iParty Corp. (NYSE Amex: IPT - news), a leading party goods
retailer, today reported financial results for its first quarter of
fiscal year 2012, which ended on March 31, 2012.
First Quarter 2012 Highlights
- Comparable store sales increase for the
first quarter of 2012 of 8.6%.
- Consolidated revenues of $15.8 million
for the first quarter of 2012, a 4.4% increase compared to the
first quarter of 2011.
- Reopening of flood damaged store in
West Lebanon, New Hampshire.
- Net loss of $1.2 million for the first
quarter of 2012, compared to a net loss of $1.5 million for the
first quarter of 2011.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, “The first quarter of 2012 was a strong one for iParty with
significantly improved same store sales. Good weather, two regional
teams in the Super Bowl, a Saturday St Patrick’s Day and an early
Easter contributed to a comparable store sales increase of 8.6%,
despite not having the benefit of a sales run up for New Year’s Eve
that occurred in the first quarter of 2011. The net result of our
strong sales performance this quarter, along with effective expense
control, was the improvement of our net loss for the first quarter
by approximately $300 thousand compared to last year’s net
loss.”
Mr. Perisano further stated, “With regard to our more recent
store additions, our Boston stores on Boylston Street and in South
Bay and our new store in Manchester, Connecticut are seeing very
strong comparative sales. The sales performance of these new stores
is exceeding our expectations and we believe that they will deliver
an enhanced profit contribution for 2012. Also, we expanded our
e-commerce offering in the first quarter beyond Halloween and
related merchandise and continue to see improved e-commerce sales.
Consistent with our plan and on the strength of our first quarter,
we are actively exploring new locations to add to our base this
year.”
Operating Results
For the first quarter of 2012, consolidated revenues were $15.75
million, a 4.4% increase compared to $15.09 million for the first
quarter of 2011. Comparable store sales in the first quarter of
2012 increased 8.6% compared to the year-ago period. Consolidated
gross profit margin was unchanged at 36.4% for the first quarter of
2012 compared to the same period in 2011. Consolidated net loss for
the first quarter of 2012 improved approximately $300,000 to $1.24
million, or $0.05 per basic and diluted share, compared to
consolidated net loss of $1.51 million, or $0.06 per basic and
diluted share, for the first quarter in 2011. On a non-GAAP basis,
net loss for the first quarter of 2012 before interest, taxes,
depreciation and amortization (“EBITDA”) was $834 thousand,
compared to EBITDA net loss of $1.05 million for the first quarter
in 2011. EBITDA is calculated as net income (loss), as reported
under United States generally accepted accounting principles
(“GAAP”), plus net interest expense, depreciation and
amortization and income taxes. The schedule accompanying this
release provides the reconciliation of net loss for the first
quarter of 2012 and 2011, under GAAP to a non-GAAP, EBITDA
basis.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 52 iParty retail stores in New England
and Florida and an internet site (www.iparty.com) for costume and
party goods and party planning. iParty’s aim is to make throwing a
successful event both stress-free and fun. With an extensive
assortment of party supplies and costumes in our stores and
available at our online store, iParty offers consumers a
sophisticated, yet fun and easy-to-use, resource to help them
customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues and, of course,
Halloween. In addition to the extensive assortment of costume and
other merchandise available through iParty’s internet site, our web
site focuses on increasing customer visits to our retail stores by
highlighting the ever changing store product assortment for all
occasions and seasons and featuring monthly coupons, store and
online promotions and ideas and themes, offering consumers an easy
and fun approach to any party. iParty aims to offer reliable,
time-tested knowledge of party-perfect trends, and superior
customer service to ensure convenient and comprehensive merchandise
selections for every occasion. Please visit our site at
www.iparty.com.
Non-GAAP Financial Measures
Pursuant to the requirements of Regulation G, we have provided
below reconciliations of any non-GAAP financial measures we use in
this press release to the most directly comparable GAAP financial
measures. We believe that our presentation of EBITDA, which is a
non-GAAP financial measure, is an important supplemental measure of
operating performance to investors. The discussion below defines
this term, why we believe it is a useful measure of our
performance, and explains certain limitations on the use of
non-GAAP financial measures such as our use of EBITDA.
EBITDA
EBITDA is a commonly used measure of performance in our industry
which we believe, when considered with measures calculated in
accordance with United States generally accepted accounting
principles ("GAAP"), gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions and income taxes and facilitates
comparisons between us and our competitors. EBITDA is a non-GAAP
financial measure and has been presented in this release because
our management and the audit committee of our board of directors
use this financial measure in monitoring and evaluating our ongoing
financial results and trends. Our management and audit committee
believe that this non-GAAP operating performance measure is useful
for investors because it enhances investors' ability to analyze
trends in our business and compare our financial and operating
performance to that of our peers.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA has certain limitations. Our presentation of
EBITDA may be different from the presentation used by other
companies and therefore comparability may be limited. Depreciation
expense for various long-term assets, interest expense, income
taxes and other items have been and will be incurred and are not
reflected in the presentation of EBITDA. Each of these items should
also be considered in the overall evaluation of our results.
Additionally, EBITDA does not consider capital expenditures and
other investing activities and should not be considered as a
measure of our liquidity. In particular, we have opened new stores
through the expenditure of capital funded with borrowings under our
bank line of credit. Our results of operations, therefore, reflect
significant charges for depreciation, amortization and interest
expense. EBITDA, which excludes these expenses, provides helpful
information about the operating performance of our business, but
EBITDA does not purport to represent operating income or cash flow
from operating activities, as those terms are defined under GAAP,
and should not be considered as an alternative to those
measurements as an indicator of our performance.
Accordingly, EBITDA should be used in addition to and in
conjunction with results presented in accordance with GAAP and
should not be considered as an alternative to net income, operating
income, cash flows from operating activities or any other operating
performance measure prescribed by GAAP, nor should these measures
be relied upon to the exclusion of GAAP financial measures. EBITDA
reflects additional ways of viewing our operations that we believe,
when viewed with our GAAP results and the reconciliations to the
corresponding GAAP financial measures, provides a more complete
understanding of factors and trends affecting our business than
could be obtained absent this disclosure. We strongly encourage
investors to review our financial information in its entirety and
not to rely on a single financial measure.
RECONCILIATION OF NON-GAAP MEASURES
For the quarter ended Mar 31,
2012 Mar 26, 2011 Net loss, as
reported under GAAP $ (1,235,266 ) $ (1,510,911 ) plus,
Interest expense, net 49,330 73,182 plus, Depreciation and
amortization 352,176 384,325 plus, Income taxes
- - EBITDA
net loss, non-GAAP
$ (833,760
) $ (1,053,404
)
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
as contained in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. You can
identify these statements by the fact that they use words such as
"anticipate," "believe," "estimate," "expect," "intend," "project,"
"plan," "outlook," and other words and terms of similar meaning.
These statements involve a number of risks and uncertainties that
could cause actual results to differ materially from the potential
results discussed in the forward-looking statements. Among the
factors that could cause actual results and outcomes to differ
materially from those contained in such forward-looking statements
are the following: changes in consumer confidence and consumer
spending patterns, particularly those impacting the New England
region and Florida, which may result from, among other factors,
rising or sustained high levels of unemployment, access to consumer
credit, mortgage foreclosures, credit market turmoil, declines in
the stock market, general feelings and expectations about the
overall economy, and unseasonable weather; disruptions to our most
important selling season, Halloween; the successful implementation
of our growth and marketing strategies; our ability to access our
existing credit line or to obtain additional financing, if
required, on acceptable terms and conditions; rising commodity
prices, especially oil and gas prices; effect of Chinese inflation
on our suppliers and product pricing; our relationships with our
third party suppliers; the failure of our inventory management
system and our point of sale system; competition from other party
supply stores and stores that merchandise and market party
supplies, including big discount retailers, dollar store chains,
and temporary Halloween merchandisers; risks related to e-commerce;
the availability of retail store space on reasonable lease terms;
and compliance with evolving federal securities, accounting, and
stock exchange rules and regulations applicable to publicly-traded
companies listed on the NYSE Amex. For a more detailed discussion
of risks and uncertainties which could cause actual results to
differ from those contained in the forward-looking statements, see
Item 1A, "Risk Factors" of iParty's most recently filed Annual
Report on Form 10-K for the fiscal year ended December 31, 2011 and
our other periodic reports filed with the SEC. iParty is providing
this information as of this date, and does not undertake to update
the information included in this press release, whether as a result
of new information, future events or otherwise.
iPARTY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) For the quarter
ended Mar 31, 2012
Mar 26, 2011 Revenues $ 15,753,745 $ 15,092,128
Operating costs: Cost of products sold and occupancy costs
10,026,180 9,600,871 Marketing and sales 5,210,909 5,136,742
General and administrative
1,702,376
1,786,022 Operating loss
(1,185,720 ) (1,431,507 ) Change in fair value of warrant
liability (216 ) (6,222 ) Interest expense, net
(49,330 )
(73,182 ) Net loss
$
(1,235,266 ) $
(1,510,911 ) Loss per share: Basic
and diluted
$ (0.05 )
$ (0.06 )
Weighted-average shares outstanding: Basic and diluted
24,408,594
24,319,464
iPARTY CORP. CONSOLIDATED BALANCE SHEETS
(unaudited) Mar 31, 2012
Dec 31, 2011 ASSETS Current assets: Cash
$ 62,450 $ 63,650 Restricted cash 523,635 819,604 Accounts
receivable 707,089 1,377,234 Inventories 16,612,714 15,965,507
Prepaid expenses and other assets 1,510,572 1,415,780 Deferred
income tax asset
46,762
46,762 Total current assets 19,463,222
19,688,537 Property and equipment, net 2,603,817 2,664,086
Intangible assets, net 546,765 626,900 Other assets 311,068 333,731
Deferred income tax asset
540,841
540,841 Total assets
$
23,465,713 $
23,854,095 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and
book overdrafts $ 6,707,479 $ 5,970,015 Accrued expenses 2,133,309
2,295,467 Current portion of capital lease obligations 2,307 4,613
Borrowings under line of credit
5,577,293
5,366,512 Total current
liabilities 14,420,388 13,636,607 Long-term liabilities:
Deferred rent 1,519,158 1,504,973 Commitments and
contingencies Convertible preferred stock 13,012,668
13,012,668 Common stock 24,409 24,409 Additional paid-in capital
53,036,492 52,987,574 Accumulated deficit
(58,547,402 )
(57,312,136 ) Total stockholders' equity
7,526,167
8,712,515 Total liabilities and
stockholders' equity
$ 23,465,713
$ 23,854,095
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