Footstar first quarter net sales decreased 13.5%, to $133.9 million in 2006 compared with $154.8 million in 2005. The company's net loss for the quarter was $3.4 million or 16 cents per diluted share compared to $1.4 million or 7 cents.
Shoemart sales were approximately $128.4 million in 2006 and $140.9 million in 2005. The Shoemart sales decrease was due to a 4.9% comparable store sales decline in 2006 as a result of weaker winter product sales and the shift of Easter out of first quarter. Furthermore, the sales decrease at Shoemart was also a result of operating in 1,402 stores at the end of first quarter 2006 versus 1,479 stores in 2005. The balance of the sales decrease during first quarter 2006 was the result of no longer selling Thom McAn product within Wal-Mart domestic stores effective at the beginning of 2006.
Gross profit decreased $5.2 million to $39.1 million in 2006 compared with $44.3 million in 2005 due to the lower sales in 2006. The gross margin rate increased in 2006 as a result of improved margins on clearance sales in 2006 compared with 2005.
SG&A expenses decreased $8.2 million, or 17.2%, to $39.4 million in 2006 compared with $47.6 million in 2005. The overall SG&A rate as a percentage of sales decreased to 29.4% in 2006 compared with 30.7% in 2005. The company incurred less corporate overhead related to the bankruptcy and has continued to reduce expenses in conjunction with sales declines.
Depreciation and amortization increased $0.5 million to $2.3 million in 2006 compared with $1.8 million in 2005 due to higher trademark amortization expense recorded in 2006.
Operating loss decreased by $2.5 million to $(2.6) million in 2006 compared with $(5.1) million in 2005 primarily due to the reasons noted above.
FOOTSTAR, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 1, 2006 AND APRIL 2, 2005
(Unaudited)
(amounts in millions, except per share amounts)
Three Months
Ended
-----------------
APRIL April
1, 2006 2, 2005
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Net sales $133.9 $154.8
Cost of sales 94.8 110.5
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GROSS PROFIT 39.1 44.3
Store operating, selling, general and administrative expenses 39.4 47.6
Depreciation and amortization 2.3 1.8
Interest expense 0.5 0.8
Interest income (0.7) --
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LOSS BEFORE REORGANIZATION ITEMS (2.4) (5.9)
Reorganization items (0.1) 3.7
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LOSS BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (2.3) (9.6)
Income tax provision (benefit) 0.3 (8.2)
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LOSS FROM CONTINUING OPERATIONS (2.6) (1.4)
Loss from discontinued operations (0.8) (0.1)
Gain from disposal of discontinued operations -- 0.1
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NET LOSS $ (3.4) $ (1.4)
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LOSS PER SHARE:
Basic and diluted:
Loss from continuing operations $(0.12) $(0.07)
Loss from discontinued operations (0.04) --
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Net loss $(0.16) $(0.07)
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Average common shares outstanding:
Basic and diluted 20.8 20.5
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