Higher costs lead to loss at DWR
By Furniture Today Staff -- Furniture Today, June 5, 2006
San Francisco — Multichannel retailer Design Within Reach said sales declined 1.4% to $35 million in the first quarter, while higher costs and a lower gross profit margin resulted in a $4.2 million net loss.
In the first quarter last year, the company earned $884,000.
CEO Ray Brunner said DWR would make "major, necessary changes in the coming months," including reining in expenses.
Brunner, who has been with the company since 2002, was promoted to CEO earlier this month to replace Tara Poseley, who resigned.
"Over the past several years, we have veered away from some of the basic tenets that made our business so successful by introducing products with lower unit costs and lower inventory turnover, and we have invested heavily in overhead," Brunner said. "We are currently examining every line item to return to the fundamentals of cost control and bring DWR back to profitability."
The company said in-person sales at DWR stores and by its direct sales force were up 12% in the first quarter to $20.9 million. Sales by telephone and on its Web site fell 18.7% to $10.7 million, however, which the retailer attributed to reduced marketing of price promotions.
Design Within Reach has reduced its sales projection for the year to $175 million, from a previously reported range of $175 million to $185 million.
| Design Within Reach | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| 13 weeks ended 4/1 | 2006 | 2005 | Change |
| (a) Includes income tax benefit of $2.3 million in the 2006 quarter. | |||
| Sales | $34,970,000 | $35,465,000 | (1.4%) |
| Operating income | (6,628,000) | 1,331,000 | — |
| Net income (a) | (4,219,000) | 884,000 | — |
| Earnings per share | (0.30) | 0.06 | — |
