Sterling Shoes Income Fund (the "Fund") (TSX: SSI.UN)(TSX: SSI.DB) today reported its financial results for the quarter ended September 30, 2009.
"The continuing recession resulted in weaker sales within our industry and increased promotional activity due to reduced consumer discretionary spending. The Fund's performance followed the same pattern. Rising unemployment rates in our key markets, most notably British Columbia, Ontario and Alberta, as well as unseasonable weather conditions throughout most of Canada, negatively impacted sales," said Jeremy Horwitz, President and Chief Executive Officer.
Replica Gucci"Management is continuing its efforts to conserve cash through aggressive cost reductions and inventory management. During the third quarter 2009, we improved our inventory position by approximately 12%, on a units per store basis, compared to the same time last year. We believe our efforts will steer Sterling towards sustainable long-term earnings and growth once economic conditions stabilize."
The Fund today announced that its Board of Trustees has approved a cash distribution of $0.01862 per trust unit for the period from November 1, 2009 to November 30, 2009, payable on December 15, 2009 to unitholders of record at the close of business on November 30, 2009. Sterling Shoes is continuing to pay equivalent distributions to the exchangeable LP units of the Partnership.
Financial Results for the three months ended September 30, 2009
During the three months ended September 2009, sales decreased 6.5% to $31.7 million from $33.9 million in the same period last year. Same store sales fell by 12.8% for the three-month period ended September 30, 2009 compared to the same period in 2008. Sales reductions reflect current weak economic conditions.
Cost of sales as a percentage of sales for the three months ended September 30, 2009 was 59.3% compared to 51.1% for the same period during 2008. Due to unfavourable economic conditions during the quarter-ended September 30, 2009 more promotional activity took place during that quarter than during the same period in 2008 which contributed to weaker gross margin.
Cost of sales was also impacted by the deterioration of the Canadian dollar versus the U.S. dollar earlier in 2009. Substantially all footwear sold in Canada is manufactured outside of Canada. Consequently, the cost of substantially all of our purchases is exposed to currency fluctuations either directly or indirectly. During the three and nine-month periods ended September 30, 2009, approximately 54% and 47% of product purchases were denominated in U.S. dollars, respectively. During the quarter ended September 30, 2009 the Canadian dollar was worth approximately 12% less against the U.S. dollar than during the same period in 2008 which increased purchase prices, inventory valuation and cost of sales.
Store and selling expenses for the three months ended September 30, 2009 were 36.3% of sales, compared to 35.7% for the same period during 2008. Store and selling expenses have a fixed underlying core with a large variable component, primarily consisting of expenses relating to occupancy and employee costs. General and administrative ("G&A") expenses Argentina Soccer Jersey for the three-months ended September 30, 2009 were 6.0% of sales, compared to 5.1% from the same period in 2008 largely due to higher computer maintenance costs this year. We continue to review business processes to seek ways to reduce overall costs.
Adjusted EBITDA for the three-months ended September 30, 2009 was negative $0.6 million compare
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