Frederick’s of Hollywood Group Inc announced the financial results for its fiscal 2013 first quarter ended October 27, 2012.
Fiscal 2013 First Quarter Compared to Fiscal 2012 First Quarter:
• Net sales decreased 20.8% to $22.4 million from $28.4 million.
• Comparable store sales decreased 17.0%.
• Total store sales decreased 20.8% to $15.2 million.
• Direct sales decreased 19.1% to $6.5 million.
• Other revenue, consisting of shipping revenue, commissions earned on direct sell-through
• Programs and breakage on gift cards decreased 31.9% to $0.8 million.
• Gross margin, as a percentage of net sales, decreased to 27.0% from 33.7%. This decrease is attributable to an increase in product and shipping promotional offers during the second half of the year.
• Net loss applicable to common shareholders was $5.2 million, or $(0.13) per diluted share, compared to a net loss of $2.3 million, or $(0.06) per diluted share.
• Adjusted EBITDA from continuing operations was a loss of $3.9 million compared to a loss of $1.1 Million. A reconciliation of GAAP results to Adjusted EBITDA from continuing operations, a nonGAAP measurement, is provided in the accompanying table.
“We have been concerned that, since the recession began, customers have been conditioned for major price reductions. We experienced firsthand the difficulty of trying to move away from such promotional activity this quarter when we tested customer tolerance for significantly lower promotional activity. While we anticipated a drop in sales, we experienced a larger than anticipated decline in customer traffic at our stores and on our eCommerce site. As a result, we revised this strategy and have returned to higher levels of promotional activity,” stated Thomas Lynch, the Company’s Chairman and Chief Executive Officer.
“As previously disclosed, we are now sharing some of the costs of our promotional activities with our vendors, which will help offset some of the costs of the increased promotions. Over the past few months, we have launched several new product categories at our stores and on our eCommerce site, which are gaining customer awareness. Our goal for these new product lines is to expand the reach of the ‘Frederick’s of Hollywood’ brand. We believe the strength of our brand with consumers will continue to help the Company through this difficult economic period,” concluded Mr. Lynch.