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Payless ShoeSource declares Q2 results
18 Aug '05
5 min read
Gross margin was 33.9 percent of sales in the second quarter 2005 versus 31.6 percent in the second quarter 2004. The improvement resulted primarily from more favorable initial mark-on relative to last year. The company has previously disclosed that, during the first quarter 2005, gross margin was positively impacted by improvements in inventory condition in addition to other items relating to the costing of inventory. These items did not have a significant net impact on gross margin in the second quarter.
Selling, general and administrative expenses were 29.0 percent of sales in the second quarter 2005 versus 26.1 percent in the second quarter 2004. The increase reflects charges of approximately $8 million for expenses relating to the management transition, a $6 million increase in advertising expense relative to last year, and $5 million additional costs for employee incentive programs. These increases were partially offset by a $4 million reduction in payroll, reflecting the reduced store count and other restructuring actions.
Operating profit from continuing operations increased during the second quarter 2005 to $34.2 million from $24.3 million during the second quarter 2004. As previously mentioned, second quarter 2005 included approximately $8 million of pre-tax charges related to the management transition. Second quarter 2004 included a non-cash pre-tax restructuring charge of $13.7 million.
The company's effective income tax rate on continuing operations was 31.8 percent during the second quarter 2005, including the discrete benefit of released tax reserves relating to favorable settlements of income tax audits. This compares with a rate of 11.1 percent in the second quarter 2004, including an adjustment to reflect a cumulative effective income tax rate of 23.3 percent for the first half of the year.
Selling, general and administrative expenses were 29.0 percent of sales in the second quarter 2005 versus 26.1 percent in the second quarter 2004. The increase reflects charges of approximately $8 million for expenses relating to the management transition, a $6 million increase in advertising expense relative to last year, and $5 million additional costs for employee incentive programs. These increases were partially offset by a $4 million reduction in payroll, reflecting the reduced store count and other restructuring actions.
Operating profit from continuing operations increased during the second quarter 2005 to $34.2 million from $24.3 million during the second quarter 2004. As previously mentioned, second quarter 2005 included approximately $8 million of pre-tax charges related to the management transition. Second quarter 2004 included a non-cash pre-tax restructuring charge of $13.7 million.
The company's effective income tax rate on continuing operations was 31.8 percent during the second quarter 2005, including the discrete benefit of released tax reserves relating to favorable settlements of income tax audits. This compares with a rate of 11.1 percent in the second quarter 2004, including an adjustment to reflect a cumulative effective income tax rate of 23.3 percent for the first half of the year.
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