Gift segment margins declined to 17.1 percent from 28.7 percent. The fiscal 2013 gross margin includes a $1.8 million inventory write-off associated with the Restructuring Plan. Excluding this write-off, gross margin would have been 21.9 percent in fiscal 2013. Gifts segment adjusted gross margins were lower in fiscal 2013 due to increased sales mix of low margin items, significantly higher retailer promotional activity, and higher freight costs over 2012. 

Total SG&A expense for fiscal 2013 was reduced by $3.0 million over the prior year. The 8 percent decline was primarily due to decreases in labor, facilities, distribution costs, and professional services. Fiscal 2013 SG&A as a percentage of net sales improved to 30.5 percent, compared to 32.1 percent in the prior year.

The Company reported a net loss of $19.2 million for fiscal 2013, or a loss of $2.69 per diluted share, compared to a net loss of $3.7 million, or a loss of $0.52 per diluted share, in fiscal 2012. Adjusted net loss deteriorated to $3.9 million compared to an adjusted net loss of $1.9 million in the prior year. Adjusted EBITDA declined by $2.8 million to a $1.0 million adjusted EBITDA loss compared to adjusted EBITDA of $1.8 million in the prior year.  

Financial Position

Net cash provided by operating activities was $0.8 million lower than fiscal 2012 primarily due to a $9.2 million change in inventory deposits due to improved terms with gifts suppliers, later payments, and a smaller holiday 2013 gift order book as expected in the Restructuring Plan. This was offset by a $3.8 million change in accounts payable, from key suppliers unfavorably modifying terms before the Company closed new credit facilities in July 2013. 

The balance on the credit facility was $9.1 million on June 30, 2013, of which $0.8 million was used to fund inventory deposits for gifts inventory expected to ship in the first half of fiscal 2014.