(Filed Under wholesale Lingerie News). Losses rose dramatically at Peekay Boutiques while sales rose modestly in both the second quarter and first half of 2015.
For the three months ended June 30, 2015 the company lost $1.787 million on sales of $9.498 million compared to a loss of $1.341 million on sales of $8.925 million in the same period in 2014. In the first six months, Peekay lost $2.273 million on sales of $21.203 million compared to a loss of $1.430 million on sales of $20.030 million in the first half of 2014.
The company bragged in its quarterly filing, “For the three months ended June 30, 2015, net revenue increased $0.6 million, or 6.4%, to $9.5 million, as compared to the same period in 2014.” On a per store basis (the company is operating 44 stores in the U.S.) that’s an increase in sales of $13,007 per store. On the other hand, the company was also losing an average of $40,611 per store during those three months.
Earlier this year Peekay filed a statement with the Securities and Exchange Commission that it planned “to raise $50 million from the sale of the company’s common stock. The company intends to use the proceeds from the offering to pay down debt, and for general corporate purposes.” But in a quarterly filing in May it noted that “No underwriter has been selected or engaged yet in connection with this proposed offering,” and no underwriter was named in the most recent August filing. After multiple requests, the company CEO and attorney have both declined to say whether an underwriter has yet been hired.
In an August SEC filing relating to the proposed offering, Peekay warned “During 2013 and 2014, we incurred net losses of $2,577,263 and $4,181,890, respectively, largely as a result of interest expense on our outstanding debt of $6.6 million annually, which exceeds the operating profits generated through the operations of our business. Approximately $38.2 million in senior secured debt matures on December 31, 2015, and we do not have the resources necessary to pay this debt as it comes due. Our ability to continue our operations and execute our business plan is dependent on our ability to refinance this debt and/or to raise sufficient capital to pay this debt and other obligations as they come due (or are extended through a refinancing) and to provide sufficient capital to operate our business as contemplated.”
Overall, the company noted, “We have a significant amount of indebtedness. As of December 31, 2014, our total debt was approximately $51 million.”
Despite the continued and expanding losses, Peekay repeated, in the latest filing, that it is still considering a dramatic increase in the number of stores even though “Each new store requires an initial cash outlay of approximately $260,000, for store build-out, fixture expenditures, initial inventory load-in and pre-opening expenses.”
Peekay explained that it has used its most recently opened stores “to test and adjust the concept and new site selection criteria and process, and are now positioned to ramp up our new store build-out plans. We believe our new stores now feature decor aligned with the shopping preference of today’s modern women and couples. This foundation will allow us to scale our new store openings from five in 2014 to up to 50 or more stores on an annual basis in the future, if desired.”
In the latest filings, Peekay revealed “Sales of lingerie constituted approximately 16% of our sales. Lingerie includes a broad range of sleepwear, body stockings, clubwear, costumes, corsets, babydolls, hosiery and panties, including brands such as Dreamgirl, Coquette, Escante and Rene Rofe.” And it stated its “major competitors for our lingerie, sexual health and wellness products include Adam & Eve, Ann Summers, Pure Romance, Pleasure Chest, Kiss & Tell and Romantix.”
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