Capital base & liquidity profile remain solid, Charming CEO
04 Jun '10
6 min read
First Quarter Consolidated Results
• Net sales for the three months ended May 1, 2010 decreased $33.3 million or 6.2% to $504.8 million, compared to $538.1 million for the three months ended May 2, 2009. The decrease in sales was primarily as a result of the impact of 149 store closings and 5 store openings during the last four quarters, a 2% decrease in comparable store sales, a decrease in the Company's Direct-to-Consumer Segment's sales related to the closing of the Lane Bryant Woman catalog and shoetrader.com in the first half of fiscal year 2009, and an increase in e-commerce sales. E-commerce sales increased 36% to $31.6 million, compared to $23.3 million in the year ago period. Comparable store sales declined 3%, 2% and 3% at the Company's Lane Bryant, Fashion Bug and Catherines brands, respectively. • Gross profit decreased $11.0 million, or 3.8% to $276.6 million in the quarter, compared to $287.6 million in the same quarter last year, related to lower sales volumes, partially offset by improvement in the gross margin rate. The gross margin improved by 140 basis points to 54.8% for the quarter ended May 1, 2010, compared to 53.4% for the quarter ended May 2, 2009. The year over year change was related to the closing of the Lane Bryant Woman catalog and shoetrader.com businesses and liquidation of related inventories in the first half of fiscal year 2009, and modest improvement in the gross margin at Lane Bryant, somewhat offset by lower gross margins at Fashion Bug and Catherines as a result of higher markdowns on early Spring merchandise. • The quarter ended May 1, 2010 included restructuring charges of $0.9 million, primarily for lease termination charges related to the Company's store closing program as announced on March 30, 2010. The quarter ended May 2, 2009 included restructuring charges of $8.7 million related to previously announced consolidation and streamlining initiatives.
Commenting on the Company's liquidity and the quarter, Eric M. Specter, Executive Vice President and Chief Financial Officer said, "Our liquidity continued to increase and remained at very healthy levels throughout the period. We continue to carefully manage our inventory investments to provide a better-balanced assortment with a stronger focus on core merchandise, coupled with meeting the fashion needs of our customer. Diluted earnings per share improved to $0.03 for the quarter, compared to diluted loss per share of $(0.06) in the year ago period."