Fiscal First Quarter 2012 Results
Revenues for the quarter ended October 31, 2011 were $351 million, an increase of $24 million, or 7.3%, compared to $327 million in the same period last year. Comparable store sales, which are based on year-over-year merchandise sales, increased 5.8% during the quarter ended October 31, 2011, compared to a decrease of 1.1% during the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 5.2% for the quarter.
For the quarter ended October 31, 2011, gross margin was $188 million, an increase of 13.7% compared to $165 million in the same period last year. The Company achieved gross margin of 53.5%, compared to 50.5% in the comparable quarter last year. The 300 basis point improvement was achieved through a combination of price increases and lower levels of merchandise discounts, partially offset by the impact of rising commodity costs. Gross margin was also impacted by an 85 basis point increase from the change in warranty revenue recognition.
Selling, general and administrative expenses were $200 million, or 56.9% of revenues, in the quarter ended October 31, 2011, compared to $195 million, or 59.7% of revenues, in the same period last year. The improvement as a percent of revenues reflects greater operating leverage of store and corporate expenses. The Company’s operating loss for the quarter was $22 million compared to an operating loss of $42 million in the prior year quarter. Operating margin improved 640 basis points, to negative 6.4%, for the quarter ended October 31, 2011, compared to negative 12.8% in the same period last year. The 640 basis point increase was primarily driven by gross margin improvement and greater operating leverage.
The Company incurred a net loss from continuing operations for the first quarter ended October 31, 2011 of $32 million, or $0.99 per share, compared to a net loss from continui ng operations of $97 million, or $3.03 per share, in the comparable quarter last year. The first quarter of fiscal 2011 included a charge to interest expense of $46 million, or $1.43 earnings per share, which resulted from the amendment to our Senior Secured Term Loan. The change in warranty revenue recognition improved net loss per share for the first quarter of fiscal 2012 by $0.18.
Inventory at October 31, 2011 stood at $857 million, compared to $834 million in the same period last year.
“Our performance this quarter demonstrates the progress we are making towards returning the Company to profitability,” commented Theo Killion, Chief Executive Officer. “We’ve now achieved top line growth in four consecutive quarters, and our efforts to expand operating margins are gaining traction.”