Aug '08
Second Quarter and Six Month Results:
• Product sales for the second quarter of 2008 decreased 3.6% to $44.8 million, compared to $46.4 million recorded in the second quarter of 2007. Net sales, which are primarily comprised of product sales and shipping revenue, decreased 3.7% to $47.3 million in the second quarter of 2008 from $49.1 million in the same period last year. Gross profit margin improved to 46.4% in the second quarter of 2008, compared to 44.3% in the same period last year.
• Product margin, which the Company defines as product gross profit divided by net product sales, was 50.3% for the second quarter of 2008, compared to 48.2% in the second quarter of 2007. For more information regarding the calculation of product margin, please see the discussion under the heading "Non-GAAP Financial Information" below.
• Selling, general and administrative expenses were $22.7 million for the second quarter of 2008, compared to $22.2 million in the same period last year.
• Loss before income tax benefit for the second quarter of 2008 was $0.7 million, compared to a loss before income tax benefit of $0.6 million in the same period last year. Net loss for the second quarter of 2008 was $0.2 million, or $(0.01) per diluted share, compared to a net loss of $0.6 million, or $(0.04) per diluted share, in the second quarter of 2007. An income tax benefit of $0.5 million was recorded in the quarter ended June 28, 2008, compared to no income tax benefit in the second quarter of 2007.
• Net sales for the six months ended June 28, 2008 increased 1.4% to $94.2 million from $92.9 million in the same period last year. Net loss before income tax benefit for the six months ended June 28, 2008 was $2.0 million, compared to a loss before income tax benefit of $4.4 million in the same period last year. Net loss for the first six months of 2008 was $0.8 million, or $(0.05) per diluted share, compared to a net loss of $4.4 million, or $(0.30) per diluted share, in the first six months of 2007.
Net sales by sales channel were as follows:
• Studio sales were $32.6 million in the second quarter of 2008, up 2.2% from $31.9 million in the same period last year, due to $1.7 million in incremental sales from the addition of four new studios since the beginning of the second quarter of 2007. Design Within Reach operated 68 studios and the DWR Annex, an outlet for returned and discontinued merchandise, at the end of the second quarter of 2008, compared to 65 studios and one outlet open at the end of the second quarter of 2007.
• Direct sales (including phone sales and sales through the Design Within Reach website) were $10.4 million in the second quarter of 2008, a decrease of approximately 17.5% from $12.6 million in the second quarter of 2007.
As of June 28, 2008, Design WithinReach had approximately $20.5 million in working capital resources, including approximately $7.1 million in cash and cash equivalents and approximately $13.4 million available for advances under its revolving credit facility.
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