Bombay Announces First Quarter Results

Furniture World Magazine

The Bombay Company, Inc. reported that revenue for the quarter ended April 30, 2005 was $122.1 million compared to $123.6 million for the corresponding period of the prior year. Same store sales for stores open more than one year declined 5% for the thirteen-week period. Revenue from non-store activity, including Bailey Street Trading Company, Internet, Mail Order and International amounted to 7% of total revenue for the quarter compared to 10% for the first quarter of the prior year primarily due to softness in Internet and mail order. The net loss for the quarter ended April 30, 2005 was $8.0 million or $0.22 per share compared to a loss of $5.7 million or $0.16 per share for the same period last year. James D. Carreker, Chairman and Chief Executive Officer, stated, "Although we were pleased with our April sales results, they were not sufficient to offset the poor sales of February and March. Less sales leverage and unusual expenses, such as professional fees, during the first quarter combined to generate disappointing earnings. Although the additional Sunday related to the Easter shift contributed approximately half of our comparable store sales improvement for April, we were encouraged by the trends in traffic, conversion and average unit retails for the month. We expect to continue the pace set in April through our second quarter. The improved quality and freshness of our inventory and our increased marketing investments should continue to drive sales and earnings. Additionally, we are well positioned for the coming quarters with improvements in merchandise flow, assortments and store presentations. We are maintaining our earnings guidance for the year." For the first quarter, revenue from retail stores increased 1% as revenue generated from net new stores more than offset the 5% decline in same store sales. Revenue from the Internet and mail order declined $2.3 million for the quarter while revenue from our wholesale channels declined approximately $0.6 million. The average retail ticket increased 2% compared to the prior year while total transaction count, including new store sales activity, fell 2% compared to the prior year. Gross margin for the first quarter declined 220 basis points primarily due to the deleveraging effect of fixed costs on the lower revenue base. Buying and store occupancy costs increased $1.4 million due to the higher store count and increased 140 basis points from 22.1% of revenue to 23.5% of revenue this year, due to the negative same store sales. Product margins declined 80 basis points due primarily to the deleveraging effect of logistics costs on the lower revenue base. SG&A expenses increased $0.7 million or 100 basis points but included approximately $1.0 million associated with the Accenture merchandise strategy study and higher audit fees as a result of the Fiscal 2004 restatement. Other corporate overhead expenses and four-wall store SG&A expenses were tightly controlled. Marketing expense declined 30 basis points due to changes in the strategy, although there were higher spending levels later in the quarter. The Company ended the quarter with $151.5 million of inventory, which was $20.4 million higher than the prior year. The increase was driven by higher levels of inventory in transit from the vendors due to the acceleration of the timing of new product introductions planned for July as well as higher inventory levels to support the growing BombayKIDS business. The Company had $28.4 million in borrowings under its credit facility as of the end of the quarter. During the first quarter, the Company opened 17 stores, including four combination stores, and closed 24 stores as it continued the migration from mall to off-mall locations. During the second quarter, the Company expects to open 7 stores and close approximately 5 to 7 stores. The year-end store count is expected to be in the range of 500 to 505 stores. In conjunction with this release, you are invited to listen to Bombay's conference call with management that will be conducted on Thursday, May 19, 2005 at 10:00 a.m. Central Time. The Company will review the first quarter and the outlook for Fiscal 2005. Interested parties should dial 212-676-5380 ten minutes prior to the start time. The call will also be broadcast live over the Internet at http://www.bombaycompany.com/ . For those who are unable to listen to the live broadcast, a telephone replay will be available for 72 hours beginning at noon Central Time at 800-633-8284. The access code is 21226541. The call will also be available for replay for 45 days on the investor relations page of the Bombay website. The Bombay Company, Inc. designs, sources and markets a unique line of home accessories, wall decor and furniture through 495 retail outlets, specialty catalogs and the internet in the U.S. and internationally.