• Net sales decreased 5.6% to $133.9 million from $141.8 million.
o Total store sales decreased 6.2% while comparable store sales decreased 5.5%.
o Direct sales (catalog and website operations) decreased 4.6%.
• Gross margin, as a percentage of net sales, was 37.1% compared to 37.8%.
• Selling, general and administrative expenses decreased by 6.0% to $55.1 million, or 41.1% of sales, from $58.6 million or 41.3% of sales.
• Net loss from discontinued operations was approximately $12.4 million, net of a tax benefit of $1.5 million for the year ended July 31, 2010, and $20.6 million, net of a tax provision of $45,000, for the year ended July 25, 2009.
• Net loss applicable to common shareholders was $21.6 million or $(0.74) per diluted share, compared to a net loss of $34.6 million or $(1.32) per diluted share.
Mr. Lynch continued, "Our fiscal 2010 year-end financial results reflect a decrease in consumer spending year-over-year, primarily due to the prolonged weakness of the macroeconomic environment, and more specifically to the severe economic downturn of the regional economies in states where our stores are concentrated, including California, Nevada and Florida. Despite these challenges, we have managed to reduce costs, improve our capital structure and remain focused on implementing our turnaround strategy, which resulted in a decrease in net loss from continuing operations.
"During the past year, we exchanged $23.1 million of outstanding long-term debt and preferred stock for common stock at an effective price of $2.66 per share. We also raised $3 million in a private placement of common stock and secured a $7 million term loan, which provides access to additional working capital as we further implement our strategy.
"In addition, we made a strategic decision to divest our wholesale business due to continuing losses, which is reported as 'discontinued operations' in our financial results. This will allow us to focus our resources on strengthening our retail operations and implementing our strategy to expand our domestic and international licensing program," Mr. Lynch concluded.
Frederick's of Hollywood Group Inc
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