Frederick’s of Hollywood Has Weak Quarter, Year

Frederick’s of Hollywood saw its fourth quarter net sales drop 18.1%, from $42.1 million a year ago to $34.5 million. The company’s net loss diminished, however, from $7.2 million a year ago to just over $7 million.

Within its channels, total store sales decreased 6.9% while comparable store sales decreased 6.5%. Direct sales (its catalog and Web site operations) decreased 11.9%
Total wholesale sales decreased 56.9%. The quarter and the fiscal year ended July 25.

For the year, the company recorded net sales of $176.3 million, a 3.3% drop from $182.2 million. The company recorded a net loss of $34.6 million, compared with a net loss of $15.7 million for its 2008 fiscal year. The net loss for fiscal 2009 includes a $19,100,000 goodwill impairment charge.

During its fiscal 2009, the intimate apparel marketer’s total store sales decreased 6.2%, to $89.9 million from $95.8 million, comparable store sales decreased 6.5%. Direct sales decreased 10.4% to $51.9 million from just under $58 million. Total wholesale sales increased 21.1% to $34.5 million from $28.5 million, however, the fiscal 2008 wholesale sales do not include $28.2 million from the first six months of fiscal 2008.

The company has amended its revolving credit facility with Wells Fargo Retail Finance II, LLC. The new facility requires the company to receive at least $4.4 million of net proceeds in a financing by Aug. 1, 2010. This is compared to the previous agreement terms that required the company to receive at least $4.9 million of net proceeds by December 7, 2009.

“Our 2009 fiscal year-end results are disappointing,” chairman and CEO Thomas Lynch said in a statement. “Weak macro-economic conditions and the significant reduction in our wholesale business magnified the challenges of integrating our retail and wholesale divisions, and highlighted the need for additional capital resources, stronger management, enhanced brand stewardship and an improved business structure.”

Lynch continued, “Some of the initial steps we have taken are beginning to impact our performance positively such as cost reductions, underperforming store closures and capital restructuring.”