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Perfumania Holdings Inc. Reports Operating Results (10-Q)

December 13, 2010 | About:
10qk

10qk

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Perfumania Holdings Inc. (PERF) filed Quarterly Report for the period ended 2010-10-30.

Perfumania Holdings Inc. has a market cap of $76.22 million; its shares were traded at around $8.5 with and P/S ratio of 0.15. Perfumania Holdings Inc. had an annual average earning growth of 3.4% over the past 10 years.

Highlight of Business Operations:

Retail sales decreased by 3.7% from $71.7 million in the thirteen weeks ended October 31, 2009 to $69.1 million in the thirteen weeks ended October 30, 2010. The decrease was due to a decrease in Perfumanias retail sales of $0.2 million and a decrease in SOWs consignment sales of $2.4 million.

Retail sales decreased by 0.5% from $207.6 million in the thirty-nine weeks ended October 31, 2009 to $206.6 million in the thirty-nine weeks ended October 30, 2010. The decrease was due to a decrease in SOWs consignment sales of $5.0 million offset by an increase in Perfumanias sales of $4.0 million.

Selling, general and administrative expenses decreased by 0.2% from $117.5 million in the thirty-nine weeks ended October 31, 2009 to $117.3 million in the thirty-nine weeks ended October 30, 2010. Included in selling, general and administrative expenses are expenses charged by Quality King which were $2.2 million and $2.3 million for the thirty-nine week periods ended October 30, 2010 and October 31, 2009, respectively. These amounts include the sublease payments to Quality King discussed in Note 10 of the condensed consolidated financial statements.

Net cash used in operating activities during the thirty-nine weeks ended October 30, 2010 was approximately $59.3 million, compared with approximately $53.0 million provided by operating activities during the thirty-nine weeks ended October 31, 2009. The $112.3 million decrease in cash flows from operating activities in the current year-to-date period from the prior years comparable period resulted primarily from increases in inventory to build for this years holiday season. Accounts payable-affiliates decreased due to the timing of payments to our affiliates. The seasonality of our operations may lead to significant fluctuations in certain asset and liability accounts between fiscal year-end and subsequent interim periods.

Net cash used in investing activities was approximately $2.1 million in the thirty-nine weeks ended October 30, 2010 compared to $5.7 million in the thirty-nine weeks ended October 31, 2009. The $3.6 million decrease in cash used in investing activities in the current year-to-date period from last years comparable period resulted primarily from a reduction in new Perfumania store openings and renovations. The current periods investing activities primarily represented spending for renovation of existing stores and new stores that either opened or were under construction during the thirty-nine weeks ended October 30, 2010 as well as information technology enhancements. During the thirty-nine weeks ended October 30, 2010, Perfumania opened six new stores, including four seasonal locations, and closed seven stores compared with 16 new store openings and three store closings during the comparable period last year. In addition, during the thirty-nine week period ended October 31, 2009, we purchased three retail stores from an unrelated party for $1.5 million. We plan to open approximately one store and two seasonal locations for the remainder of fiscal 2010 and plan to close approximately five stores. We continuously evaluate the appropriate new store growth rate in light of economic conditions and may adjust the growth rate as conditions change. Furthermore, we continue to evaluate the need to close, remodel or relocate existing stores.

Net cash provided by financing activities during the thirty-nine weeks ended October 30, 2010 was approximately $60.9 million, primarily from net borrowings under our credit facility, compared with approximately $50.0 million used in financing activities for the thirty-nine weeks ended October 31, 2009. The $110.9 million increase in cash flows from financing activities in the current year-to-date period from the prior years comparable period resulted from increases in net borrowings to fund the increase in inventory for this years holiday season.

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