Iparty (AMEX:IPT)
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iParty Corp. (AMEX: IPT), a party goods retailer
that operates 50 iParty retail stores, today reported financial
results for its first quarter of fiscal year 2006, which ended on
April 1, 2006.
For the quarter, consolidated revenues were $13.5 million, a 2.9%
increase compared to $13.2 million for the first quarter of 2005. The
increase in first quarter revenues from the year-ago period was due to
sales from five new stores that opened since the end of the first
quarter of 2005, as well as sales from one additional store that
opened during the first quarter of 2005, partially offset by a 1.4%
decrease in comparable store sales. Consolidated gross profit margin
was 37.3% for the first quarter compared to a margin of 38.0% for the
same period in 2005. Consolidated net loss for the quarter was $2.2
million, or $0.10 per basic and diluted share, compared to
consolidated net loss of $1.7 million, or $0.08 per basic and diluted
share, in the first quarter of 2005.
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, "We are pleased with our overall performance in the
first quarter. Our comparable store sales for the quarter decreased by
1.4%, mostly because Easter shifted into the second quarter of 2006
from the first quarter in 2005. Our comparable stores sales were also
negatively affected by the fact that the New England Patriots did not
participate in the Super Bowl in 2006 as they did in two previous
years. This was a significant factor in driving less traffic into the
stores in our core market in New England, where 45 of our 50 stores
are located, during January and February than during the same period
in the previous year. During the quarter, our product margins, as a
percentage of sales, were lower than last year primarily due to our
new stores, which operate at a higher occupancy cost to sales ratio
until they reach maturity. The store payroll costs associated with our
new stores also negatively affected our marketing and sales expenses,
as a percentage to sales. Ours is a seasonal business and the first
quarter is traditionally our slowest. We expect these ratios to
improve as we progress through the year."
"As previously disclosed, our plan for 2006 calls for us to focus
on increasing our comparable store sales growth, improving our gross
margins, and leveraging our overall cost structure as the 12 new
stores we opened over the past two years start to mature. We
anticipate that our financial results for the second quarter will
start to reflect the progress we've made toward achieving those
goals."
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT -
news) is a party goods retailer that operates 50 iParty retail stores
and licenses the operation of an Internet site for party goods and
party planning at www.iparty.com. iParty's aim is to make throwing a
successful event both stress-free and fun. With over 20,000 party
supplies and costumes and an online party magazine and party-related
content, iParty offers consumers a sophisticated, yet fun and
easy-to-use, resource with an extensive assortment of products to
customize any party, including birthday bashes, Easter get-togethers,
graduation parties, summer barbecues, and, of course, Halloween.
iParty aims to offer reliable, time-tested knowledge of party-perfect
trends, and superior customer service to ensure convenient and
comprehensive merchandise selections for every occasion. Please visit
our site at www.iparty.com.
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking statements
that are based on our current expectations, beliefs, assumptions,
estimates, forecasts and projections, including those about future
store openings, future expectations of comparable store sales growth,
improved gross margins, profitability and the industry and markets in
which iParty operates. The statements contained in this release are
not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed in such forward-looking statements, and such statements
should not be relied upon as representing iParty's expectations or
beliefs as of any date subsequent to the date of this press release.
Important factors that may affect future operating results include,
but are not limited to, economic and other developments such as
unseasonable weather, that affect consumer confidence or consumer
spending patterns, particularly those impacting the New England
region, where 45 of our 50 stores our located, and particularly during
the Halloween season, which is our single most important season;
intense competition from other party supply stores and stores that
merchandise and market party supplies, including big discount
retailers, dollar store chains, and temporary Halloween merchandisers;
the failure of any of our systems, including, without limitation, our
newly-installed point-of-sale system and our existing merchandise
management system, the latter of which was developed by a vendor who
is no longer in business and which we are considering replacing in the
upcoming twelve months; the success or failure of our efforts to
implement our business growth and marketing strategies; our inability
to obtain additional financing, if required, on terms and conditions
acceptable to us; rising oil and gas prices which impact prices of
petroleum-based/plastic products, which are a key raw material in much
of our merchandise, affect our freight costs and those of our
suppliers, and affect consumer confidence and spending patterns;
third-party suppliers' failure to fulfill their obligations to us; the
availability of retail store space on reasonable lease terms;
compliance with evolving federal securities, accounting, and stock
exchange rules and regulations applicable to publicly-traded companies
listed on the American Stock Exchange. For a discussion of these and
other risks and uncertainties which could cause actual results to
differ from those contained in the forward-looking statements, see
Item 1A, "Risk Factors" of iParty's most recently filed Annual Report
on Form 10-K for the fiscal year ended December 31, 2005.
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iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months
ended
-------------------------
Apr 1, 2006 Mar 26, 2005
------------ ------------
Revenues $13,545,799 $13,159,763
Operating costs:
Cost of products sold 8,498,254 8,165,569
Marketing and sales 5,355,098 4,835,847
General and administrative 1,693,276 1,800,950
------------ ------------
Operating loss (2,000,829) (1,642,603)
Interest income 256 172
Interest expense (157,784) (102,348)
------------ ------------
Loss before income taxes (2,158,357) (1,744,779)
Income taxes - -
------------ ------------
Net loss $(2,158,357) $(1,744,779)
============ ============
Loss per share:
Basic and diluted $(0.10) $(0.08)
============ ============
Weighted-average shares outstanding:
Basic and diluted 22,544,257 22,107,567
============ ============
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Apr 1, 2006 Dec 31, 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $1,394,995 $699,194
Restricted cash 362,069 651,617
Accounts receivable 578,769 1,246,545
Inventory, net 13,489,104 13,251,307
Prepaid expenses and other assets 1,469,459 548,114
------------ ------------
Total current assets 17,294,396 16,396,777
Property and equipment, net 4,987,880 5,187,099
Other assets 140,450 133,200
------------ ------------
Total assets $22,422,726 $21,717,076
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,109,467 $4,695,094
Accrued expenses 2,132,686 2,532,238
Current portion of capital lease
obligations 459,007 442,358
Borrowings under line of credit 7,530,809 6,635,874
------------ ------------
Total current liabilities 17,231,969 14,305,564
Long-term liabilities:
Capital lease obligations, net of current
portion 296,202 426,995
Other liabilities 728,538 669,003
------------ ------------
Total long-term liabilities 1,024,740 1,095,998
Commitments and contingencies
Convertible preferred stock 13,808,650 13,816,101
Common stock 22,547 22,537
Additional paid-in capital 50,987,957 50,971,656
Accumulated deficit (60,653,137) (58,494,780)
------------ ------------
Total stockholders' equity 4,166,017 6,315,514
------------ ------------
Total liabilities and stockholders' equity $22,422,726 $21,717,076
============ ============
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