During the 13-week period ended July 30, 2005, the Company re-opened 3 Wet Seal stores and closed 5 Wet Seal stores. At July 30, 2005, the Company operated 305 Wet Seal stores and 91 Arden B. stores.
Net sales for the 13-weeks ended July 30, 2005 were $126.3 million, compared with net sales of $105.7 million for the same period last year, a 19.5 percent increase. Although the Company closed 153 Wet Seal stores, sales increased over the prior year's quarter due to the significant increase in comparable store sales. The growth in comparable store sales was driven by increased transaction counts in both the Wet Seal and Arden B. businesses.
Gross profit margin dollars increased $30.7 million over last year and, as a percentage of sales, increased 22.7 percentage points to 32.9%. A number of factors contributed to the improvement: 1) significantly lower markdown volume in the Wet Seal division, 2) the closing of low volume, unprofitable stores and 3) leverage benefits, primarily on occupancy costs, due to increased sales volume.
The Company had net interest expense of approximately $0.9 million for the 13-week period ended July 30, 2005 compared to $0.2 million for the same period a year ago. Interest expense was $1.4 million and increased significantly as a result of the placement of an $8.0 million term loan in September 2004, a $10.0 million bridge loan in November 2004, $56.0 million of convertible notes issued January 14, 2005 and amortization of financing costs associated with the debt placements.
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