Claire’s Stores Inc. suffered a wider first-quarter loss as its same-store sales declined on both sides of the Atlantic.
In the three months ended May 3, the net loss was $38.1 million versus a loss of $26.6 million in the first quarter of 2013. Operating income declined 48.6 percent to $16.8 million while adjusted EBITDA, excluding items such as a year-ago loss on early debt extinguishment in 2013, dropped 11.6 percent to $48.1 million.
Revenues declined 0.2 percent to $353.3 million from $354 million a year ago, and comparable-store sales, recorded in local currencies, dropped 4.4 percent, with a 5.6 percent decline in North America and a 2.4 percent descent in Europe. The firm said that lower comps were partially offset by store closures, favorable currency translation on stores outside the U.S. and increased shipments to franchisees.
Per Brodin, executive vice president and chief financial officer, said on a conference call Thursday morning that the sales trend in the current second quarter was “improved from the first quarter and is currently in the low negative single digits.”
Gross margin fell to 47.1 percent of sales from 49.6 percent in the first quarter of 2013. Inventories stood at $175 million, down from $178.9 million at the close of the fourth quarter but up 10.1 percent from the year-ago level.
Brodin noted that the current inventory contained “less fashion risk and we expected to be able to work through that inventory without seeing it age out.”
Beatrice Lafon, the former president of Claire’s European division who was appointed chief executive officer seven weeks ago, said she would be prepared to discuss her observations about the business and lay out strategic direction when the company reports second-quarter results.
Under the Claire’s and Icing nameplates, the Chicago-based company operates 1,881 stores in North America, 1,187 in Europe and three in China. It also operates 426 units through franchising arrangements.