Net loss climbed nearly 27% from a year earlier at Hancock Fabrics, Inc., a retailer of fabrics, sewing materials, etc, in its second fiscal quarter ended July 26, 2014.
Hancock reported a net loss of $3.3 million, or negative $0.16 per basic share in second quarter of 2014 compared to a net loss of $2.6 million, or negative $0.13 per basic share in the second quarter of 2013.
Net sales for the second quarter of 2014 were nearly flat at $59.3 million compared to $59.1 million for second quarter of last year, while comparable store sales increased 0.9%.
Gross profit for the second quarter of 2014 declined 30 basis points to 44.6% as compared to 44.9% for the second quarter of the prior year.
Selling, general and administrative expenses (SG&A) for the second quarter of 2014 rose by $560,000 or 80 basis points as a percentage of sales from the same period of 2013.
Hancock said the increase in SG&A expenses was primarily related to an increase in health benefit related costs and professional fees.
Operating loss for the second quarter of 2014 went up to $1.9 million versus a loss of $1.3 million in the second quarter last year, again primarily driven by health benefit related costs and professional fees, Hancock informed.
The biggest setback to the second quarter of 2014 financials was noticed in EBITDA, a non-GAAP measure, which skyrocketed more than ten times to reach a loss of $685,000 against a loss of $63,000 for the same period last year.
At the end of the second quarter, Hancock Fabrics had outstanding borrowings under its revolving line of credit of $67.0 million, a term loan balance of $15.0 million and outstanding letters of credit of $6.4 million.
Additional amounts available to borrow under its revolving line of credit at the end of the quarter were $10.5 million and the balance of its subordinated debt stood at $8.2 million at the end of second quarter of 2014.
CEO Steve Morgan said, "As with most retailers, our first half sales and margin results were negatively impacted by the unusually bad weather early in the year but that is now behind us and we see good opportunity going forward."
Morgan continued, "As we move into the second half of the year, we will continue to focus on maintaining the large margin gains from the prior year. We will accelerate our focus on expense management look to keep decreasing expenses going forward. "
