Frederick's of Hollywood reports fiscal Q3 & nine months results

10 Jun '09

5 min read

Frederick's of Hollywood Group Inc (formerly, Movie Star, Inc.) announced financial results for its third quarter and nine months ended April 25, 2009. On January 28, 2008, the Company completed its merger with FOH Holdings, Inc. (“FOH Holdings”), the parent company of Frederick's of Hollywood, Inc.

The merger was accounted for as a reverse acquisition in which the Company was treated as the acquired company and FOH Holdings was treated as the acquiring company. The historical financial information presented for the periods and dates prior to January 28, 2008, the closing date of the merger, is that of FOH Holdings and its subsidiaries, and for periods subsequent to January 28, 2008 is that of the merged company.

Fiscal 2009 Third Quarter Compared to Fiscal 2008 Third Quarter
Net sales for the fiscal 2009 third quarter decreased to $46,766,000 from $60,841,000 for the fiscal 2008 third quarter. The decrease was primarily due to a reduction in wholesale net sales as a result of a $13,131,000 decrease in sales to the wholesale division's largest customer, and, to a lesser extent, a $1,152,000 reduction in retail net sales.

Gross margin, as a percentage of sales, increased to 38.2% for the fiscal 2009 third quarter from 35.9% for the fiscal 2008 third quarter. The increase was due to a higher gross margin of 41.8% for the retail division, partially offset by a lower gross margin of 18.8% for the wholesale division, as compared to a gross margin for the retail and wholesale divisions of 39.6% and 28.4%, respectively, for the three months ended April 26, 2008.

For the fiscal 2009 third quarter, selling, general and administrative expenses decreased by $3,906,000 to $19,459,000, or 41.6% of sales, from $23,365,000, or 38.4% of sales, for the fiscal 2008 third quarter. The dollar amount decrease was primarily due to reductions in selling, general and administrative expenses across the Company's retail division, wholesale division and corporate executive office.

For the fiscal 2009 third quarter, the Company recorded a net loss applicable to common shareholders of $2,120,000, or $(0.08) per diluted share, compared to a net loss applicable to common shareholders of $2,126,000, or $(0.08) per diluted share, for the fiscal 2008 third quarter. Adjusted EBITDA for the fiscal 2009 third quarter was $22,000 compared to Adjusted EBITDA of $1,138,000 for the fiscal 2008 third quarter.

Nine Months Ended April 25, 2009 Compared to Nine Months Ended April 26, 2008
Net sales for the nine months ended April 25, 2009 increased to $141,847,000 from $140,140,000 for the nine months ended April 26, 2008. The increase was primarily due to the addition of a full nine months of wholesale net sales of $30,969,000 for the fiscal 2009 nine-month period as compared to the addition of only three months of wholesale net sales of $20,292,000 following the consummation of the merger for the fiscal 2008 nine-month period, which was partially offset by a decrease in retail net sales of $8,970,000 to $110,878,000 from $119,848,000 for the nine months ended April 26, 2008.

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