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Perfumania Holdings Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: April 17, 2012 11:45AM
Perfumania Holdings Inc. (PERF) filed Annual Report for the period ended 2012-01-28. Purfumania Hldg has a market cap of $81.2 million; its shares were traded at around $8.95 with and P/S ratio of 0.2. Purfumania Hldg had an annual average earning growth of 1.6% over the past 10 years.
Highlight of Business Operations:Net sales increased 1.8% from $484.8 million in fiscal 2010 to $493.5 million in fiscal 2011, due to an increase in retail sales offset by a decrease in wholesale sales. Retail sales increased 8.3% compared to the prior year as a result of increases in sales for both Perfumania and SOW, driven by increases in prices per unit as well as in customer traffic. Wholesale revenues decreased by 11.7% from the prior year as a result of less product availability and less customer demand.
The Company s owned tradenames that have been determined to have indefinite lives are not subject to amortization but are reviewed at least annually for potential impairment. The fair values are estimated and compared to their carrying values. Fair value is principally estimated using a discounted cash flow model which depends on, among other factors, estimates of future sales and expense trends, liquidity and capitalization. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We recognize an impairment loss when the estimated fair value is less than the carrying value.
Perfumania s retail sales for fiscal 2011 increased by 8.2% from $261.4 million in 2010 to $282.8 million in fiscal 2011. The average number of stores operated was 347 in fiscal 2011 compared with 367 in fiscal 2010. Perfumania s comparable store sales increased by 10.4% during fiscal 2011. Comparable store sales measure sales from stores that have been open for one year or more. We exclude stores that are closed for renovation from comparable store sales from the month during which renovation commences until the first full month after reopening. The average retail price per unit sold during fiscal 2011 increased 1.8% from fiscal 2010 and the total number of units sold increased by 6.5%. The increase in the average retail price per unit sold and the increase in the number of units sold were due to an increase in customer traffic and various store level promotions.
Perfumania s retail gross profit for fiscal 2011 increased by 5.4% to $129.1 million compared with $122.5 million in 2010. For these same periods, Perfumania s retail gross margins were 45.6% and 46.9%, respectively.
Cash provided by (used in) operating activities primarily represents income before depreciation and non-cash charges and after changes in working capital. Working capital is significantly impacted by changes in accounts receivable, inventory and accounts payable. The $45.0 million increase in cash flows from operations in fiscal 2011 as compared to fiscal 2010 was primarily due to the net income for fiscal 2011 compared with the net loss in fiscal 2010 and changes in working capital. Our accounts receivables decreased in fiscal 2011 due to lower wholesale sales in fiscal 2011 compared to fiscal 2010. Inventory levels decreased in fiscal 2011 due to an effort by management to optimize and reduce inventory levels resulting in lower inventory purchases, and accounts payable fluctuations are generally determined by the timing of merchandise purchases and payments.
Stocks Discussed: PERF,