Consolidated selling, general and administrative expenses (SG&A) decreased $0.5 million, or 1.9%, to $25.9 million in the first quarter of 2009 largely due to managed cost reductions across most operating departments. Partially offsetting this decrease in SG&A were expenses associated with the Company's licensed brands Donna Karan and DKNY, which were not in the same period in 2008. As a percentage of net sales, SG&A was 22.7% in the first quarter of 2009 compared to 26.9% in the first quarter of 2008.
Due to all of the factors described above, operating income in the first quarter of 2009 was $10.6 million, or 9.3% of net sales, compared to $11.6 million, or 11.8% of net sales, in the first quarter of 2008.
Net interest expense in the first quarter of 2009 was $0.7 million compared to $1.2 million in the first quarter of 2008. The decrease was a combination of a lower average interest rate and lower average debt outstanding in the first quarter of 2009 when compared to the same period in 2008.
The Company's effective income tax rate for the first quarter of 2009 was 39.4% compared to 41.8% in the first quarter of 2008, with the decrease in rate related to reductions in taxes on income from foreign operations.
Net income for both the first quarter of 2009 and 2008 was $6.0 million and EPS was $0.26.
Total cash and cash equivalents at the end of the first quarter of 2009 was $26.3 million compared to $10.7 million at the end of the first quarter of 2008. The Company's debt outstanding was $88.1 million as of April 4, 2009 versus $89.5 million as of March 29, 2008. Net debt totaled $61.8 million at the end of the first quarter of 2009, with no material maturities until 2014.
Financial Performance Guidance for 2009: Second Quarter Outlook: • Net sales for the second quarter are expected to be flat to up in the low single digits percentage range over last year. • Gross margin rates are anticipated to be in the mid-30 percent range, reflecting an increase in promotional activities versus 2008 and change in the Company's channel mix with reduced department store and chain and retail store sales, and increased sales in the mass merchant channel and to off-priced and specialty retailers. • SG&A is expected to increase in the low to mid single digits percentage range over 2008 including expenses for its Donna Karan and DKNY investments. • EPS is expected to be in the range of $0.21 to $0.25.
Full Year Trend: • Net sales are expected to increase in the low single digits percentage range in the second half of 2009 versus the second half of 2008. • Full year net sales are expected to increase in the mid single digits percentage range over 2008. • Gross margin rates are anticipated to be in the mid-30 percent range for the year, reflecting an increase in promotional activities versus 2008 and change in the Company's channel mix with reduced department store and chain and retail store sales, and increased sales in the mass merchant channel and to off-priced and specialty retailers. • The Company will continue to control its spending and its costs will increase only modestly, as expense reduction actions will partially offset increased costs for a full year of spending relating to its Donna Karan and DKNY businesses, targeted investments in product development and for replenishment of incentive plan provisions. • EPS for the full year 2009 is expected to be in the range of $1.00 to $1.10 versus the Company's prior guidance of EPS in the range of $0.90 to $1.00, and reported EPS of $1.05 for full year 2008.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
