SHERMAN OAKS, Calif. — Earl Scheib Inc. has reported its results for the second quarter of 2009 and six months ended Oct. 31.
Net sales for the second quarter of fiscal 2009 were $8.45 million, a decrease of 27.8 percent from the second quarter of fiscal 2008 net sales of $11.7 million. The company operated the same number of sales days in the second quarter of fiscal 2009 as in 2008, and operated 15 fewer retail paint shops at Oct. 31, 2008 compared to 2007. On a same-day basis, same-shop retail sales decreased by 21.9 percent; while combined sales in the fleet and truck center, commercial coatings operations and the now closed Florida locations decreased by $246,000 in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. The decrease in same shop-same day retail sales is primarily due to a reduction in car volume.
Net sales for the six months were $18.3 million, as compared to $24 million for the six months ended Oct. 31, 2007, a decrease of 23.4 percent. The company operated the same number of sales days in the six months of fiscal 2009 as in 2008. On a same-day basis, same-shop retail sales decreased by 18.3 percent due primarily to a reduction in car volume; while combined sales in the fleet and truck center, commercial coatings operations and the closed Florida locations decreased by $457,000 in the first six months of fiscal 2009 as compared to the first six months of fiscal 2008.
The second quarter of fiscal 2008 resulted in an operating loss of $849,000 compared to an operating loss of $640,000 in the second quarter of fiscal 2008. Gross margins decreased by 4.8 percent of sales in the second quarter of fiscal 2009 compared to fiscal 2008, due primarily to the inability to decrease costs proportionally with the decrease in sales. Selling, general and administrative expenses decreased by $910,000 to 27.1 percent of sales in the second quarter of fiscal 2009 compared with the second quarter of fiscal 2008, due primarily to decreases in payroll and advertising expenses.
The six months ended October 31, 2008 resulted in an operating loss of $1.03 million compared to an operating loss of $1.28 million in the six months ended Oct. 31, 2007. Gross margins decreased by 2.8 percent of sales in the six months compared to the six months ended Oct. 31, 2007, due primarily to the inability to decrease costs proportionally with the decrease in sales. Selling, general and administrative expenses decreased by $1.96 million to 24.6 percent of sales in the six months ended Oct. 31, compared to the 2007 six month period, due primarily to decreases in payroll and advertising expenses, and a net decrease in other selling, general and administrative expenses. Cost of sales was reduced by $3.88 million in the six months ended Oct. 31, compared with the 2007 six month period as a result of both the reduction in sales and improved cost controls. In total, operating costs and expenses were reduced by $5.84 million in the six months compared with the six months ended Oct. 31, 2007.
The company sold one closed retail paint shop property in the second quarter of fiscal 2009 for a gain of $526,000 and sold two properties in the six month period ended Oct. 31 for a net gain of $982,000.
Overall, the net loss for the second quarter of fiscal 2009 was $397,000 or 10 cents per diluted share; compared to a net loss of $376,000, or 9 cents per diluted share, for the second quarter of fiscal 2008. For the six months the net loss was $200,000, or 5 cents per diluted share, compared to a net loss of $1.03 million or 26 cents per diluted share, for the six months ended Oct. 31, 2007.
Christian Bement, president and chief executive officer, stated "We continue to be affected by the unprecedented economic slowdown throughout the United States. Like all retailers, our sales suffered during the second quarter of fiscal 2009. We continue to take steps to reduce our cost structure while at the same time focusing on the quality of the service we have provided for more than 70 years. With significantly less sales than the prior year, the increase in the operating loss over the prior period was much narrower as a result of the cost reductions made by management. Our board of directors and management continue to work closely with the company’s exclusive financial advisor, Wedbush Morgan Securities, to identify and pursue strategic alternatives designed to maximize stockholder value. We continue to believe that Earl Scheib possesses a valuable asset base and strong retail locations that, with the leaner cost structure, is well positioned when the general economy begins to reverse its course."
