BELLPORT, N.Y., May 3, 2010 (GLOBE NEWSWIRE) -- Perfumania Holdings, Inc., (Nasdaq:PERF) announced the results of operations for its 2009 fiscal year ended January 30, 2010.
Fiscal 2009 Results
Total revenues for fiscal year 2009 were $510.9 million, an increase of 19.0% over the $429.3 million reported for the prior year, primarily due to the inclusion of the results of the Perfumania retail division for the full year in fiscal 2009. On August 11, 2008 Perfumania Holdings, Inc. (the "Company") completed its acquisition of Model Reorg, Inc. ("Model Reorg") ("the Merger"). For accounting purposes, Model Reorg was considered to be the acquirer in the Merger. The consolidated financial results include the accounts of Model Reorg prior to the Merger and the results of the consolidated companies starting on the Merger date August 11, 2008. Perfumania's retail store sales for fiscal 2009 increased by 4.7% to $265.9 million compared to fiscal 2008. The average number of stores operated was 367 in fiscal 2009 versus 329 in the prior year, which contributed to the increase in retail sales. However, Perfumania's comparable store sales decreased by 3.6% during fiscal 2009. Comparable store sales measure sales from stores that have been open for one year or more. We exclude stores that are closed for renovation from comparable store sales from the month during which renovation commences until the first full month after reopening. Wholesale sales to unaffiliated companies decreased modestly compared to the prior year due primarily to the impact of the ongoing, global economic downturn and its resulting reduction in consumer spending.
Gross profit for fiscal year 2009 was $178.8 million, a 32.6% increase over the prior year amount of $134.8 million. Excluding the gross profit from Perfumania's retail sales, which is included for the full year in fiscal 2009 and only part of the 2008 fiscal year, gross profit decreased by $6.8 million or 9.3%. The company experienced a decrease in gross profit dollars and percentages as a direct result of its efforts to maximize inventory turns and productivity and reduce overall retail store and distribution center inventory levels in fiscal 2009.
The reduction in inventory of $85.9 million was a major contributor to the Company's ability to pay down $113.4 million of outstanding borrowings under its bank line of credit in fiscal 2009.
During fiscal 2009, operating expenses increased 36.5% from $127.4 million in fiscal 2008, to $173.9 million exclusive of impairment charges of $68.1 million and $2.3 million in fiscal 2008, and 2009, respectively. The increase is due principally to the operating expenses attributable to Perfumania's retail sales which are included for the full year in fiscal 2009 and only part of the 2008 fiscal year. Selling, general and administrative expenses for fiscal 2009 decreased modestly compared to those incurred for the full fiscal year 2008 for all entities.
As a result principally of the foregoing, we recognized income from operations in fiscal 2009 of approximately $2.6 million, as compared to a loss from operations in fiscal 2008 of $60.7 million.
Interest expense was approximately $18.2 million for fiscal 2009 compared with approximately $12.0 million in fiscal 2008. The fiscal 2009 amount includes the combined company for the full fiscal year whereas the fiscal 2008 amount includes Model Reorg prior to the Merger on August 11, 2008 and then the combined company for the remainder of the year. Overall, the interest rates on total variable interest debt increased by approximately 2.9% during fiscal 2009 as compared to fiscal 2008.
Our effective tax rates for fiscal 2009 and fiscal 2008 were 1.2% and 19.6% respectively. In both years the effective tax rates differed from our federal statutory rates primarily due to the impact of recording valuation allowances and non-deductible expenses.
As a result principally of the foregoing, we realized a net loss of approximately $15.8 million in fiscal 2009 compared to a net loss of $87.0 million in fiscal 2008.
| PERFUMANIA HOLDINGS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (in thousands, except share and per share amounts) | ||
| Fiscal Year Ended | Fiscal Year Ended | |
| January 30, 2010 | January 31, 2009 | |
| Net sales | $ 510,922 | $ 429,294 |
| Cost of goods sold | 332,132 | 294,474 |
| Gross profit | 178,790 | 134,820 |
| Operating expenses: | ||
| Selling, general and administrative expenses | 164,141 | 119,994 |
| Asset impairment | 2,320 | 68,078 |
| Depreciation and amortization | 9,766 | 7,423 |
| Total operating expenses | 176,227 | 195,495 |
| Income (loss) from operations | 2,563 | (60,675) |
| Interest expense | 18,202 | 12,023 |
| Loss before income tax provision | (15,639) | (72,698) |
| Income tax provision | 189 | 14,262 |
| Net loss | $ (15,828) | $ (86,960) |
| Net loss per common share: | ||
| Basic and diluted | $ (1.77) | $ (15.41) |
|
Weighted average number of common shares outstanding: |
||
| Basic and diluted | 8,966,417 | 7,364,203 |
| PERFUMANIA HOLDINGS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except share amounts) | ||
| January 30, 2010 | January 31, 2009 | |
| ASSETS: | ||
| Current assets: | ||
| Cash and cash equivalents | $ 1,951 | $ 4,202 |
|
Accounts receivable, net of allowances of $335 and $1,049, as of January 30, 2010 and January 31, 2009, respectively |
25,382 | 29,035 |
| Inventories | 216,038 | 301,883 |
| Prepaid expenses and other current assets | 11,902 | 5,813 |
| Total current assets | 255,273 | 340,933 |
| Property and equipment, net | 35,882 | 41,755 |
| Other assets, net | 15,430 | 17,442 |
| Total assets | $ 306,585 | $ 400,130 |
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||
| Current liabilities: | ||
| Revolving credit facility | $ 40,012 | $ 153,383 |
| Accounts payable | 35,017 | 28,834 |
| Accounts payable-affiliate | 35,277 | 12,169 |
| Accrued expenses and other liabilities | 18,068 | 20,717 |
| Current portion of notes payable - affiliate | 640 | 640 |
| Current portion of obligations under capital leases and other long-term debt | 1,147 | 1,102 |
| Total current liabilities | 130,161 | 216,845 |
| Notes payable - affiliate | 95,739 | 96,379 |
| Long-term portion of obligations under capital leases | 2,034 | 3,253 |
| Other long-term liabilities | 14,560 | 3,772 |
| Total liabilities | 242,494 | 320,249 |
| Shareholders' equity: | ||
|
Preferred stock, $.10 par value, 1,000,000 shares authorized as of January 30, 2010 and January 31, 2009, none issued |
-- | -- |
|
Common stock, $.01 par value, 20,000,000 shares authorized; 9,864,666 shares issued and outstanding as of January 30, 2010 and January 31, 2009 |
99 | 99 |
| Additional paid-in capital | 125,045 | 125,007 |
| Accumulated deficit | (52,476) | (36,648) |
|
Treasury stock, at cost, 898,249 shares as of January 30, 2010 and January 31, 2009 |
(8,577) | (8,577) |
| Total shareholders' equity | 64,091 | 79,881 |
| Total liabilities and shareholders' equity | $ 306,585 | $ 400,130 |
The Company's fiscal year results are based on a fifty-two or fifty-three week retail calendar ending on the Saturday closest to January 31. All references herein to fiscal years are to the calendar year in which the fiscal year begins; for example, fiscal year 2009 refers to the fiscal year that began on February 1, 2009 and ended on January 30, 2010. The two fiscal years presented contain fifty-two weeks.
"In fiscal year 2009 we continued our consolidation and relocation of corporate departments to our new facility in Bellport, New York," said Michael W. Katz, the Company's President and Chief Executive Officer. "We continue to strive for greater operating efficiency, challenge operating expenses and further promote our products to react to the very difficult retail environment. We are encouraged by the results of these programs and some slight improvement in the retail environment so far in fiscal 2010.
"We have concluded that starting in May 2010 we will announce our retail sales information in a format comparable to most retailers presently disclosing this information monthly.
"We commend all our loyal employees for their efforts in this difficult retail environment and look forward to their participation in an improving retail environment in the future," concluded Mr. Katz.
This press release may include information presented which contains forward-looking information, including statements regarding the strategic direction of the Company. Some of these statements, including those that contain the words "anticipate," "believe," "plan," "estimate," "expect," "should," "intend," and other similar expressions, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Among the factors that could cause actual results, performance or achievement to differ materially from those described or implied in the forward-looking statements are our ability to further integrate and achieve synergies between the Perfumania and Model Reorg businesses, our ability to service our obligations, our ability to comply with the covenants in our senior credit facility, general economic conditions including a decrease in discretionary spending by consumers, competition and the ability to raise additional capital to finance our expansion. Additional information regarding factors that could cause results to differ can be found in the company's Annual Report on Form 10-K for the fiscal year ended January 30, 2010, in the section entitled "Risk Factors."