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iParty Corp Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 28, 2012 10:00AM

iParty Corp (IPT) filed Annual Report for the period ended 2011-12-31. Iparty Corp has a market cap of $3.7 million; its shares were traded at around $0.17 with and P/S ratio of 0.1.



Highlight of Business Operations:

We currently operate 52 retail stores, including 47 in New England, including our new store in Manchester, CT, and our reopened store in West Lebanon, NH, and five in Florida. We also operated eleven temporary Halloween stores in 2011, which is consistent with the number of temporary stores we operated in 2010 and, more than twice as many as in 2009. During 2011, the US economy continued its emergence from the deep recession of 2008/2009 with some improvements seen in stock market price levels and unemployment. These factors contributed to an improvement in the overall retail environment. However, our sales and profit performance in 2011 were negatively affected by two significant weather events. Tropical Storm Irene struck in late August, which caused significant damage to our West Lebanon New Hampshire store. The store was closed from the date of the storm until its reopening in January, 2012. More importantly, the New England region experienced an early season Nor easter snow storm on the Saturday before Halloween, our most important retail season. Eleven of our stores were without power for almost a week. Sales levels at our stores that remained open were severely reduced due to the storm related disruption in our customers daily lives and shopping patterns. We ended fiscal 2011 with approximately $80.9 million in sales for the 53 week year, a decrease of 0.5% from the prior 52 week year, and we reported a net loss of approximately $1.3 million as compared to net income of $254 thousand in 2010. Comparable store sales in 2011 decreased 5.4% compared to sales in 2010 from a positive 0.7% in fiscal 2010 when compared to 2009. Comparable store sales are defined as sales from those stores open for at least one full year.

For the first quarter of 2011, our consolidated revenues were $15.1 million, compared to $14.8 million for the first quarter of 2010, despite the shift in Easter to the second quarter of 2011 and the severe winter weather in New England that shortened our number of sale days in the first quarter of 2011. The increase in first quarter revenues from the year-ago period included a 1.1% decrease in comparable store sales (sales from stores open more than one year). The increase in consolidated revenue was primarily due to the increase in sales from our new store in the South Bay Center and increased sales from our Boylston Street store, both in Boston, Massachusetts. Consolidated gross profit margin was 36.4% for the first quarter of 2011 compared to a margin of 35.7% for the same period in 2010. The increase in gross profit margin was primarily due to the reversal of an inventory provision recognized in the fourth quarter of fiscal 2010, as well to increased initial product profit margins. The consolidated net loss for the first quarter of 2011 was $1.51 million, or $0.06 per share, compared to consolidated net loss of $1.49 million, or $0.07 per share, for the first quarter in 2010.

For the second quarter of 2011, our consolidated revenues were $19.6 million, compared to $20.1 million for the second quarter of 2010. The decrease in second quarter revenues from the year-ago period included a 5.6% decrease in comparable store sales. The decrease in consolidated revenue was primarily due to the decrease in sales from novelty wrist bands, which experienced a brief period of strong popularity in the spring and summer of 2010, that were not replaced by another novelty item or popular licensed goods in 2011, and the effect on the business from the slow economic recovery and spike in gas prices during the first half of 2011. Partially offsetting the lack of replacement sales were increased sales from our new stores in the South Bay Center, Boston, MA and in Manchester, CT and improved performance in some of our seasonal categories. Consolidated gross profit margin was 39.7% for the second quarter of 2011 compared to a margin of 40.7% for the same period in 2010. The lower gross profit margin was primarily due to decreased leveraging of occupancy costs based on the decline in same store sales, which was partly offset by increased product selling margins. The consolidated net profit for the second quarter of 2011 was $43 thousand, or $0.00 per share, compared to $767 thousand, or $0.02 per share, for the second quarter of 2010.

For the third quarter of 2011, our consolidated revenues were $16.5 million, compared to $16.9 million for the third quarter of 2010. The decrease in third quarter revenues from the year-ago period included a 5.7% decrease in comparable store sales. The decrease in consolidated revenue was primarily driven by a decrease in customer traffic and resulting decrease in sales transactions during the third quarter of 2011. We believe that the decrease in customer traffic was partly due to the decrease in sales of novelty wrist bands. These sales decreases were partially offset by increased sales from our new stores in the South Bay Center, Boston, and in Manchester, Connecticut. Consolidated gross profit margin was 34.3% for the third quarter of 2011 compared to a gross profit margin of 36.8% for the same period in 2010. The lower gross profit margin was primarily due to decreased leveraging of occupancy costs based on the decline in same store sales, as well as by decreased product selling margins. The consolidated net loss for the third quarter of 2011 was $2.8 million, or $0.12 per share, compared to $1.9 million, or $0.08 per share, for the third quarter of 2010.

Overall, we experienced a 7.3% decrease in comparable store sales in the fourth quarter, including the October results noted above. Total sales increased 0.7% in the fourth quarter as compared to the fourth quarter of 2010. This increase included sales of $1.9 million for the 53rd week of 2011. Consolidated gross profit margin was 43.1% for the fourth quarter of 2011compared to a gross profit margin of 42.7% for the same period in 2010, due primarily to increased leveraging of occupancy costs based on the additional 53rd week of sales in 2011. For the quarter, our net income was $3.0 million, compared to $2.9 million in the fourth quarter of 2010. The increase in net income for the fourth quarter of 2011 as compared to the fourth quarter of 2010 was primarily due to the extra week in the quarter due to the 53 week fiscal year, offset by the storm related sales and profit shortfalls in October.

Read the The complete Report



Stocks Discussed: IPT,
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