Claire’s Stores Inc. on Thursday reported a third-quarter loss that increased more than 50 percent, citing the weak global retail environment.
For the quarter ended Nov. 1, the Pembroke Pines, Fla.-based accessories and jewelry retailer posted a loss of $21.6 million, 56.1 percent higher than a $13.8 million loss last year. Sales in the period fell 6.8 percent to $333 million from $357.4 million a year ago. Same-store sales dropped 6.3 percent, declining 8.7 percent in North America, with average transactions dropping 11.2 percent per store, but average sales per transaction rising 6.2 percent.
“In the third quarter, our sales performance was negatively affected by the challenging global retail environment, despite our improvements to the merchandising organization, ongoing benefits from our Pan-European Transformation project and improved in-store execution,” said chief executive officer Gene Kahn.
He added that a cost-saving initiative helped the company realize about $6 million in third-quarter savings and that Claire’s was on track to achieve its goal of $15 million in savings in fiscal 2008 and more than $40 million a year in the long term.
Kahn noted that same-store decreases have intensified in the fourth quarter. “This effect has been more pronounced in Europe, due primarily to a decline in sales performance in Zone 1, the United Kingdom and Ireland, which we believe has been driven by weakening economic conditions in that market,” he added.
Gross margins for the quarter declined by 200 basis points to 48.7 percent from 50.7 percent a year ago.
Claire’s was acquired by Apollo Management LP in 2007. Although privately owned, the company issues quarterly earnings reports because of its publicly held debt. Claire’s reported in its third-quarter results that it has $2.37 billion in long-term debt.
In the first three quarters of fiscal 2008, Claire’s posted a loss of $74.1 million, 26.8 percent higher than the loss of $58.4 million in last year’s quarter, which included both pre- and post-acquisition figures. Sales in the nine months fell 4.1 percent to $1.02 billion from $1.06 billion a year ago.
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