Included in net earnings for the 2006 quarter were $0.5 million before tax, $0.3 million after tax, or $0.01 per diluted share, of stock option expense related to the adoption of FAS 123R "Share-Based Payment", a new accounting pronouncement requiring the expensing of stock-based compensation.
The Company achieved a 10% rise in net sales driven by broad based organic sales growth across all business segments and the acquisition of Vince. An increase in gross profit as a percent of net sales combined with the improvement in net sales enabled net earnings and earnings per share on an ongoing basis to exceed last year despite higher selling, general and administrative costs.
Gross profit as a percentage of net sales rose by 170 basis points from last year to 21.2%, primarily due to improved performance at retail by many of the Company's brands, which resulted in lower markdowns. Selling, general and administrative costs increased, among other reasons, due to the addition of 18 new retail stores, the acquisition of Vince, higher marketing spend and activities to fund the Company's strategic initiatives.
Operating earnings (gross profit less selling, general & administrative expense before stock option expense, amortization and restructuring and other non-recurring charges) as a percent of net sales rose by 150 basis points from last year to 5.1%.
marketing@alchempro.com
