Second quarter 2010 net sales were $211.6 million compared to $177.7 million for the second quarter 2009. Income from operations for the second quarter 2010 was $9.1 million compared to $1.0 million for the second quarter 2009. Net income for the second quarter 2010 was $6.0 million compared to $5.8 million for the second quarter 2009, which included the gain on troubled debt restructuring.
For the second quarter 2010, the Company reported earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $12.7 million compared to EBITDA of $5.4 million for the second quarter 2009. A reconciliation of EBITDA to net income (loss) is set forth at the end of this press release.
Results include the impact of certain restructuring and other highlighted charges discussed below. Excluding these highlighted charges, EBITDA was $12.4 million for the second quarter 2010 compared to EBITDA of $5.8 million for the second quarter 2009. The improvement in EBITDA was driven by higher unit volumes and higher gross margins.
Second quarter 2010 gross profit was $38.3 million compared to $30.2 million for the second quarter 2009. The increase in gross profit was due to a 21.6% growth in unit volumes combined with a 4% increase in gross profit per unit. Second quarter 2010 gross margin was 18.1% compared to 17.0% in the second quarter 2009.
The Company regained lost market share during the second quarter 2010. As reported by STARS, the market grew 11% in units sold. Approximately half of the increase in the Company's unit volume for the second quarter 2010 was due to the growth in the market. The remainder of the increase in the Company's unit volume was due to the Company's three-part guarantee instituted in July 2009 as well as sales and marketing efforts to grow revenues and gross profit. The three-part guarantee consists of promises that the Company would be in stock in key styles and colors, that it would fulfill orders accurately and that the Company would not be undersold.
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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FOR THE THREE AND SIX MONTHS ENDED JUNE 26, 2010 AND JUNE 27, 2009 |
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(dollars in millions) |
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(Unaudited) |
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Three Months Ended |
Six Months Ended |
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2010 |
2009 |
2010 |
2009 |
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Net sales |
$211.6 |
$177.7 |
$365.0 |
$329.4 |
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Cost of sales (exclusive of depreciation and amortization as shown below) |
173.3 |
147.5 |
299.9 |
274.2 |
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Gross profit |
38.3 |
30.2 |
65.1 |
55.2 |
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Warehousing, selling and administrative expenses |
25.9 |
24.4 |
51.8 |
51.2 |
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Restructuring charges, net |
(0.3) |
0.1 |
(0.2) |
0.6 |
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Stock-based compensation |
0.0 |
0.3 |
0.0 |
0.3 |
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Depreciation and amortization |
3.6 |
4.4 |
7.7 |
9.1 |
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Operating expenses |
29.2 |
29.2 |
59.3 |
61.2 |
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Income (loss) from operations |
9.1 |
1.0 |
5.8 |
(6.0) |
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Other (income) expense |
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Interest expense |
3.0 |
4.1 |
5.7 |
12.0 |
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Other financing costs |
0.0 |
1.5 |
0.0 |
1.5 |
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Gain on troubled debt restructuring |
0.0 |
(10.5) |
0.0 |
(10.5) |
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Total other expense |
3.0 |
(4.9) |
5.7 |
3.0 |
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Income (loss) before income taxes |
6.1 |
5.9 |
0.1 |
(9.0) |
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Income tax provision |
0.1 |
0.1 |
0.1 |
0.1 |
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Net income (loss) |
$6.0 |
$5.8 |
$0.0 |
($9.1) |
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Reconciliation to EBITDA |
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Interest expense |
3.0 |
4.1 |
5.7 |
12.0 |
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Other financing costs |
0.0 |
1.5 |
0.0 |
1.5 |
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Income tax provision |
0.1 |
0.1 |
0.1 |
0.1 |
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Depreciation and amortization |
3.6 |
4.4 |
7.7 |
9.1 |
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Gain on troubled debt restructuring |
0.0 |
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