Gross profit was $28.3 million, or 51.3 per cent of net sales, compared to gross profit of $25.5 million, or 46.8 per cent of net sales, in the first quarter of fiscal 2018. The 450 basis point increase in gross margin rate was due to the non-recurrence of an unfavourable adjustment to inventory reserves in the prior year, stronger full price selling, and lower product costs.
In the reported quarter, selling, general, and administrative expenses were $34.0 million, or 61.7 per cent of sales, compared to $29.9 million, or 54.8 per cent of sales, in the first quarter of fiscal 2018. The increase in SG&A dollars was primarily the result of strategic consulting costs of $1.4 million, higher compensation and benefits, and investments in marketing and new stores.
"Our first quarter results came in largely as expected. We continue to focus on our direct to consumer business through retail expansion and enhancements to our e-commerce channel. At wholesale, our women’s business continues to resonate with consumers, which in our view is driving further market share gains. Our Vince Unfold subscription business is gaining traction and we are excited about other opportunities including a test by Microsoft, expected to launch in the coming months, presenting Vince in the windows of select stores. We are pleased with the increased momentum we are seeing in our business as weather improves and we begin to benefit from some early timing of shipments. Overall, we believe we are gaining momentum with merchandising strategies and an elevated focus on marketing leaving us well positioned to deliver profitable growth over the long term," Brendan Hoffman, chief executive officer, said.
The company ended the first quarter of fiscal 2019 with $45.6 million of borrowings under its debt agreements. The company decreased borrowings under its debt agreements since the same period last year by $5.0 million, primarily due to $4.2 million of net repayments to the term loan facilities.
For fiscal 2019, the company continues to expect net sales to be between $290 million and $300 million. This compared to net sales of $279.0 million in fiscal 2018. Operating income is to be between $7 million and $9 million. This compared to reported operating income of $4.1 million in fiscal 2018 which included a $1.7 million non-cash asset impairment charge related to property and equipment of certain retail stores. (RR)
Fibre2Fashion News Desk – India
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