First Quarter net sales from the Company's accessories business rose 3.9% compared to the prior year quarter with sales volume growth from RELIC brand leather goods and RELIC eyewear partially offset by low single-digit sales volume declines in FOSSIL women's and men's leather products.
Worldwide company-owned retail store sales increased 22.7%, compared to the prior year quarter, as a result of a 25.6% increase in the average number of stores open during the First Quarter and comparable store sales gains of 4.6%. On a comparable thirteen week period for the prior year quarter, First Quarter sales from company-owned retail stores increased by approximately 12%.
Gross profit of $156.1 million represents an increase of 17.4% over the prior year quarter amount of $133.0 million. Gross profit margin increased by 90 basis points to 51.2% in the First Quarter compared to 50.3% in the prior year quarter. The increase in First Quarter gross profit margin reflects a 130 basis point improvement due to favorable currency rates and an increased sales mix of higher gross profit margin international and company-owned retail store sales.
These increases in gross profit margin were partially offset by increased RELIC accessory sales and increased export sales to distributors from the Company's U.S. operations, both of which carry lower gross profit margins than the Company's historical consolidated gross profit margin.
Additionally, gross profit margins were negatively impacted as a result of certain new styles added to the Company's global watch assortment which generated lower gross profit margins than historical averages. However, the Company currently has an initiative in place that it believes will result in improved gross product margins across its various product lines beginning in the second half of the year.
The Company continues to estimate net sales growth in the lower double-digit range for the remainder of fiscal year 2007 and expects continued gross margin improvement on a year-over-year basis. The Company does not expect net sales growth for any prospective quarter to be significantly higher or lower than this range. These estimates incorporate the current prevailing spot rate of the U.S. dollar compared to other foreign currencies, primarily the Euro and Pound.
marketing@alchempro.com
