• Adjusted net loss for fiscal 2009 was $5.9 million or $0.46 per diluted share, excluding non-cash impairment and separation agreement charges, as well as exit cost reversals. This compares to adjusted net loss for fiscal 2008 of $3.7 million or $0.28 per diluted share, excluding store exit, impairment and management change costs.
Fourth Quarter and Full Year Operating Results
Gross profit in the fourth quarter of fiscal 2009 was $26.5 million, or 40.9% of net sales, compared to $21.5 million, or 32.6% of net sales, in the fourth quarter of fiscal 2008. For fiscal 2009, gross profit was $87.8 million, or 39.9% of net sales, compared to $109.7 million, or 41.3% of net sales, in fiscal 2008. The increase in gross profit margin for the fourth quarter was primarily driven by an increase in initial mark-up and a reduction in markdowns taken, as well as a reduction in buying and occupancy costs, as compared to last year. For fiscal 2009, the decline in gross profit margin was primarily due to lower sales and the resulting deleverage in buying and occupancy, as well as higher markdowns, as a percent of sales. In total, operating expenses for the fourth quarter of fiscal 2009 were $28.9 million, or 44.4% of net sales, as compared to $30.4 million, or 46.1% of net sales, in the fourth quarter of fiscal 2008. For fiscal 2009, total operating expenses were $102.2 million, or 46.5% of net sales, compared to $121.5 million, or 45.7% of net sales, in fiscal 2008. Operating expenses for the 14-week fiscal 2009 period included (i) a $2.7 million non-cash store and intangible asset impairment charge; (ii) a $134,000 benefit related to the reversal of separation agreement costs; and (iii) a $65,000 benefit related to the reversal of exit costs. Operating expenses for the 13-week fiscal 2008 period included $2.1 million of non-cash store and intangible asset impairment charges.
Operating expenses for the 53-week fiscal 2009 period included (i) $2.7 million in non-cash store and intangible asset impairment charge; (ii) $2.0 million in separation agreement costs; and (iii) a $65,000 benefit from the reversal of exit costs. Operating expenses for the 52-week fiscal 2008 period included (i) $2.8 million in store exit costs; (ii) $2.1 million of non-cash store and intangible asset impairment charges; and (iii) $616,000 of costs related to the management change in January 2008. The decrease in operating expenses for the fourth quarter and full year 2009 was primarily driven by a reduction in store payroll, depreciation and advertising costs, as well as lower general and administrative costs.
At January 2, 2010, cash and marketable securities totaled $37.0 million, as compared to $30.0 million in cash and marketable securities at December 27, 2008. Total inventory at cost decreased 25.6% at year-end, from the prior-year period. Working capital decreased by $1.5 million to $41.9 million from $43.5 million, at December 27, 2008.