Footstar, Inc. reported in a filing with the SEC that net sales decreased 5.0% to $153.6 million in the third quarter of 2006 compared with $161.7 million in 2005. Shoemart sales decreased by $3.6 million or 2.4% from $148.9 million in 2005 to $145.3 million in 2006, which was due to a comparable store sales decrease of 0.5% and average store counts that were down 2.9% versus the prior year period. Rite Aid sales were essentially flat during the third quarter. The balance of the sales decrease was the result of no longer selling Thom McAn product within Wal-Mart domestic stores effective at the beginning of 2006.
GROSS PROFIT
Gross profit decreased $2.0 million or 4.2% to $45.8 million in 2006 compared with $47.8 million in 2005. The gross profit decrease is largely the result of the sales decrease described above. The overall gross margin rate increased 0.2% due to higher average selling prices realized in the Shoemart business.
SG&A EXPENSES
SG&A expenses decreased $3.9 million, or 9.3%, to $38.1 million in 2006 compared with $42.0 million in 2005. The overall SG&A rate as a percentage of sales decreased to 24.8% in 2006 versus 26.0% in 2005. SG&A expenses were reduced due to a reduction in the number of open Shoemart stores along with reduced corporate overhead resulting from our emergence from bankruptcy.
OPERATING PROFIT
Operating profit increased $1.5 million to $5.7 million in 2006 compared with $4.2 million in 2005 primarily due to the increase in the gross margin rate and decrease in expenses noted above.
