FOH reports fiscal 2010 Q4 & year-end financial results

26 Oct '10

4 min read

Frederick's of Hollywood Group Inc. announced financial results for its fiscal 2010 fourth quarter and year ended July 31, 2010.

Thomas Lynch, the Company's Chairman and Chief Executive Officer, stated, "We have made significant improvements to our business throughout fiscal 2010. This has included advancing our strategy to become a sexy lifestyle brand and a focus on web-based initiatives to increase online sales. We also have strengthened our balance sheet, setting a clear path for the Company's future growth.

"In the fourth quarter of fiscal 2010, we entered into four separate multi-year licensing agreements with licensees to manufacture, distribute and market swimwear, sexy Halloween costumes, jewelry and accessories under the Frederick's of Hollywood® brand. These agreements have effectively launched our licensing program and are leading the way for Frederick's of Hollywood to become a comprehensive lifestyle brand for sexy women. Each agreement will ramp up separately over the next year and generate new, higher margin revenue compared to our traditional retail and direct to consumer operations."

Fiscal 2010 Fourth Quarter Compared to Fiscal 2009 Fourth Quarter:

• Net loss from continuing operations increased to $4.9 million from $3.3 million.
o Excluding an impairment of long-lived assets of $1.7 million compared to $0.2 million, net loss from continuing operations was $3.2 million compared to $3.1 million.
• Adjusted EBITDA from continuing operations was a loss of $1.9 million compared to a loss of $1.6 million. A reconciliation of GAAP results to Adjusted EBITDA, a non-GAAP measurement, is provided in the accompanying table.
• Gross margin, as a percentage of net sales, was 34.1% compared to 34.2%.
• Selling, general and administrative expenses decreased by 3.0% to $12.9 million, or 44.1% of sales, from $13.2 million or 42.8% of sales.
• Net sales decreased 5.9% to $29.1 million from $30.9 million.
o Total store sales decreased 5.5% while comparable store sales decreased 3.5%.
o Direct sales (catalog and website operations) decreased 4.2%.
• Net loss from discontinued operations increased to $7.5 million from $3.6 million.
• Net loss applicable to common shareholders was $12.5 million or $(0.35) per diluted share, compared to a net loss of $7.0 million or $(0.27) per diluted share.

Fiscal Year Ended July 31, 2010 Compared to Fiscal Year Ended July 25, 2009:

• Net loss from continuing operations decreased to $8.8 million from $13.5 million.
o Excluding an impairment of long-lived assets of $1.7 million compared to $0.2 million and a goodwill impairment of $6.7 million in the prior year, net loss from continuing operations was $7.1 million compared to $6.6 million.
• Adjusted EBITDA from continuing operations was a loss of $1.2 million compared to a loss of $0.6 million. A reconciliation of GAAP results to Adjusted EBITDA, a non-GAAP measurement, is provided in the accompanying table.

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