Now, let me touch on our performance by category. Video comparable sales decreased 8%, comp sales in our top 50 in video decreased 20% during the quarter. Video represented 41% of our business during the quarter versus 42% last year.Music comparable store sales declined 9%, comp sales in our top 50 decreased 27% during the quarter. The music category represented 37% of our business for the quarter, compared to 38% last year. Negative comps in our two largest category, video and music have been largely driven by weak new releases. New releases in the back half of the year are expected to be stronger then they were in the first half of the year. In addition, we’ve been able to offset the negative comps with improved gross margins. Electronic comp store sales increased 10%. Electronics sales represent 9% of our total business, compared to 8% last year. In our trend category, comp store sales increased 6%. Trend sales represented 8% of our total business in the quarter, compared to 7% last year. Video games comp store sales were down 14% for the quarter and games represent 5% of our business, the same way it is last year. We have games in 121 stores, which represent 28% of the chain. John will now take you through the financial highlights for the quarter. John? John Sullivan Thank you, Bob. Good morning. As Bob mentioned, our net loss for the quarter improved $8.5 million to $7.3 million or $0.23 per share, which is a 54% improvement over last year’s net loss of $15.8 million or $0.34 per share. Our EBITDA loss improved $7.2 million for the quarter to $4.8 million, that is 60% improvement over last year’s EBITDA loss of $12 million. Our gross margin rates for the quarter increased 330 basis points to 37.0% of sales from 33.7% last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all our product categories and the leveraging of our distribution of freight costs due to the closing of a distribution facility in Carson, California last year.
SG&A expenses were $44.8 million, a reduction of 22% and a total sales decline of 20%, resulting in a decrease as a percentage of sales to 41.5% this year from 42.5% last year. The decrease in SG&A was driven by the closing of underperforming stores and continued focus on a factor of expense management.Net interest expense was $793,000 in the quarter versus $815,000 last year. The company has not required any borrowings under its line of credit during this year’s first half and therefore we ended the quarter without any borrowings outstanding under the line of credit. In addition, the company more than doubled its cash balance from the prior year. We ended the quarter with cash of $22.5 million, compared to $10.5 million last year. Year-over-year, we have lowered our inventory by $32 million. Our quarter end inventory position was $205 million versus last year’s $237 million. On a per square foot basis, this was $70 a foot versus $67 last year. During the quarter, we closed four stores and we didn’t have any openings. We ended the quarter with 444 – 440 stores and operation in 2.9 million square feet versus last years 534 stores and 3.6 million square feet. Now, I’d like to turn it over to Bob. Bob Higgins Thank you. John. We are encouraged by our first half results. Year-to-date we’ve improved our net loss over last year by $17.4 million, a 64% improvement, our best first half performance since 2005. Our electronics and trend categories which combined represent a 16% of our business had 10% comp increase in the first half. We continued to strength our assortment in these categories. The improvement in our operating results has been driven by a higher gross margin rate and reductions in operating expenses. The improvement in gross margin as a percentage of sales reflect improved margins rates across all categories. We’ve been able to reduce operating expenses by challenging each and every component of our business to improve and become more efficient, whilst at the same time, we are investing in people, technology and merchandise to support our future. Read the rest of this transcript for free on seekingalpha.com