“Our teams are continuing to focus on Orchard’s five key priorities: Projecting a consistent and compelling brand identity, driving sales through merchandising and marketing initiatives, improving operational efficiencies, aligning resources and talent, and strengthening our financial position. We made a great deal of progress in fiscal 2011, but we are still in the beginning stage of the turnaround.”
Fourth Quarter 2011
Net sales in the fourth quarter of fiscal 2011 were $141.6 million compared to $141.5 million in the same period last year. Comparable store sales
increased 2.3%, reflecting the Company’s second consecutive quarter of positive comp performance.
Fourth quarter net loss was $7.2 million and includes $3.6 million of non-cash loss on sale of real property and store impairment charges. This compares to a net loss of $3.4 million in the fourth quarter of fiscal 2010.
Non-GAAP Adjusted EBITDA (see reconciliation of Non-GAAP Adjusted EBITDA to net loss, below) was $4.9 million in the fourth quarter of 2011 compared to $13.0 million a year ago.
Balance Sheet and Cash Flow
As of January 28, 2012, inventories totaled $157.7 million, a decrease of $14.4 million, or 8.4%, compared to $172.1 million at the end of fiscal 2010. Additionally, the Company generated $57.8 million in proceeds from sale-leaseback transactions on five properties in fiscal 2011. The proceeds were used to pay down debt and renegotiate and amend the Company’s financing agreements. At the end of fiscal 2011, total debt and capital lease obligations had been reduced to $262.4 million from $338.2 million at the end of fiscal 2010.
Fiscal 2012 Store Opening Plans and Comparable Store Sales Expectations
Baker continued, “We are executing on our key strategies to drive traffic and sales. Specifically, in addition to our real estate activity, we’re refurbishing approximately 35 locations with exterior signage and paint in Orchard’s new contemporary logo and colors, and we’re providing direct access from the parking lot to our higher margin nursery and garden centers at approximately 15 additional locations this year. By the end of fiscal 2012, more than half of our store portfolio will have updated signage and paint, and more than 60% will have direct nursery access. At the same time, we’re implementing extensive product line reviews to upgrade our assortment, improve inventory levels and help drive gross margin. Importantly, we are pleased with the early results of our new, productive store format, which we are rolling out this year. Our plans include the opening of up to three new stores and the remodeling of up to six existing Orchard locations during fiscal 2012.”