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Perfumania Holdings Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 11, 2012 05:05PM
Perfumania Holdings Inc. (PERF) filed Quarterly Report for the period ended 2012-10-27.
Highlight of Business Operations:The operations and results of the historical Parlux Inc. business are significant to the Company's consolidated financial statements. At the end of the last reported fiscal year of the respective companies immediately preceding the merger (January 28, 2012 for the Company and March 31, 2011 for Parlux Inc.), the total assets were approximately $287 million for Perfumania, compared to approximately $113 million for Parlux Inc., and total net sales were approximately $494 million for Perfumania compared to approximately $123 million for Parlux Inc. Management is currently working with Parlux personnel to integrate the Parlux business, to maximize operating efficiencies and cost savings, and to update operating and capital forecasts. Management believes that the merger will have a significant effect on the Company's future sales, expenses and operating results as compared to its historical results.
Perfumania's retail sales decreased from $59.6 million in the thirteen weeks ended October 29, 2011 to $59.4 million in the thirteen weeks ended October 27, 2012. The average number of stores operated was 345 in the thirteen weeks ended October 27, 2012 compared with 344 in the comparable period last year. Perfumania's comparable store sales decreased by 2.0% during the thirteen weeks ended October 27, 2012 from the same period in 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 the thirteen weeks ended October 27, 2012 increased by 2.2% from the prior year's comparable period while the total number of units sold decreased by 2.4%. The reduction in demand is attributed to lower mall traffic.
Selling, general and administrative expenses include payroll and related benefits for our distribution center, sales, store operations, field management, purchasing and other corporate office and administrative personnel; rent, common area maintenance, real estate taxes and utilities for our stores, distribution centers and corporate office; advertising, consignment fees, sales promotion, insurance, supplies, freight out, and other administrative expenses. Selling, general and administrative expenses were $57.5 million in the thirteen weeks ended October 27, 2012, compared to $39.9 million in the thirteen weeks ended October 29, 2011. Excluding the results of Parlux, selling, general and administrative expenses increased by $0.7 million. Included in selling, general and administrative expenses are expenses in connection with the Services Agreement with Quality King, which was less than $0.1 million during the thirteen weeks ended October 27, 2012 and $0.1 million for the thirteen weeks ended October 29, 2011.
Excluding the results of Parlux, the decrease in wholesale sales of $13.1 million or 12.5% is the result of less product availability for the wholesale division and less customer demand during the thirty-nine weeks ended October 27, 2012 compared to the thirty-nine weeks ended October 29, 2011.
Perfumania's retail gross profit for the thirty-nine weeks ended October 27, 2012 decreased by 2.7% to $82.5 million compared with the comparable period in 2011. For these same periods, Perfumania's retail gross margins were 45.6% and 47.0%, respectively.
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