and $0.7 million of start-up costs for our e-commerce launch and supply chain transition. These increases were partially offset by lower healthcare costs, due to favorable claims experience, and slightly higher credit card program income.
For the first six months, SG&A expenses were $148.0 million or 24.2 percent of sales compared to $142.9 million or 24.2 percent of sales last year. Adjusted SG&A expenses for the first six months of 2012 were $145.0 million and 24.6 percent of sales.
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