Note Regarding Operating Results
As previously noted, the Red Hook, Brooklyn location was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy. The store re-opened on March 1, 2013. As a result, the Company has presented certain information without the operations of its Red Hook, Brooklyn store for the full quarter and full fiscal year to make more meaningful comparisons between periods. Where indicated, the Company has made a pro forma adjustment to include an estimate for the lost sales from its Red Hook, Brooklyn store during the period that it was closed. 1
Operating Results for the Fourth Quarter of Fiscal 2013
For the fiscal 2013 fourth quarter, net sales increased 19% to $178.7 million from net sales of $150.3 million in the same period last year. Excluding the Red Hook, Brooklyn store for the fourth quarter of both periods, net sales increased 29%. Sales growth in the quarter was driven by new store openings and an increase in comparable store sales (excluding the Red Hook, Brooklyn store) of 2.4%.Adjusted EBITDA for the fiscal 2013 fourth quarter increased 24% to $13.5 million, inclusive of $2.5 million of business interruption insurance, from $10.9 million in the fourth quarter of 2012. The adjusted EBITDA margin was 7.6% in the fourth quarter compared to 7.2% in the same period last year. On a pro forma basis to include the estimated lost sales at the Red Hook, Brooklyn location, the adjusted EBITDA margin was 7.1% in the fourth quarter. 1
|EBITDA Reconciliation ($ in millions, % of net sales)|
|Quarter Ended:||April 1, 2012||March 31, 2013|
|Reconciliation to EBITDA:|
|(+) Store depreciation & amortization||3.9||2.6%||5.1||2.8%|
|(+) Corporate depreciation & amortization||1.4||0.9%||1.1||0.6%|
|(+) Management fees||1.1||0.7%||0.9||0.5%|
|(+) Non-recurring expenses||1.6||1.1%||4.4||2.5%|
|(+) Equity compensation charge||0.1||0.1%||0.0||0.0%|
|(+) Store opening costs||1.5||1.0%||2.4||1.3%|
|(+) Pre-opening advertising||--||0.0%||0.5||0.3%|
|(+) Interest expense, net||4.5||3.0%||6.5||3.7%|
|(+) Income tax benefit||(1.4)||-0.9%||(0.7)||-0.4%|
|Note: In the fiscal quarter ended April 1, 2012, pre-opening advertising is included in store opening costs.|
Other Operating Items Gross profit for the fourth quarter increased 17% to $60.1 million from $51.2 million in the fourth quarter of the prior year. Excluding the Red Hook, Brooklyn store for the fourth quarter of both periods, gross profit increased 26%. The Company's gross profit margin was 33.6% in the fiscal 2013 fourth quarter versus 34.1% in the fourth quarter of the prior year. The decrease in gross profit margin reflects changes to the composition of the Company's store mix and an increase in store occupancy.
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