As expected, this expense leverage was partially offset by pressure in gross margin rate. The gross margin rate for the quarter declined 60 basis points compared to last year due to certain lower margin deals and promotions as well as a slight shift in merchandise mix towards lower margin categories.
For the first quarter of fiscal 2007, the Company recorded net interest income of $2.9 million, a $2.6 million improvement compared to last year, with the increase directly attributable to the cash generated by the business over the last 12 months. The effective income tax rate for the first quarter of fiscal 2007 was 36.0% compared to 32.8% last year.
Inventory ended the quarter at $798 million, down 1% compared to last year due to lower store count. For the fifth consecutive quarter, the Company achieved record inventory turnover results driven by improving inventory management and timely flow of merchandise along with strength in comparable store sales. The Company ended the first quarter of fiscal 2007 with no debt and total cash and investments of $210 million, an increase of $136 million over the prior year.
In addition to the GSR, the Company purchased 0.4 million of its outstanding common shares in open market transactions at a cost of $13.7 million during the first quarter of fiscal year 2007. The remaining repurchase authorization under the 2007 Repurchase Program was approximately $486.3 million as of May 5, 2007.
For the second quarter of fiscal 2007, the Company's guidance calls for a 2% to 4% comparable store sales increase compared to a 5.2% comparable store sales increase recorded last year.
Based on this level of sales performance, the Company's earnings are estimated to be in the range of $0.07 to $0.10 per diluted share, compared to income from continuing operations for the second quarter of fiscal 2006 of $0.04 per diluted share.
marketing@alchempro.com
