Overview of Results
Net income for the third quarter of 2013 was $28 thousand or breakeven per diluted share compared to a net loss of $1.7 million or $0.04 loss per diluted share in 2012.
For the first nine months of 2013, net income was $18.1 million or $0.40 per diluted share compared to $11.5 million or $0.26 per diluted share in the same period in 2012. Adjusted net income for the first nine months of 2012 was $10.2 million or $0.23 per diluted share.
EBITDA for the third quarter was $6.9 million compared to $2.8 million in 2012. EBITDA for the first nine months of 2013 was $51.0 million compared to $34.2 million adjusted EBITDA in 2012.
Comments on Results
"Our earnings continue to improve as a result of our continued sales momentum," said Jay Stein, Chief Executive Officer. "We have been very focused on refining our brands, pricing and sales execution and the improvements are evident in our results."
Total sales for the third quarter of 2013 increased 6.1 percent to $290.5 million, while comparable store sales increased 4.8 percent. For the first nine months of 2013, total sales increased 4.5 percent to $902.8 million, while comparable store sales increased 4.0 percent.
Gross profit for the third quarter increased to $77.8 million or 26.8 percent of sales from $70.7 million or 25.8 percent of sales in 2012. The increase in the quarter’s gross profit rate was primarily the result of higher markup and slightly lowers occupancy costs as a percentage of sales, offset by slightly higher markdowns.
Gross profit for the first nine months of 2013 increased $19.6 million to $256.0 million or 28.4 percent of sales from $236.4 million or 27.4 percent of sales in 2012. The increase in the year-to-date gross profit rate was primarily the result of higher markup, slightly lower markdowns as a percentage of sales and slightly lower occupancy costs as a percentage of sales.
Selling, general and administrative ("SG&A") expenses for the third quarter were $77.9 million or 26.8 percent of sales compared to $74.4 million or 27.2 percent of sales in 2012. The $3.5 million increase over 2012 SG&A expenses was primarily due to higher compensation costs, higher depreciation expense, $0.4 million of professional fees associated with last year's restatement and $0.2 million of start-up costs for our e-commerce launch and supply chain transition.
The higher compensation costs mostly resulted from higher earnings-based incentive compensation expense and increased payroll to support our higher sales and new stores. The SG&A increases were partially offset by lower healthcare costs due to favorable claims experience.
For the first nine months, SG&A expenses were $225.9 million or 25.0 percent of sales compared to $217.3 million or 25.2 percent of sales last year. SG&A expenses for the first nine months of 2012, adjusted to remove $2.1 million in gift card breakage, were $219.4 million and 25.4 percent of sales.
The $6.5 million increase in 2013 over 2012 adjusted SG&A was primarily due to higher compensation costs, higher depreciation expense, $1.2 million of start-up costs for our e-commerce launch and supply chain transition and $1.1 million of professional fees associated with last year's restatement. These increases were partially offset by lower healthcare costs due to favorable claims experience, higher credit card program income, lower store closing costs and slightly lower advertising expense.
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