(Filed Under wholesale Lingerie News). Peekay Boutiques second quarter sales fell 3% to $9.22 million while its loss for the period rose by 14% to $2.04 million.
For the six months ended June 30, 2016 sales dropped to $20.5 million, down from $21.2 million during the same period in 2015. And losses rose from $2.3 million in the first half of 2015, to $2.9 million for the same period in 2016.
The company operates 47 stores in six states, selling a variety of adult and sexual wellness products as well and intimate apparel. In the same quarter last year it reported “Sales of lingerie constituted approximately 16%” of its sales.
A major problem for the chain is the interest expense on its outstanding debt. A major portion of this debt was accumulated as smaller chains were folded in and the company went public at the start of 2015. As of June 30, 2016 its short term debt totaled $50.9 million, and during the second quarter interest expense on that debt totaled $1.9 million.
And short term debt is rising. As of December 31, 2015 it stood at $47.5 million.
Peekay warned again in its latest filing with the SEC that its ability “to continue its operations and execute its business plan is dependent on its 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 its business as contemplated. Management is in the process of exploring refinancing options, and raising additional equity capital through either a private placement of its securities, a public offering or a strategic transaction.”
Late last year the company had hired an underwriter in an attempt to raise funds by selling stock to the public, but that attempt was abandoned, at least temporarily, and no mention of a specific underwriter is made in the current filing. Meanwhile the company has been operating under a series of forbearance agreements from its lenders who seem inclined, at least for the moment, to give the company more time to solve its problems.
Peekay provided additional details about the quarter. “Our same store sales decreased $0.2 million, or 2.2%, to $9.1 million, for the three months ended June 30, 2016 as compared to the same period in 2015.” It explained that “In July 2015, we ended the sale of pornographic DVDs in our retail stores, and the same store revenue decline from 2015 results experienced in the second quarter was almost entirely the result of this change in assortment.”
“Gross profit for the three months ended June 30, 2016 was $5.8 million, a decrease of $0.2million, or 3% over the same period in 2015. Gross profit, expressed as a percentage of net revenue, was relatively consistent at 63.3% for both the three months ended June 30, 2015 and 2016.”
Peekay also reported that in the second quarter, “selling, general and administrative expenses totaled $5 million, a decrease of $0.5 million over the same period in 2015. The decrease in operating expenses resulted, in part, from a reduction of $0.2 million in marketing and advertising costs, from the second quarter of 2015 to comparable period in 2016, as the company tested theater advertisement during the Fifty Shades of Grey movie release and pre-release in 2015. The company also reduced management and administrative fees for the three months ended June 30, 2016, as compared to the comparable 2015 period.”
Peekay has experienced a string of losses over the years. It posted a loss of $46.7 million in 2015, a loss of $4.2 million the year before. In 2013 and 2014 the company had net losses of $2.6 million and $4.2 million, respectively.
Finally, Peekay again warned that although it continues to operate under forbearance agreements with its lenders, “we may be forced to file for bankruptcy and/or liquidate our assets if we are unable to meet the terms of the agreement." — NM
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