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Frederick’s of Hollywood Shrinks Q1 Net Loss

The company said Tuesday that its "improving" retail business helped it narrow its first-quarter net loss.

Frederick’s of Hollywood Group Inc. said Tuesday that its “improving” retail business helped it narrow its first-quarter net loss.

For the three months ended Oct. 30, the New York-based company recorded a net loss of $1.2 million, or 3 cents a diluted share, compared with a loss of $4.3 million, or 17 cents, in the year-ago period. Net sales fell 8 percent to $28.6 million from $31.1 million in 2009. Same-store sales for the period dipped 7 percent, and fewer promotions and reduced buying costs helped improve gross margin to 40.1 percent of sales versus the year-ago margin of 35.2 percent.

The company said it shrank its net loss from continuing operations to $297,000, or 1 cent a share, from $2.6 million, or 10 cents a share, a year earlier.

Strategic reductions in head count and changes in catalogue distribution drove a 14.1 percent reduction in selling, general and administrative expenses to $11.3 million, the company said.

“We are continuing to seek both domestic and international licensing partners capable of providing high-quality products and a strong distribution network,” said chairman and chief executive officer Thomas Lynch. During the quarter, the firm entered into a multiyear licensing agreement for bed and bath products with Lady Sandra Home Fashions Inc.

“While we are still facing many challenges associated with the macroeconomic environment, we believe the actions we have taken to transform the Frederick’s of Hollywood brand into a sexy lifestyle brand have placed us on a path towards profitability,” Lynch said.

Frederick’s of Hollywood sold its wholesale division to Dolce Vita Intimates LLC in the fourth quarter, a decision that was influenced in part by a “dramatic reduction” in its business with Wal-Mart Stores Inc., according to a recent regulatory filing with the Securities and Exchange Commission.

The innerwear firm, which operates 126 specialty stores, ended wholesale operations because of “continuing losses,” permitting it to focus on its core retail operations.

Shares closed at 91 cents, down 2 cents or 2.5 percent.