Orchard Supply Hardware Stores Corporation (Nasdaq:OSH), a specialty retailer focused on the consumer segment of the home improvement market, today announced preliminary financial results for the first quarter of fiscal 2012 ended April 28, 2012. The Company plans to release final financial results and hold a conference call in early June.
First Quarter Fiscal 2012 Preliminary Financial Highlights
- First quarter fiscal 2012 net sales were $155.0 million compared to $163.8 million for the prior year period. Comparable store sales (1) for the period decreased by 3.1%, in line with the Company’s previously stated outlook.
- Net loss in the first quarter of fiscal 2012 is expected to be in the range of $4.2 to $4.8 million compared to $1.0 million in the first quarter of fiscal 2011.
- Non-GAAP Adjusted EBITDA (see reconciliation of Non-GAAP Adjusted EBITDA to net loss, below) is expected to be in the range of $7.0 to $8.0 million compared to $11.2 million for the prior year period.
Mark Baker, President and Chief Executive Officer, stated, “Despite disappointing first quarter comparable store sales that reflect softness in outdoor and seasonal goods, we anticipate that full year comparable store sales will be positive. We are continuing to focus on our five key turnaround strategies, including initiatives to upgrade and enhance our store portfolio and improve our product assortments. We also remain on track to open up to three new stores and remodel up to six locations this year.”
Comparable store sales are calculated using sales of stores open at least twelve months and exclude E-commerce. Additionally, and because of an agreement the Company entered into with Sears Holdings Corporation on October 26, 2011 whereby the Company now sells appliances on a consignment basis and receives commission income for sales of such appliances and related protection agreements, comparable store sales also exclude approximately $4.1 million of net sales of Sears branded appliances in the first quarter of fiscal 2011 and approximately $0.5 million of commission income in the first quarter of fiscal 2012.
Non-GAAP Financial Measure
In addition to our net loss determined in accordance with GAAP, for purposes of evaluating operating performance, the Company uses an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), which is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our business for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. The Adjusted EBITDA should not be considered as a substitute for GAAP measurements. While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because: