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 third quarter of fiscal year 2005, which ended on
September 24, 2005.
For the quarter, consolidated revenues were $14.8 million, a 12.8%
increase compared to $13.2 million for the third quarter of 2004. The
increase in third quarter revenues from the year-ago period was due to
a 2.5% increase in comparable store sales and sales from eight new
stores that opened since the end of the third quarter of 2004.
Consolidated gross profit margin was 39.1% for the third quarter
compared to a margin of 40.0% for the same period in 2004.
Consolidated net loss was $2.4 million, or $0.11 per basic and diluted
share, compared to consolidated net loss of $1.6 million, or $0.07 per
basic and diluted share, in the third quarter of 2004.
For the nine-month year-to-date period, consolidated revenues were
$44.5 million, a 9.8% increase compared to $40.6 million for the first
nine months of 2004. This year's nine-month year-to-date consolidated
revenues included a 0.4% increase in comparable store sales.
Consolidated gross profit margin was 39.9% for the nine-month period
compared to 42.2% for the same period in 2004. For the nine-month
year-to-date period, consolidated net loss was $4.1 million, or $0.19
per basic and diluted share, compared to a net loss of $1.7 million,
or $0.08 per basic and diluted share, for the first nine months of
2004.
Sal Perisano, Chief Executive Officer of iParty Corp., commented,
"We are pleased with our continuing ability to implement our growth
strategy. We opened five new stores during the quarter bringing our
total number of stores to 50. Sales from our new stores contributed
towards a total sales increase of 12.8% for the quarter while our
comparable stores increased by 2.5%. The increase in comparable store
sales was mostly driven by higher sales of Boston Red Sox related
merchandise which we feel was due to increased exposure for our brand
through our Red Sox sponsorship program as well as better inventory
levels. Higher occupancy costs as a percentage of sales continue to
put pressure on our gross profit margin. The increase in occupancy
costs continues to be largely attributable to our new stores, which,
as we have previously reported, operate at a higher occupancy to sales
ratio until they reach maturity. Our marketing and sales costs as a
percentage of sales continue to run higher than last year largely due
to increased advertising, including our sponsorship program with the
Boston Red Sox and higher depreciation costs associated with the
acquisition of fixed assets for our new stores. Our general and
administrative expenses are higher than last year primarily due to
consultant costs associated with the selection of a new merchandise
system that we are currently planning to install in 2006. We continue
to believe that our investment in growth, new stores and improved
infrastructure will yield longer-term increases in profitability."
"We also continue to seek out marketing opportunities to increase
our public profile and build our brand. The Red Sox sponsorship this
past year was an example of this focus. As another example, we are
especially excited about our partnership with Boston Medical Center in
connection with Halloween Town, a Halloween celebration for the city
of Boston that will be held on October 30, 2005 at the Seaport World
Trade Center. This is a fundraising event for Boston Medical Center
that we expect will draw thousands of children and parents. We believe
that our participation in Halloween Town, like our Red Sox
sponsorship, will help us reach new customers and continue to meet our
important goal of further establishing the iParty brand."
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 offers 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 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 the
effects of adverse changes in overall economic conditions, the success
or failure of iParty's efforts to implement its business strategy; the
success or failure of iParty's marketing initiatives and its efforts
to build the iParty brand; iParty's inability to obtain additional
financing, if required; third-party suppliers' failure to fulfill
their obligations to iParty; unseasonable weather, particularly in the
New England region; intense competition from other party supply stores
and stores that merchandise and market party supplies, including big
discount retailers and dollar store chains; the availability of retail
store space on reasonable lease terms; the failure of iParty's systems
or those of its third-party suppliers; general economic and other
developments affecting consumer confidence or spending patterns,
particularly in the New England region; compliance with evolving
federal securities, accounting, and stock exchange rules and
regulations applicable to publicly-traded companies listed on the
American Stock Exchange; and government regulation of the Internet.
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 "Cautionary Statements and Risk
Factors" in iParty's most recently filed Annual Report on Form 10-K
and "Factors That May Affect Future Results" in iParty's most recently
filed Quarterly Report on Form 10-Q.
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iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three For the nine
months ended months ended
------------------------- -------------------------
Sep 24, 2005 Sep 25, 2004 Sep 24, 2005 Sep 25, 2004
------------ ------------ ------------ ------------
Revenues $14,839,051 $13,157,546 $44,516,336 $40,554,000
Operating costs:
Cost of products
sold and
occupancy costs 9,042,165 7,897,580 26,752,342 23,454,594
Marketing and
sales 6,204,540 5,276,532 16,316,817 14,367,835
General and
administrative 1,852,047 1,509,548 5,187,189 4,674,898
----------- ----------- ----------- -----------
Operating loss (2,259,701) (1,526,114) (3,740,012) (1,943,327)
Other income - 28,000 - 382,500
----------- ----------- ----------- -----------
Loss before
interest (2,259,701) (1,498,114) (3,740,012) (1,560,827)
Interest income 477 271 758 1,280
Interest expense (151,437) (77,580) (383,298) (148,900)
----------- ----------- ----------- -----------
Net loss $(2,410,661) $(1,575,423) $(4,122,552) $(1,708,447)
=========== =========== =========== ===========
Basic and diluted
net loss per
share $ (0.11) $ (0.07) $ (0.19) $ (0.08)
=========== =========== =========== ===========
Weighted-average
shares
outstanding:
Basic and
diluted 22,147,063 22,019,408 22,123,289 21,123,511
=========== =========== =========== ===========
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Sep 24, 2005 Dec 25, 2004
------------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,001,298 $ 1,757,157
Restricted cash 451,798 561,407
Accounts receivable 945,417 700,961
Inventory, net 17,399,118 11,400,971
Prepaid expenses and other assets 809,662 476,046
------------ ------------
Total current assets 20,607,293 14,896,542
Property and equipment, net 5,311,804 4,483,705
Other assets 102,775 99,690
------------ ------------
Total assets $ 26,021,872 $ 19,479,937
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,459,521 $ 3,421,195
Accrued expenses 3,036,100 2,615,835
Current portion of capital lease
obligations 425,847 365,674
Borrowings under line of credit 9,519,470 5,257,690
------------ ------------
Total current liabilities 22,440,938 11,660,394
Long-term liabilities:
Capital lease obligations, net of
current portion 555,150 796,693
Other liabilities 565,146 471,759
------------ ------------
Total long-term liabilities 1,120,296 1,268,452
Commitments and contingencies
Convertible preferred stock 14,217,861 14,308,002
Common stock 22,189 22,093
Additional paid-in capital 50,570,243 50,448,100
Accumulated deficit (62,349,655) (58,227,104)
------------ ------------
Total stockholders' equity 2,460,638 6,551,091
------------ ------------
Total liabilities and stockholders' equity $ 26,021,872 $ 19,479,937
============ ============
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