Bombay 1st Quarter Sales, Income Off

May 17, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on May 2006 The Bombay Co. reported first quarter 2006 sales of $118.7 million, down 2.8 percent from $122.1 million in the same period last year.

For the 13-week period ended April 29, the retailer lost $15.6 million, compared to a net loss of $8 million in first-quarter 2005.

Same store sales for stores open more than one year declined 1.2 percent in the first quarter. Revenue from non-store activity, including Bailey Street Trading Co.—the assets of which were sold during fiscal 2005—Internet, mail order and international amounted to 6.7 percent of total revenue for the quarter compared to 7.5 percent for the first quarter of the prior year.

Increases in revenue from direct-to-customer business, driven primarily by Internet sales and international wholesale operations of $2.4 million partially offset the loss of revenue from the Bailey Street, which totaled $3.6 million last year.

Retail store revenue declined 2 percent during the first quarter, about half of that related to a reduction in store count; and the rest related to lower same-store sales.

Gross margin for the first quarter declined 180 basis points versus the prior year, mainly because of a 150 basis point decline in product margin. The decline in product margin was related to a larger portion of sales being generated by promotional activity, particularly in the furniture area where the bedroom, dining room and kids categories had margin declines as a result of increased clearance activity.

Bombay opened four stores, including one combination store, during the first quarter and closed 20 stores. The company ended the period with a total of 482 stores compared to 495 stores at the end of the first quarter of fiscal 2005. Retail square footage, however, declined a modest 0.5 percent due to the difference in sizes of the stores as the company has moved stores from malls to off-mall sites during the past year.

During the second quarter, Bombay expects to open three stores and close 10 to 14 stores. The year-end store count is expected to be in the range of 460 to 465 stores.

“The overall environment for specialty home furnishings remains challenging,” said James Carreker, chairman and chief executive officer, who steps down June 3. “We saw a significant decline in traffic and business after Easter that adversely affected results. We continue to control expenses, investing in areas to drive business to remain competitive. We are testing national television broadcast on select cable networks during May and early June. We are tightly controlling our inventory levels and carefully managing liquidity and markdown levels in order to maintain flexibility. We enter the second quarter with an improved inventory content compared to last year and what we believe to be an improved assortment.”