SHERMAN OAKS, CA — Earl Scheib has reported its operating results for the first quarter ended July 31, for the fiscal year ending April 30, 2007.
Net sales for the first quarter of fiscal 2007 were $12,652,000, a decrease of 2.8 percent from the first quarter of fiscal 2006. This resulted primarily from a decrease in car volume in the retail paint and body shops and operation of five fewer retail shops, partially offset by an increase in the average transaction value and one additional selling day in the first quarter of fiscal 2007. On a same-day basis, same-shop retail sales in the first quarter of fiscal 2007 decreased by 0.2 percent.
Operating income in the first quarter of fiscal 2007 was $241,000, as compared to $236,000 in the first quarter of fiscal 2006. Gross margins increased by 1.5 percent of sales in the first quarter of fiscal 2007 as reductions in expenses, primarily labor and materials, exceeded the reduction in sales. Selling, general and administrative expense increased by $102,000, or 1.4 percent of sales, due primarily to increased salary expense.
Net interest expense in the first quarter of fiscal 2007 was $36,000 less than the first quarter of fiscal 2006, as the company terminated its existing bank credit facility in the first quarter of fiscal 2007.
The first quarter last year included the sale of one parcel of real estate for a pretax gain of $130,000. There were no sales of property in this year’s first quarter. As a result, net income for the first quarter of fiscal 2007 was $57,000, or 1 cent per diluted share, compared to net income of $136,000, or 3 cents per diluted share, in the first quarter of fiscal 2006.
Commenting on the results, Chris Bement, chief executive officer and president, stated, "As I previously discussed in my letter in the 2006 Annual Report to Shareholders, the impact of soaring gasoline prices, rising interest costs and other general economic and market factors beyond our control continued to negatively affect our retail shop car intake in the first quarter ended July 31. We continue to believe that the decrease in car volume will abate as time passes, consumers become more oriented to higher gasoline prices and the economic climate settles down. We continue to review our sales price points and look to expand our spot painting and minor collision repair work.
"We are close to executing leases for two new retail shop locations in California, and plan to open them in early 2007. We are working to complete the installation of our new corporate wide point-of-sale computer system, and have hired experienced technical personnel for that purpose. The retention of these personnel is the reason for the increase in selling, general and administrative salaries in the first quarter of this year. We expect that this investment will yield improved financial results in future periods."
For more information about Earl Scheib, go to: http://www.earlscheib.com.
