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Justice fashion brand for teen girls
13 Aug '08
6 min read
Rayden concluded, “We are financially sound. We have good liquidity and the right people to execute this transition. We believe this strategy will create value and excitement for our customers and enhance returns for our shareholders.”
Second Quarter 2008 Results:
For the second quarter, ending August 2, 2008, the Company reported a loss per diluted share of $0.27 on a net loss of $6.7 million, compared to earnings per diluted share of $0.07 on net income of $2.1 million reported for the second quarter 2007.
Performance Analysis:
Net sales for the second quarter of 2008 were $223.1 million, a 4% increase on the $213.7 million in net sales for the 2007 quarter. Justice sales were $69.3 million. Limited Too sales were $145.0 million. The net sales increase of 4% was primarily driven by new store sales growth of 12% offset by a decrease in comparable store sales of 8%, with Limited Too's comp store sales down 11% and Justice's comp store sales up 3%. The company's e-commerce sales increased 22%.
In early April, the Company disclosed that Limited Too's sales were weak for the second half of February and much of March due to a lack of spring color within its sportswear assortment, along with the absence of a meaningful casual bottoms business. The Company also said that given a more difficult retail environment, customers appeared to be trading down in their apparel shopping, choosing lower price or sale items and buying fewer of them.
Commenting on the second quarter results, Rayden said: “Our results are extremely disappointing. While we have corrected Limited Too's spring merchandising difficulties, the macro-economic trends we began to see affecting Limited Too in the last several quarters accelerated dramatically in the second quarter.
“At the same time, Justice did much better than Limited Too in a difficult quarter and there is real excitement in the stores for a great product at an attractive value proposition. Despite a tough second quarter, Justice posted double-digit comp store sales growth through the first half of the year, as it has done year after year since we opened the first store in 2004. We don't see these macro-economic trends changing any time soon and believe we will be well positioned to capitalize on these trends through our single store brand strategy.”
Gross income for the second quarter of fiscal 2008 was $61.8 million, or 27.7% of net sales, compared to second quarter 2007's gross income of $68.5 million, or 32.1% of net sales. The reduction in gross income was primarily the result of the inability to leverage occupancy costs against an 8% comparable store sales decrease, as well as a 240 basis point reduction in the Company's merchandise margin.
This decrease in merchandise margin was driven primarily by increased markdowns at both brands and a planned decrease in initial mark up due to the growth of the Justice brand.
Store operating, general and administrative expenses (SG&A) for the second quarter of fiscal 2008 were $71.1 million, or 31.9% of net sales, compared to $66.4 million in the second quarter 2007, or 31.1% of net sales. The increase in SG&A as a percentage of net sales was primarily the result of the inability to leverage store payroll and marketing costs against an 8% comparable store sales decrease.
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Second Quarter 2008 Results:
For the second quarter, ending August 2, 2008, the Company reported a loss per diluted share of $0.27 on a net loss of $6.7 million, compared to earnings per diluted share of $0.07 on net income of $2.1 million reported for the second quarter 2007.
Performance Analysis:
Net sales for the second quarter of 2008 were $223.1 million, a 4% increase on the $213.7 million in net sales for the 2007 quarter. Justice sales were $69.3 million. Limited Too sales were $145.0 million. The net sales increase of 4% was primarily driven by new store sales growth of 12% offset by a decrease in comparable store sales of 8%, with Limited Too's comp store sales down 11% and Justice's comp store sales up 3%. The company's e-commerce sales increased 22%.
In early April, the Company disclosed that Limited Too's sales were weak for the second half of February and much of March due to a lack of spring color within its sportswear assortment, along with the absence of a meaningful casual bottoms business. The Company also said that given a more difficult retail environment, customers appeared to be trading down in their apparel shopping, choosing lower price or sale items and buying fewer of them.
Commenting on the second quarter results, Rayden said: “Our results are extremely disappointing. While we have corrected Limited Too's spring merchandising difficulties, the macro-economic trends we began to see affecting Limited Too in the last several quarters accelerated dramatically in the second quarter.
“At the same time, Justice did much better than Limited Too in a difficult quarter and there is real excitement in the stores for a great product at an attractive value proposition. Despite a tough second quarter, Justice posted double-digit comp store sales growth through the first half of the year, as it has done year after year since we opened the first store in 2004. We don't see these macro-economic trends changing any time soon and believe we will be well positioned to capitalize on these trends through our single store brand strategy.”
Gross income for the second quarter of fiscal 2008 was $61.8 million, or 27.7% of net sales, compared to second quarter 2007's gross income of $68.5 million, or 32.1% of net sales. The reduction in gross income was primarily the result of the inability to leverage occupancy costs against an 8% comparable store sales decrease, as well as a 240 basis point reduction in the Company's merchandise margin.
This decrease in merchandise margin was driven primarily by increased markdowns at both brands and a planned decrease in initial mark up due to the growth of the Justice brand.
Store operating, general and administrative expenses (SG&A) for the second quarter of fiscal 2008 were $71.1 million, or 31.9% of net sales, compared to $66.4 million in the second quarter 2007, or 31.1% of net sales. The increase in SG&A as a percentage of net sales was primarily the result of the inability to leverage store payroll and marketing costs against an 8% comparable store sales decrease.
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