Luxury jewelry retailer Birks & Mayors reported Monday that net sales for the third quarter of fiscal 2009 fell by 28.2 percent, year-over-year, to $88.1 million. Same store sales decreased by 23 percent, with same store sales in the company’s Canadian and U.S. markets down 18 percent and 28 percent, respectively.
The decline in sales includes $9.3 million of lower sales due to the impact of foreign currency translation resulting from a weaker Canadian dollar, partially offset by $1.2 million of additional sales generated in October 2008 from one Mayors store and the two acquired Brinkhaus stores, all of which began operation in November 2007, said the Montreal, Canada-based company, with 69 stores in Canada, Florida, and Georgia.
The retailer reported a net loss for the period, ended, Dec. 27, 2008, of $42.7 million, compared to net income of $12.7 million in the prior year’s third quarter.
Gross profit for the fiscal third quarter was $37.5 million, or 42.6 percent of net sales, as compared to $59.5 million, or 48.5 percent of net sales in the third quarter of Fiscal 2008. “The 590 basis point decline in the gross profit margin was impacted by the company’s decision in November 2007 to lower the retail prices of certain products sold in Canada to reduce price disparity with the U.S. market and certain sales initiatives in the U.S. and Canada to generate sales during the unusually difficult holiday period,” the company said in its report.
Selling, general and administrative expenses were $29.6 million, or 33.6 percent of net sales, as compared to $37.3 million, or 30.4 percent of net sales in the third quarter of Fiscal 2008. “The $7.7 million decrease in the third quarter of Fiscal 2009 included a $3.1 million decrease in SG&A associated with the translation of Canadian expenses into U.S. dollars with a weaker Canadian dollar, a $1.7 million decrease in marketing costs and a $1.2 million decrease in general operating expenses resulting from the company’s strategy of controlling costs during these difficult economic times,” the company said.
“The entire luxury retail sector was dramatically affected by the abrupt and severe nature of the economic downturn, banking crisis and unprecedented drop in consumer confidence during the quarter,” said Tom Andruskevich, Birks & Mayors president and chief executive officer. “As a result, our company experienced significant decreases in store traffic, average sale, net sales, and operating profits. As we expect this extremely challenging environment to continue well into 2009, we will plan and manage our business very conservatively. We will continue to support our key product brands and maintain strong client relationships, while improving inventory productivity and reducing operating expenses and capital expenditures, all with a focus on optimizing cash flow.”
For the year-to-date, the company said net sales decreased by 11.5 percent, year-over-year, to $221.7 million, which includes a $6.2 million reduction in sales related to translating Canadian sales into U.S. dollars. Same store sales declined by 14 percent, which follows a 1 percent decrease in the prior-year period.
The net loss for the 39-week period, ended Dec. 27, 2008, was $46.6 million, compared to net income of $7.2 million in the prior-year period.