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Financial report summary
?Management Discussion
- Net sales decreased 5%, or $20.6 million, to $407.5 million in fiscal year 2019 compared to $428.1 million in fiscal year 2018 due to a 4% decrease in comparable sales as well as a net decrease in boutique count. The decrease in comparable sales was due to a decline in traffic as well as a decrease in average unit retail prices as a result of deeper markdowns and promotions mostly during the fourth quarter of fiscal year 2019. These decreases were partially offset by an improvement in conversion rates. There were 701 comparable boutiques and 10 non-comparable boutiques open at February 1, 2020, compared to 698 and 29, respectively, at February 2, 2019.
- Cost of goods sold and occupancy costs decreased 3% to $258.0 million in fiscal year 2019 from $265.1 million in fiscal year 2018. Cost of merchandise and shipping expenses decreased by $2.0 million as there were no marked out-of-stock charges in fiscal year 2019 as well as a decrease in ecommerce shipping expenses. These decreases were partially offset by an increase in the number of units sold. Occupancy costs decreased by $5.1 million due to the net decrease in boutique count, lower depreciation associated with boutiques impaired in fiscal year 2018 and lower demolition costs related to prior year boutique remodels.
- As a percentage of net sales, cost of goods sold and occupancy costs increased to 63.3% in fiscal year 2019 from 61.9% in fiscal year 2018, an unfavorable variance of 140 basis points. This unfavorable variance was due to lower merchandise margins driven by deeper markdowns and promotions mostly during the fourth quarter of fiscal year 2019 partially offset by lower occupancy costs.