Selling, general, and administrative (SG&A) expenses for the third quarter of fiscal 2018 declined 3 per cent to $491 million, or 32.6 per cent of sales, compared to $506 million, or 32.3 per cent of sales in the year-ago period. The decline in SG&A expenses was primarily due to approximately $30 million in synergies and cost reduction initiatives, mainly reflecting headcount and non-merchandise procurement savings, lower store expenses resulting from our fleet optimisation programme, and lower performance-based compensation.
For the three months ended April 28, 2018, the company recorded a tax benefit of $11 million on pre-tax loss of $52 million. The effective tax rate for the quarter of 21.9 per cent primarily reflects the federal and state statutory rate as well as the impact of permanent and discrete items, including the impact of the 2017 Act.
The company ended the third quarter of fiscal 2018 with cash and cash equivalents of $363 million. Of this amount, approximately $279 million was held outside of the U.S. Subsequent to the end of the third quarter of fiscal 2018, the company repatriated approximately $225 million of its foreign cash back to the US, of which $112.5 million was used to prepay required term loan payments through October of 2019.
"Our third quarter results reflected a soft start in February, with sequential improvement over the combined March / April period. Another strong quarter at Justice was offset by continued challenges at our Value segment, particularly at dressbarn. We realized an 8 cent loss per share on an adjusted basis for the quarter, which is certainly not at a level that we consider acceptable, or representative of the company’s earnings potential. Our transformation program delivered significant expense reductions, and we were pleased to see improved comp sales performance exiting the third quarter. This momentum has continued into our fourth quarter with quarter-to-date comp sales up mid-single digits," David Jaffe, chief executive officer, said.
"Looking forward, we will continue to drive our enterprise transformation to realize the full value of our brand portfolio, and we are working to quickly stabilize performance at our Value segment. Our brands are focused on delivering compelling fashion offerings and a differentiated experience to our customers, and we expect to leverage our leaner cost structure and our growing competitive capabilities to support sustained, profitable comp growth. In parallel, we continue to evaluate opportunities across our brand portfolio to create shareholder value," Jaffe concluded.
The company expects net sales in the range of $1.62 to $1.66 billion in the fourth quarter of fiscal 2018. The gross margin rate is likely to be in the range of 56.5 to 57.0 per cent. The operating income is predicted to be around $22 to $42 million. (RR)
Fibre2Fashion News Desk – India
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