Hancock Fabrics announced financial results for its first quarter ended May 2, 2015. Net sales were $61.7 million compared to $63 million in the first quarter of the prior year.
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Comparable store sales declined by 1.9% primarily due to the disruption of product flow resulting from West Coast port issues.
Gross profit for the first quarter was 43.6% compared to 45.1% for the first quarter of the prior year.
Selling, general and administrative expenses for the first quarter of 2015, including depreciation and amortization, increased to 45.8% of net sales compared to 43.6% for the first quarter of the prior year.
Increases in employee benefit costs, professional fees and reduced commission income was partially offset by reductions in insurance claims activity and the gain recognized from sales of an owned store location.
Operating loss for the quarter was $(1.3) million compared to operating income of $0.9 million in the first quarter last year.
Interest expense for the first quarter of 2015 was $2.8 million and includes $1.4 million of costs, of which approximately $0.9 million represents a non-cash write-off of prior deferred financing costs, resulting from the early termination of the Company’s amended and restated loan and security agreement with General Electric Capital Corporation following its debt refinancing in April 2015.
Excluding the one-time expense resulting from this termination, non-GAAP interest expense would have been $1.4 million for the first quarter of 2015 compared to $1.4 million for the same period of 2014.
EBITDA, a non-GAAP measure which is defined as earnings (loss) before interest, taxes, depreciation and amortization, was a loss of $(55) thousand for the quarter compared to income of $2.1 million for the same period last year.
At quarter end, the Company had outstanding borrowings under its new revolver and term loan credit facility of $59.8 million and $17.5 million, respectively, and outstanding letters of credit of $8.5 million.
Availability under the new credit facility was $6.3 million at May 2, 2015, but would have been $7.8 million, excluding $1.5 million of duplicate letters of credit from the transition to the Company’s new lender. The balance of the Company’s subordinated debt was $8.2 million at quarter end. ■