- The Disney Store team is talented, energized and loves working with all the creative possibilities that the Disney Store brand offers to elevate and innovate merchandise assortment, strengthening unique position.
- The new 700,000 square foot distribution center in Fort Payne, Alabama goes live on schedule, and will support current needs and future growth over the next few years.
These results are preliminary and may be subject to adjustment pending the review and confirmation of certain tax laws and other factors.
Due to previously announced restatement, the company is not providing full comparative financial results, and it is providing only selected balance sheet data.
Preliminary net loss was $27.1 million compared to a net loss of $15.2 million last year.
- On a preliminary per share basis the company lost 93 cents per share versus a loss of 53 cents per share last year.
- The company incurred stock option investigation fees of approximately $1.8 million pre-tax.
- On a segment basis, The Children''s Place recorded an operating loss of $8 million versus an operating profit of $3.5 million last year.
- Disney Store''s operating loss was $10.6 million compared to an operating loss of $4.5 million last year.
Shared services reported an operating loss of $24.1 million, including $1.8 million in stock option investigation fees, versus an operating loss of $24 million last year.
Excluding the previously mentioned stock option investigation fees, shared services expense decreased 7%.
Second quarter results reflect weak customer response to summer line, particularly in big girls and newborns, boy''s and accessories comparable store sales in the positive low single digits.
Decision to move monster sale and back-to-school floor sets later in the quarter, the results of which were negative to sales. Increased average unit retails, which did not resonate with the customer and a slow start to initial back-to-school selling, particularly due to later back-to-school starts, corresponding tax-free shopping events, coupled with an intense promotional environment.
Slow start was particularly felt in big girls. Negative 1% comparable store sales reflect a 1% decrease in transactions. Lower traffic was partially offset by higher conversion. By region, Canada was strongest with low-teen comparable store sales, while the Southeast was weakest with negative double-digit comparable store sales.
Based on early back-to-school selling, the company looked at the second half to ensure it has proactive strategies in place to compete in a promotional environment to drive traffic and sales.
As part of the strategy, the company launched a $9.99 denim event in the third week of July and moved up Fall One sale by 10 days in early August. Both events were successful in driving traffic and sales into stores. The markdowns the company expects to take as a result of second half promotional strategy are factored in today''s earnings guidance. Fall Two set last Friday and includes Halloween Costume offering.
In the first half, ticketed AURs increased in the mid-to-high single digits. In the second half, ticketed AURs are planned flat to slightly down versus last year.
In the first half, style count was up approximately 20% versus last year. In the second half, style count is planned up 2%. In the first half, depth per style decreased 20%. In the second half, depth per style is up 10%. Second half plans reflect commitment to narrow deep, focused assortments at a great value, which makes for an easy shopping experience and is easier to execute.
On July 10, the company launched on schedule new store-within-a-store shoe concept and is now currently operating 33 stores as well as online. Though still very new, initial customer response has been positive. While the company has a lot more to learn, it is confident that concept of fashionable, high-quality shoes at a great value fills a big void in the marketplace.
The second quarter at Disney Store was challenging.
The company attributes results to continued mall traffic declines, Meet the Robinsons and Ratatouille merchandise not meeting expectations, and decision to move both semi-annual sale and fall delivery a week later this year versus last year.
Areas of strength came from Cars, Pirates of the Caribbean and Golden Princess assortments. Flat comparable store sales reflect the 1% increase in average transaction side, driven by higher units per transaction, partially offset by lower average unit retail.
Comparable sales transactions decreased 1%, partially offset by higher depth conversion. Guest traffic, which the company is dependent on, was down 6%, in line with national mall traffic declines. By geography, comparable store sales were positive in Canada and in the Northeast, and in the negative, low-single digits in all other regions.
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