Claire’s Stores Inc. reduced its first-quarter loss on expense discipline as its sales fell nearly 10 percent during the period.
The Chicago-based retailer of jewelry and accessories for girls and young women said that its net loss in the three months ended May 2 fell to $35.4 million from a loss of $38.1 million in the comparable 2014 period. Adjusted earnings before interest, taxes, depreciation and amortization declined 21.8 percent to $37.6 million from $48.1 million
Net sales declined 9.4 percent, to $320 million from $353.3 million, and were down 2.8 percent on a constant-currency basis.
Damage to the bottom line was limited by a 10.3 percent decline in selling, general and administrative costs, to $113 million. However, gross margin fell to 46 percent of sales from 47.1 percent a year ago.
Same-store sales were off 2.5 percent, including a 1.9 percent drop-off in North America and a 3.6 percent slip in Europe, with results outside the U.S. calculated at local currency.
“The port issue is largely resolved and we saw sales improve late in the first quarter,” said Beatrice Lafon, chief executive officer, adding the comps so far in the second quarter had been flat.
The company calculated that port congestion cost it $48 million in sales in the fourth quarter and $10 million in the first quarter.
The decline in comps included a 0.8 percent decrease in average transactions per store and a 1.3 percent decline in average transaction value.
However, some of that decrease was offset by improved conversion.
On a conference call with analysts Friday morning, J. Per Brodin, chief financial officer, pointed out, “Overall, conversion rates were at or near their highest levels in Q1 since we began measuring conversion in 2012 in both North America and Europe, helping to mitigate some of the traffic issues that occurred during the quarter.
Claire’s is continuing to expand its concession business with Toys ‘R’ Us and seek new partners for the concession initiative. The brand is now present in 219 Toys ‘R’ Us stores, up from 20 a year ago, and is expected to expand to an additional 360 locations during the course of the current year.
But Claire’s noted that upcoming concession locations might not be as large as those opened in Toys ‘R’ Us. “It’s a factor of what’s available and how much space the partners that we’re working with have,” said Brodin. “It’s not only a partner-by-partner process, but a location-by-location one.”
The existing concession locations are about one-fifth the size of a typical Claire’s store. Possible partners on the project include Tesco, The Toy Center in Italy and BHS in the U.K. Lafon declined to identify addition prospects in the U.S., but the company said it might be able to disclose plans in time for its second-quarter conference call, projected to take place in early September.
Claire’s was acquired for $3.1 billion by Apollo Management in 2007 and then taken private.