Bombay Reports Revenue Decline For November

Furniture World Magazine

The Bombay Company, Inc. reported that total revenue decreased 13.4% to $50.1 million for the four-week period ended November 26, 2005 compared to $57.8 million for the four weeks ended November 27, 2004. Same store sales for stores open more than one year declined 12.4%. Revenue from non-store activities including Internet, Mail Order, International and Bailey Street was 5.3% of total revenue compared to 7.2% the prior year. Prior year revenue includes $1.0 million, or 1.8% of the total, from the Bailey Street operations, which were disposed of during the second quarter of Fiscal 2005. Total revenue for the forty-three week period ended November 26, 2005 declined 0.5% to $428.3 million compared to $430.6 million for the forty-three week period ended November 27, 2004. Same store sales declined 2.0% for the year-to-date period. Year-to date revenue from non-store activities was 4.8% compared to 9.6% for the Fiscal 2004 year-to-date period. James D. Carreker, Chairman and Chief Executive Officer, noted, "We created a significant sales shortfall in the early weeks of November by not repeating a 50% off event that generated several million dollars of incremental sales during the first two weeks of last November. We determined that the event lacked sufficient profitability given the high discount rate and reduced the effectiveness of the subsequent holiday promotions. Therefore, we replaced the promotion with two 40% off events earlier in the fall with greater limits on items included in the sale. In an attempt to offset the impact of the change, we moved a gift catalog out of October and into November which we believe provided a better start to the gift giving season but fell far short of matching the sales for the 50% off event. The change in the promotion strategy resulted in a significant improvement in the product margins although not enough to offset the sales decline. "Given the anticipation of a later and more promotional holiday season, we also made the decision to back load our broad-based advertising and promotions to the five-week period from Thanksgiving to Christmas. We significantly increased advertising during the Thanksgiving weekend, which resulted in a slight increase in same store sales and product margins although far below expectations given the amount of advertising and special promotions. "While the month was difficult, we did see some positives. We entered the holiday season with an upgraded assortment that resulted in a 10% increase in the average unit retail realized for the month and a 13% increase for the Thanksgiving week. While we believe store traffic was down, based upon counts from a subset of our stores, the conversion rate was the highest of the fall season. Off-mall, core Bombay locations in the US generated positive comp sales for Thanksgiving week at a substantial spread over our mall-based stores. Wall decor and functional accessories showed the greatest strength along with Christmas ornaments and nutcrackers. We also began to see a strengthening of the Internet business later in the month. "The holiday season has just begun and we think that we are well positioned for the remainder of the gift giving season. We have adjusted our marketing calendar to respond to the loss of furniture sales in November and to improve our market share capture for the remaining weeks of the holiday season," concluded Mr. Carreker. The Bombay Company, Inc. designs, sources and markets a unique line of home accessories, wall decor and furniture through 502 retail outlets, specialty catalogs and the Internet in the U.S. and internationally.