By  on September 14, 2009

Nearly $44 million in cost cuts and a one-time gain allowed Claire’s Stores Inc. to reduce its second-quarter loss.

For the three months ended Aug. 1, the Pembroke Pines, Fla.-based specialty store group reported a net loss of $3.7 million, well below the $16.9 million lost in the prior-year quarter.

Sales fell 12.7 percent, to $314.2 million from $360 million, and were off 6.9 percent on a comparable-store basis. North American comps dropped 9.9 percent and European comps, measured in local currencies, fell 1.6 percent.

Results, hurt by currency fluctuation, included a $17.1 million gain on early debt extinguishment and year-on-year reductions of $22.2 million in cost of sales, occupancy and buying expenses and $21.6 million in selling, general and administrative expenses.

“During the second quarter, a decline in traffic coupled with a highly promotional teen apparel specialty business caused a more competitive environment for every customer dollar,” said Gene Kahn, chief executive officer. “Since we are very confident in our value proposition, we did not overreact to the promotional activity, allowing us to improve our merchandise margin.”

Despite an 80-basis point improvement in merchandise margin, gross margin declined to 49.7 percent of sales from 49.9 percent in the 2008 quarter.

Kahn said comps improved over the course of each month of the second quarter but that the metric had declined in the low-single digits so far in the third quarter.

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