Design Within Reach 2nd quarter sales up 49%
The retailer of modern design went public just last year
-- Home Accents Today, 8/15/2005 7:24:00 AM
San Francisco-based Design Within Reach’s net sales for the second quarter of 2005 were $41.9 million, up 49% from the $28.2 million recorded in the same period last year. The retailer of modern design went public just last year and has achieved sales increases of more than 40% for the last three years.
Net earnings for the second quarter of 2005 were $1.4 million, or $0.09 per diluted share on approximately 14.8 million shares outstanding, compared to $806,000, or $0.07 per diluted share on approximately 11.7 million shares outstanding, in the second quarter of 2004. Earnings from operations were $2.2 million compared to $1.4 million the prior year. The results are preliminary due to a delay following the company's May 2005 systems conversion and pending auditor review.
For the six months ended July 2, 2005, net sales increased 53% to $77.4 million from $50.7 million for the same period in 2004. Net earnings for the first six months of 2005 were $2.3 million, or $0.15 per diluted share, compared to $1.3 million, or $0.11 per diluted share, during the same period in 2004. For the six months ended July 2, 2005, earnings from operations was $3.4 million, compared to $2.2 million in the same six-month period in 2004.
“Our second quarter results continue to demonstrate our ability to expand into new markets and realize the operating leverage of our integrated sales platform and single common inventory,” said Wayne Badovinus, president and CEO. “With a total of 51 Studios in operation, we are experiencing robust sales growth, but our strong top-line results continue to be impacted at the gross margin level, primarily due to the negative effect of the Euro exchange rate year-over-year and increased shipping costs.”
Badovinus said DWR’s top priority is to “focus on stabilizing and improving gross margins and protecting the valuable Design Within Reach brand.” To that end the company has implemented a number of margin initiatives, including reducing the number of promotional events, further developing alternative product sourcing, growing its proprietary product development effort (the retailer is debuting its own bedding line this fall) and employing additional shipping options.
Gross profit margin was 44.7% in the second quarter of 2005, compared to 46.5% in the same period last year. This decrease is due primarily to the strength of the Euro versus the U.S. dollar and the rising costs of shipping. Shipping and handling expenses have increased significantly as the new Studios influence the merchandise mix toward “white glove delivery” items, which require special assistance due to their weight or fragility.
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