Second Quarter Fiscal 2013:
Net sales totaled $137.2 million versus net sales of $135.3 million in the second quarter of 2012.
Consolidated comparable store sales increased 3.7%, including an increase of 3.9% for Wet Seal and an increase of 2.0% for Arden B.
Gross profit increased 32% to $40.7 million compared to $30.8 million a year ago, while gross margin expanded 680 basis points to 29.6% of sales versus 22.8% of sales in the second quarter of 2012. The year-over-year increase is primarily attributable to substantial improvement in merchandise margin due to reduced markdown levels.
Operating income was $1.0 million compared to operating loss of $19.5 million in the second quarter of fiscal 2012. The current year and prior year quarters include $262,000 and $9.0 million, respectively, of non-cash asset impairment charges. Operating loss in the prior year period also includes $1.9 million in CEO severance costs. Non-GAAP adjusted operating income, excluding the effect of the aforementioned charges, was $1.2 million in the second quarter of fiscal 2013 compared to non-GAAP adjusted operating loss of $8.6 million in the prior year period.
Net income totaled $1.0 million, or $0.01 per diluted share, compared to net loss of $12.4 million, or $0.14 per diluted share, in the prior year quarter. Non-GAAP adjusted net income in the second quarter of fiscal 2013, excluding the after-tax effect of non-cash asset impairment charges, totaled $1.2 million, or $0.01 per diluted share. Non-GAAP adjusted net loss in the second quarter of fiscal 2012, excluding the after-tax effect of non-cash asset impairment charges and CEO severance costs, was $5.8 million, or $0.07 per diluted share.
At quarter’s end, the Company’s inventory per square foot was up 2% versus a year ago, including an increase of 3% at Wet Seal and a decrease of 15% at Arden B.
John D. Goodman, Chief Executive Officer, stated, “During the second quarter we achieved strong year-over-year improvement across all of our key financial metrics. We delivered comparable store sales growth of 3.7%, expanded our merchandise margin, reduced expenses and attained profitability. Our performance reflects the benefits of our fast fashion operating model, ongoing progress against our turnaround strategies and strong inventory management.”
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