PERFUMANIA is a specialty retailer and wholesale distributor of a wide range of brand name and designer fragrances. Perfumania operates a chain of retail stores specializing in the sale of fragrances at discounted prices up to 75% below the manufacturers' suggested retail prices. Perfumania's wholesale division distributes fragrances and related products primarily to an affiliate. Perfumania.com offers a selection of the Company's more popular products for sale over the Internet and serves as an alternative shopping experience to Perfumania retail customers. Perfumania Holdings Inc. has a market cap of $25.6 million; its shares were traded at around $2.7 with and P/S ratio of 0.1.
Highlight of Business Operations:Approximately $6.8 million of the $12.3 million decrease in wholesale sales are represented by affiliate sales to Perfumania in the three months ended April 30. 2008. As a result of the Merger on August 11, 2008, wholesale sales to Perfumania became intercompany transactions, which are eliminated in consolidation. The remaining decrease in wholesale sales of $5.9 million is the result of the continuing tightening of credit resources generally, which decreases customers ability to purchase.
Selling, general and administrative expenses include payroll and related benefits for our distribution centers, 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 increased by $25.5 from $13.3 million in the three months ended April 30, 2008 to $38.7 million in the thirteen weeks ended May 2, 2009. Excluding the selling, general and administrative expenses of Perfumanias retail division of $27.2 million, which are included for the period from February 1, 2009 through May 2, 2009, selling, general and administrative expenses decreased by $1.7 million or 12.8%. Included in selling, general and administrative expenses are expenses in connection with the service agreements with Quality King, which were $0.7 million and $0.6 million for the thirteen weeks ended May 2, 2009 and the three months ended April 30, 2008, respectively.
Depreciation and amortization was approximately $2.5 million in the thirteen weeks ended May 2, 2009, compared to $0.4 million for the three months ended April 30, 2008. Approximately $1.8 million of the total increase is attributable to Perfumanias retail division.
As a result of the foregoing, we realized a net loss of approximately $9.9 million in the thirteen weeks ended May 2, 2009, of which $8.8 million is attributable to Perfumania, compared to a net income of $0.6 million in the three months ended April 30, 2008.
Revolving loans under the Senior Credit Facility may be drawn, repaid and reborrowed up to the amount available under a borrowing base calculated with reference to a specified percentage of the borrowers eligible accounts and a specified percentage of the borrowers eligible inventory from time to time. GECC has the right to impose reserves in its reasonable credit judgment, whether or not there is an Event of Default, which would effectively reduce the borrowing base and thereby the amount that the borrowers may borrow under the Senior Credit facility. Under an amendment to the Senior Credit Facility executed as of May 26, 2009 (Waiver and Amendment No.1), reserves against borrowing availability increasing from $9 million to $15 million at August 4, 2009 and thereafter will automatically apply, in addition to any reserves that may be imposed from time to time in GECCs reasonable credit judgment. The Senior Credit Facility also includes a sub-limit of $25 million for letters of credit and a sub-limit of $12.5 million for swing line loans (that is, same-day loans from the lead or agent bank).
Net cash used in investing activities was approximately $3.6 million in the thirteen weeks ended May 2, 2009 compared to $3.3 million in the three months ended April 30, 2008. 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 thirteen weeks ended May 2, 2009. During the thirteen weeks ended May 2, 2009, Perfumania opened nine new stores, relocated one existing store and closed two stores. In addition, during the thirteen weeks ended May 2, 2009, we purchased three existing retail stores from an unrelated party for $1.5 million. Due to the current and anticipated economic environment in 2009, we plan to reduce the number of Perfumania new store openings to approximately seven stores for the remainder of fiscal 2009 and plan to close approximately four stores.
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