Frederick's of Hollywood Group Inc. Reports Fiscal 2012 Year-End
and Fourth Quarter Financial Results
HOLLYWOOD, Calif.
, Oct. 26, 2012
/PRNewswire/ -- Frederick's of Hollywood Group Inc. (NYSE
MKT: FOH) ("Company") today announced the financial results for its
fiscal 2012 fourth quarter and year ended July 28, 2012.
"We have made significant adjustments to our operations
over the past few years that have led to improvements in our
overall business model. While there is no
question that executing our turnaround strategy has been
challenging, we have steadily reduced operating losses and believe
that we are on a path toward achieving long-term profitability,"
stated Thomas Lynch, the Company's
Chairman and Chief Executive Officer.
"We are focused on continuing to strategically utilize our
resources to drive more profitable sales through disciplined
expense management, proper inventory levels and an innovative
promotional strategy. We believe that executing
our fiscal 2013 operating initiatives also will improve our
business. These initiatives include expanding
our product categories, augmenting our product mix to include more
branded products, offering a broader assortment of merchandise at
varying price points, and implementing a new marketing strategy
that utilizes a 'brandzine,' or branded magazine for mailings, and
the latest digital marketing tools online such as digital display
advertising, email retargeting and increased search marketing,"
concluded Mr. Lynch.
The Company also announced today that it will no longer
report monthly comparable store sales after reporting them for the
past year and will return to just reporting its quarterly financial
results. "We believe that returning to reporting
our comparable store sales quarterly will enable investors to focus
more on our longer-term overall financial performance," stated Mr.
Lynch.
Fiscal Year Ended July 28,
2012 Compared to Fiscal Year Ended July 30, 2011:
- Net loss applicable to common shareholders was
$6.5 million, or $(0.17) per diluted share, compared to a net loss
of $12.1 million, or $(0.31) per diluted share.
- Adjusted EBITDA from continuing operations was a loss of
$1.1 million compared to a loss of
$2.9 million.
A reconciliation of GAAP results to Adjusted EBITDA from
continuing operations, a non-GAAP measurement, is provided in the
accompanying table.
- Net sales decreased 6.9% to $
111.4 million from $119.6
million.
- Comparable store sales increased 0.5%.
- Total store sales decreased 2.0% to $70.8 million.
- Direct sales decreased 9.7% to $35.8 million.
- Other revenue decreased 33.3% to $4.7 million.
- Gross margin, as a percentage of net sales, increased to
37.4% from 35.9%, which was primarily attributable to a
$4.0 million increase in vendor
allowances for the year ended July 28,
2012 as compared to the year ended July 30, 2011.
- Selling, general and administrative expenses decreased by
8.0% to $45.8 million, or 41.1% of
sales, from $49.8 million or 41.6% of
sales.
Fiscal 2012 Fourth Quarter Compared to Fiscal 2011
Fourth Quarter:
- Net loss applicable to common shareholders was
$4.0 million or $(0.10) per diluted share, compared to a net loss
of $7.2 million or $(0.19) per diluted share.
- Adjusted EBITDA from continuing operations was a loss of
$2.3 million compared to a loss of
$3.6 million. A
reconciliation of GAAP results to Adjusted EBITDA, a non-GAAP
measurement, is provided in the accompanying
table.
- Net sales decreased 21.2% to $20.3
million from $25.8
million.
- Comparable store sales decreased 10.1%.
- Total store sales decreased 14.6% to $13.6 million.
- Direct sales (catalog and website operations) decreased
21.7% to $6.2 million.
- Other revenue, consisting of shipping revenue,
commissions earned on direct sell-through programs, breakage on
gift cards and product sales to the Company's licensing partner in
the Middle East, decreased 71.6%
to $0.6 million.
- Gross margin, as a percentage of net sales, increased to
32.4% from to 29.4%.
- Selling, general and administrative expenses decreased by
21.4% to $9.5 million, or 46.7% of
sales, from $12.1 million or 46.8% of
sales.
Non-GAAP Financial Measures
For
purposes of evaluating operating performance, the Company uses an
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization ("Adjusted EBITDA") measurement, which is computed as
the net loss from continuing operations appearing on the statement
of operations plus depreciation and amortization, interest, income
tax expense, stock compensation expense and non-cash impairment of
long-lived assets. Adjusted EBITDA is used by
management to evaluate the operating performance of the Company's
business for comparable periods. Adjusted EBITDA
should not be used by investors or other third parties as the sole
basis for formulating investment decisions as it excludes a number
of important cash and non-cash recurring items.
While Adjusted EBITDA is a non-GAAP measurement,
management believes that it is an important indicator of operating
performance because:
- Adjusted EBITDA excludes the effects of financing and
investing activities by eliminating the effects of interest and
depreciation costs; and
- Other significant items, while periodically affecting the
Company's results, may vary significantly from period to period and
have a disproportionate effect in a given period, which affects the
comparability of results.
(in
thousands)
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
July 28,
2012
|
|
July 30,
2011
|
|
July 28,
2012
|
|
July 30,
2011
|
Net loss from continuing
operations
|
|
$(3,875)
|
|
$(6,872)
|
|
$(6,432)
|
|
$(10,330)
|
Depreciation and
amortization
|
|
522
|
|
750
|
|
2,460
|
|
3,122
|
Interest
|
|
925
|
|
379
|
|
2,224
|
|
1,483
|
Income tax
provision
|
|
25
|
|
74
|
|
75
|
|
134
|
Stock compensation
expense
|
|
112
|
|
146
|
|
553
|
|
823
|
Non-cash impairment of
long-lived assets
|
|
-
|
|
1,910
|
|
-
|
|
1,910
|
Adjusted EBITDA from continuing operations
|
|
$(2,291)
|
|
$(3,613)
|
|
$(1,120)
|
|
$(2,858)
|
Forward Looking Statement
Certain
of the matters set forth in this press release are forward-looking
and involve a number of risks and uncertainties.
These statements are based on management's current expectations or
beliefs. Actual results may vary materially from
those expressed or implied by the statements
herein. Among the factors that could cause
actual results to differ materially are the following: competition;
business conditions and industry growth; rapidly changing consumer
preferences and trends; general economic conditions; working
capital needs; continued compliance with government regulations;
loss of key personnel; labor practices; product development;
management of growth, increases in costs of operations or inability
to meet efficiency or cost reduction objectives; timing of orders
and deliveries of products; risks of doing business abroad; the
ability to protect our intellectual property; and the other risks
that are described from time to time in the Company's SEC
reports. The Company is under no obligation to,
and expressly disclaims any obligation to, update or alter its
forward-looking statements, whether as a result of new information,
future events, changes in assumptions or otherwise.
About Frederick's of Hollywood Group
Inc.
Frederick's of Hollywood Group Inc.,
through its subsidiaries, sells women's intimate apparel and
related products under its proprietary Frederick's of Hollywood® brand through 118
specialty retail stores, a catalog and an online shop at
http://www.fredericks.com/. With its exclusive
product offerings including Seduction by Frederick's of
Hollywood and the Hollywood
Exxtreme Cleavage® bra, Frederick's of Hollywood is the Original Sex
Symbol®.
Our press releases and financial reports can be accessed
on our corporate website at
http://www.fohgroup.com.
This release is available on the KCSA Strategic
Communications Web site at
http://www.kcsa.com.
CONTACT:
Frederick's of Hollywood Group
Inc.
Thomas Rende,
CFO
(212) 779-8300
Investor Contacts:
Todd Fromer / Garth
Russell
KCSA Strategic
Communications
212-896-1215 /
212-896-1250
tfromer@kcsa.com / grussell@kcsa.com
(Tables Below)
FREDERICK'S OF HOLLYWOOD
GROUP INC. CONSOLIDATED
CONDENSED BALANCE SHEETS (In Thousands)
|
|
|
|
|
|
|
|
July 28,
|
|
July 30,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
741
|
|
$
448
|
|
|
Accounts
receivable
|
997
|
|
1,214
|
|
|
Income tax
receivable
|
-
|
|
51
|
|
|
Merchandise
inventories
|
12,915
|
|
14,816
|
|
|
Prepaid expenses and other
current assets
|
952
|
|
2,108
|
|
|
Deferred income tax
assets
|
48
|
|
68
|
|
|
|
Total current
assets
|
15,653
|
|
18,705
|
|
PROPERTY AND EQUIPMENT,
Net
|
6,806
|
|
8,925
|
|
INTANGIBLE
ASSETS
|
18,259
|
|
18,259
|
|
OTHER
ASSETS
|
756
|
|
588
|
|
|
|
TOTAL
ASSETS
|
$
41,474
|
|
$
46,477
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIENCY)
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Revolving credit
facilities
|
$
7,356
|
|
$
5,415
|
|
|
Accounts payable and other
accrued expenses
|
14,623
|
|
21,250
|
|
|
|
Total current
liabilities
|
21,979
|
|
26,665
|
|
|
|
|
|
|
|
|
|
|
|
DEFERRED RENT AND TENANT
ALLOWANCES
|
3,887
|
|
4,749
|
|
TERM
LOANS
|
9,039
|
|
7,527
|
|
OTHER
|
-
|
|
5
|
|
DEFERRED INCOME TAX
LIABILITIES
|
7,352
|
|
7,372
|
|
|
|
TOTAL
LIABILITIES
|
42,257
|
|
46,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
(DEFICIENCY)
|
(783)
|
|
159
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS'
EQUITY
(DEFICIENCY)
|
$
41,474
|
|
$
46,477
|
FREDERICK'S OF HOLLYWOOD
GROUP INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
(In Thousands, Except Per
Share Amounts)
|
|
|
Three Months
Ended
(Unaudited)
|
|
Year
Ended
|
|
|
July 28,
2012
|
|
July 30,
2011
|
|
July 28,
2012
|
|
July 30,
2011
|
Net sales
|
|
$20,342
|
|
$25,817
|
|
$111,406
|
|
$119,615
|
Cost of goods sold, buying
and occupancy
|
|
13,761
|
|
18,232
|
|
69,782
|
|
76,647
|
Gross
profit
|
|
6,581
|
|
7,585
|
|
41,624
|
|
42,968
|
Selling, general and
administrative expenses
|
|
9,506
|
|
12,094
|
|
45,757
|
|
49,771
|
Impairment of long-lived
assets
|
|
-
|
|
1,910
|
|
-
|
|
1,910
|
Operating
loss
|
|
(2,925)
|
|
(6,419)
|
|
(4,133)
|
|
(8,713)
|
Interest
expense
|
|
925
|
|
379
|
|
2,224
|
|
1,483
|
Loss before income tax
provision
|
|
(3,850)
|
|
(6,798)
|
|
(6,357)
|
|
(10,196)
|
Income tax
provision
|
|
25
|
|
74
|
|
75
|
|
134
|
Net loss from continuing
operations
|
|
(3,875)
|
|
(6,872)
|
|
(6,432)
|
|
(10,330)
|
Net loss from discontinued
operations
|
|
-
|
|
(312)
|
|
-
|
|
(1,725)
|
Net loss
|
|
(3,875)
|
|
(7,184)
|
|
(6,432)
|
|
(12,055)
|
Less: Preferred stock
dividends
|
|
84
|
|
-
|
|
84
|
|
-
|
Net loss applicable to
common shareholders
|
|
$(3,959)
|
|
$(7,184)
|
|
$
(6,516)
|
|
$(12,055)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss
per share from continuing operations
|
|
$(0.10)
|
|
$(0.18)
|
|
$
(0.17)
|
|
$(0.27)
|
Basic and diluted net loss
per share from discontinued operations
|
|
-
|
|
$(0.01)
|
|
-
|
|
$(0.04)
|
Total basic and diluted net
loss per share applicable to common shareholders
|
|
$(0.10)
|
|
$(0.19)
|
|
$
(0.17)
|
|
$(0.31)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic and diluted
|
|
38,963
|
|
38,641
|
|
38,844
|
|
38,517
|
SOURCE Frederick's of Hollywood Group Inc.