(Filed Under Financial and General Interest News). Naked Brand Group second quarter sales fell 18.8% to $293,011, while losses in the three months ended July 31, 2016 grew by 5.2% to $3,301,780.
At the same time, the company reported a dramatic, $104,700 decline in sales (compared to the same quarter last year) to its biggest customer last year, Nordstrom, as well as the continuing evaporation of its business in Canada, where the company reported just $2,093 in sales compared to $85,528 in the same quarter, ended July 31, 2015.
In the year ended January 31, 2016, Naked’s sales to Nordstrom accounted for 41% of its business, it said in last year’s annual report, or $569,660. That works out to an average of $142,415 per quarter last year. Thus, the recent revelation about Nordstrom could mean it lost as much as 74% of its business with that store in the latest quarter. “Nordstrom is currently of key importance to our business and our results of operations, which would be materially adversely affected if this relationship ceased,” the company noted at the time, adding, “Our largest distribution partner is Nordstrom.”
The virtual elimination of Naked’s Canadian business in the last two quarters is also significant. The firm was incorporated in Canada in 2009, and sales there represented 21.5% of sales in its last fiscal year. In recent quarters Naked has no longer listed two prominent Canadian retailers, Hudson Bay and Holt Renfrew, among the examples of its prominent customers. And in the company’s first quarter (ended April 30, 2016) Canadian sales also almost disappeared: just $2,029 (or less than 0.5% of its total), down from $80,290 (or 31.0% of its total) in the quarter ended April 30, 2015.
In June, at the time of the release of first quarter results, BODY asked Naked president Joel Primus for a comment on the abrupt declines in Canada. He responded: “We are always focused on customer satisfaction and are unable to provide the level of customer service we strive for until we open a warehouse in Canada. This is a temporary situation and do expect to return to our Canada [customers]. The product is still available online in Canada through our retail partners such as Nordstrom, Hudson Bay, Amazon and Bare Necessities. We greatly value the patience our Canadian customers have shown during this transition.”
Naked explained the sales decline in the recent quarter stating: “Net sales decreased primarily as a result of above average sales in the comparative period from the launch of our expanded and redesigned men’s collections in that period, which resulted in high initial bulk up orders, and the fulfillment of backup orders which had built up in anticipation of the new collections. In the current period, sales to department stores accounted for approximately 32% of total sales, as compared to 46% in the comparative quarter ended July 31, 2015. Sales of our women’s products at new accounts have been strong, however these sales were offset by a decrease in our men’s sales from Nordstrom in the current period, as a result of a reduction by Nordstrom in replenishment orders aimed at reducing overstocked in-store inventory and a store closure which resulted in a return of in-store merchandise.”
There was also some bad news at the internet store, wearnaked.com, “which sales channel saw a modest decrease in net sales to approximately $74,139 for the three-month period ended July 31, 2016, from $76,955 for the three-month period ended July 31, 2015.”
Naked reported that during the last quarter, “we sold off some out of season and overstock inventory through off price sales channels. Sales to off price customers accounted for approximately 17% of total net sales during the three months ended July 31, 2016, as compared to 0% during the three months ended July 31, 2015.”
In the current quarterly report Naked listed as prominent customers: “Nordstrom, Dillard’s, Bloomingdale’s, Amazon.com, Soma.com, Saksfifthavenue.com, barenecessities.com.” — NM
Disclaimer: The views expressed in comments published on bodymagazine.us are those of the comment writers alone. They do not represent the views or opinions of Bodymagazine or its staff.
NOTE: Your Email will not be displayed.