Strategic turnaround strategy works at Frederick's of Hollywood
10 Jun '10
4 min read
Frederick's of Hollywood Group Inc announced financial results for its fiscal 2010 third quarter and nine months ended April 24, 2010.
Thomas Lynch, the Company's Chairman and Chief Executive Officer, stated, "We delivered our first quarterly profit since beginning our strategic turnaround despite the impact of reduced consumer spending on discretionary items. Our bottom-line results for the third fiscal quarter reflect a substantial increase in gross margins from 38% to 40% and a reduction in expenses of $2.8 million."
Fiscal 2010 Third Quarter Compared to Fiscal 2009 Third Quarter:
• Net income applicable to common shareholders was $218,000, or $0.01 per diluted share, compared to a net loss of $2.1 million or ($0.08) per diluted share • Net sales decreased 7.2% to $43.4 million from $46.8 million o Total store sales decreased 8.5% while comparable store sales decreased 7.7% o Direct sales decreased 2.8%. o Total wholesale sales decreased $860,000 or 11.7%, which accounted for approximately 25.5% of our total decrease • Gross margin, as a percentage of net sales, increased to 40.2% from 38.2% as a result of an increase in wholesale gross margin from 18.8% to 32.8% • Selling, general and administrative expenses decreased by 14.6% to $16.6 million, or 38.3% of sales, from $19.5 million or 41.6% of sales
Fiscal Nine Months Ended April 24, 2010 Compared to Fiscal Nine Months Ended April 25, 2009:
• Net loss applicable to common shareholders was $9.1 million or ($0.34) per diluted share, compared to a net loss of $27.6 million or ($1.05) per diluted share • Net sales decreased 14.0% to $121.9 million from $141.8 million o Total store sales decreased 6.4% while comparable store sales decreased 6.1% o Direct sales (catalog and website operations) decreased 4.0% o Total wholesale sales decreased $13.8 million or 44.5%, which accounted for approximately 69% of our total decrease • Gross margin, as a percentage of net sales, increased to 36.1% from 35.8% • Selling, general and administrative expenses decreased by 11.0% to $51.3 million, or 42.1% of sales, from $57.6 million or 40.6% of sales
Mr. Lynch continued, "Our team has worked extremely hard to implement the turnaround strategy we launched last year, and the results of our efforts are driving improved performance. In conjunction with our strategy, we've been able to successfully meet several key milestones, including an exclusive, multi-year international licensing agreement with Blue By Yoo to manufacture, distribute, and market a new line of swimwear under the Frederick's of Hollywood brand. In addition to swimwear, we have identified domestic and international licensing opportunities that will allow us to expand beyond intimate apparel and into a lifestyle brand, which includes opportunities in product categories such as fragrance, jewelry, accessories, footwear, headwear, handbags and costumes as well as partnering with international distributors in countries such as Korea, Brazil, Japan, China and Canada.
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