This improvement reflected the leveraging of occupancy and buying costs which were offset, in part, by a decrease in merchandise margins. Selling, general and administrative expenses, which includes allocated overhead, improved to 32.7% of sales from 34.7% last year, resulting in a narrowing of the quarterly loss for the segment to $1.8 million from $1.9 million.
Net sales for the direct segment increased 5% to $60.8 million versus last year's $57.8 million for the quarter. Gross profit was $28.9 million versus last year's $26.9 million, an increase of 7%. This improvement reflected higher merchandise margins which more than offset an increase in shipping and handling costs.
Robert Bernard, Chief Executive Officer, stated: "We are pleased to have finished 2006 on a positive note and with good momentum in both of our business segments. We are also encouraged by the continued top-line strength in both retail and direct into the first quarter of fiscal 2007."
"We remain focused on our plans for the long term and will invest appropriately in our older stores in fiscal 2007, and expect to add over twenty new stores this year and move into our new headquarters later this month. Our ongoing goal is to strengthen our Company on all levels and to continue to build the platform from which we can support our growth over the next five years and beyond."
Same-store sales for the retail segment decreased by 2% for the year, with total retail segment sales increasing by 22%. Net sales for the direct segment increased by 10%.Gross profit increased by 16% to $101.8 million or 39.5% of sales, compared to $88.1 million or 38.9% of sales. SG&A expense was 37.2% versus 38.3% a year ago, an improvement of over 110 bps.
Income from continuing operations before interest and taxes increased to $6.1 million, or 2.3% of sales, up from approximately breakeven in the previous year.
Net income for the fiscal year was $5.8 million or $0.18 per fully-diluted share compared to a loss from continuing operations and before the cumulative effect of the change in accounting principle of $0.7 million or $0.03 per fully-diluted share last year.
marketing@alchempro.com
