Gross profit margin decreased by 100 basis points to 51.8 percent in the Second Quarter compared to 52.8 percent in the prior year period. The decline in gross profit margin is mainly attributable to the Company's efforts to rebalance assortments that resulted in an increase in discontinued product sales at gross profit margins significantly below the Company's historical average gross profit margin.
Additionally, gross profit margin further declined as a result of a higher sales mix domestically from the Company's accessory and mass market watch businesses. Sales from the Company's domestic accessory and mass market watch businesses generally produce lower gross profit margins than the Company's historical consolidated gross profit margin. These declines in gross profit margin were partially offset by currency translation gains as a result of the Second Quarter average U.S. dollar rate remaining slightly weaker than the prior year quarter.
The Company's international segment net sales (primarily the Euro and Pound based) translated into higher U.S. dollar amounts, benefiting comparable gross profit margin by approximately 60 basis points during the quarter. For the first six months of 2005, gross profit margin increased by 10 basis points to 52.0 percent compared to 51.9 percent in the first six months of the prior year.
This increase was primarily related to foreign currency gains and a higher mix of sales from the Company's internationalbusinesses that generally provide gross profit margin in excess of the Company's historical consolidated gross profit margin partially offset by a higher mix of sales from the Company's lower margin domestic accessory and mass market businesses and discontinued product sales.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
