Iparty (AMEX:IPT)
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iParty Corp. (AMEX: IPT - news), a party goods retailer
that operates 50 iParty retail stores, today reported financial
results for its second quarter of fiscal year 2006, which ended on
July 1, 2006.
For the quarter, consolidated revenues were $18.6 million, a 12.5%
increase compared to $16.5 million for the second quarter of 2005. The
increase in first quarter revenues from the year-ago period was
primarily due to sales from five new stores that opened since the end
of the second quarter of 2005 as well as a 1.6% increase in comparable
store sales from stores open for more than one year. Consolidated
gross profit margin was 41.4% for the second quarter compared to a
margin of 42.2% for the same period in 2005. Consolidated net income
for the quarter was approximately $120,000, or $0.00 per basic and
diluted share, compared to consolidated net income of approximately
$30,000, or $0.00 per basic and diluted share, in the second quarter
of 2005.
For the six-month year-to-date period, consolidated revenues were
$32.1 million, an 8.3% increase compared to $29.7 million for the
first six months of 2005. This year's six-month year-to-date
consolidated revenues included a 0.3% increase in comparable store
sales. Consolidated gross profit margin was 39.6% for the six-month
period compared to 40.3% for the same period in 2005. For the
six-month period, consolidated net loss was $2.0 million, or $0.09 per
basic and diluted share, compared to a consolidated net loss of $1.7
million, or $0.08 per basic and diluted share, for the first six
months of 2005.
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, "We were once again able to report a net profit in
our second quarter, marking our fifth consecutive year of second
quarter profitability. That said, while our comparable store sales for
the quarter increased by 1.6%, mostly because Easter shifted into the
second quarter of 2006 from the first quarter in 2005, our
year-to-date comparable sales only increased by 0.3% which is lower
than we had expected. We have identified several factors that we
believe have caused our traffic to be down so far in 2006. Although we
can't change factors like the massive flooding that afflicted large
portions of our core New England market in May or the high gasoline
prices that seem to be affecting most retailers nationwide, we do
believe that we can affect other business drivers in the second half
of the year. We intend to focus on ways of driving more traffic into
our stores by, among other things, adjusting the media allocations in
our advertising program, with a goal of improving our comparable store
sales."
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
2007; 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
(Unaudited)
For the three months ended For the six months ended
------------------------ ------------------------
Jul 1, 2006 Jun 25, 2005 Jul 1, 2006 Jun 25, 2005
------------------------ ------------------------
Revenues $18,587,169 $16,517,522 $32,132,968 $29,677,285
Operating costs:
Cost of products sold
and occupancy costs 10,897,816 9,544,608 19,396,070 17,710,177
Marketing and sales 5,993,016 5,276,430 11,348,114 10,112,277
General and
administrative 1,404,412 1,534,192 3,097,688 3,335,142
------------------------ ------------------------
Operating income
(loss) 291,925 162,292 (1,708,904) (1,480,311)
Interest expense, net (169,993) (129,404) (327,521) (231,580)
------------------------ ------------------------
Net income (loss) $121,932 $32,888 $(2,036,425)$(1,711,891)
======================== ========================
Income (loss) per
share:
Basic $0.00 $0.00 $(0.09) $(0.08)
======================== ========================
Diluted $0.00 $0.00 $(0.09) $(0.08)
======================== ========================
Weighted-average
shares outstanding:
Basic 37,728,932 37,706,143 22,545,872 22,111,403
======================== ========================
Diluted 39,283,126 39,937,184 22,545,872 22,111,403
======================== ========================
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Jul 1, 2006 Dec 31, 2005
------------------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $1,835,340 $699,194
Restricted cash 549,594 651,617
Accounts receivable 665,093 1,246,545
Inventory, net 13,750,307 13,251,307
Prepaid expenses and other assets 1,209,292 548,114
------------------------
Total current assets 18,009,626 16,396,777
Property and equipment, net 4,789,217 5,187,099
Other assets 194,142 133,200
------------------------
Total assets $22,992,985 $21,717,076
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,524,288 $4,695,094
Accrued expenses 2,157,940 2,532,238
Current portion of capital lease obligations 475,895 442,358
Borrowings under line of credit 7,597,456 6,635,874
------------------------
Total current liabilities 17,755,579 14,305,564
Long-term liabilities:
Capital lease obligations, net of current
portion 162,631 426,995
Other liabilities 779,939 669,003
------------------------
Total long-term liabilities 942,570 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 50,994,844 50,971,656
Accumulated deficit (60,531,205)(58,494,780)
------------------------
Total stockholders' equity 4,294,836 6,315,514
------------------------
Total liabilities and stockholders' equity $22,992,985 $21,717,076
========================
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