Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Perfumania Holdings, Inc. (880460) 10-Q published on Jun 19, 2017 at 5:03 pm
Reporting Period: Apr 28, 2017
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330). The amendments, which apply to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, require that entities measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. The Company adopted ASU No. 2015-11 prospectively effective January 29, 2017. There was no impact to the Company's consolidated financial statements.
The customer trends affecting our recent performance are likely to continue to exert downward pressure on our revenues. We are reviewing and updating the Company’s sales strategy, including our business model and cost structure, to identify initiatives to reduce and align our overhead structure with our current business model, improve supply chain efficiency, optimize marketing spending, reduce expenses and improve operating results in the long-term. Among other strategies, we are accelerating closings of under-performing stores and working to increase e-commerce sales. We believe we can significantly increase our e-commerce penetration and establish the framework of a successful long-term e-commerce strategy. As customers increasingly shop across multiple channels, we continue to invest in these and other omni-channel initiatives in order to create a more seamless shopping experience for our customers. These strategic changes may have a material impact on our expenses in the nearer term but are intended to increase revenues. In addition, any changes, including changes to our capital structure, resulting from the independent directors’ review of our financial condition described below in “Liquidity and Capital Resources” may also have a material impact on our results of operations.
Net cash used in investing activities was approximately $0.3 million in the thirteen weeks ended April 29, 2017 compared to $0.8 million in the thirteen weeks ended April 30, 2016. Investing activities during the thirteen weeks ended April 29, 2017 consisted of corporate and information technology enhancements. The decrease in cash used in investing activities resulted from less information technology spending during the thirteen weeks ended April 29, 2017 versus last year's comparative period and no new Perfumania store openings during the thirteen weeks ended April 29, 2017 compared with the thirteen weeks ended April 30, 2016. During the thirteen weeks ended April 29, 2017, Perfumania did not open any new stores and closed 47 stores compared with one new store and 11 store closures during the thirteen weeks ended April 30, 2016. We plan to open one store and continue to close under-performing stores during the remainder of fiscal 2017. We continue to evaluate the need to close, remodel or relocate existing stores.
In addition to the work on operational strategies described above, we have announced that a special committee of our independent directors is considering various alternatives to address the Company’s financial condition. The special committee is considering the Company’s capital structure and possible alternatives that could result in value to all shareholders, and has contacted members of the Nussdorf family, our principal shareholders, to begin discussions over possible approaches. The Company does not have a defined timeline for the strategic review process, and there can be no assurance that it will result in any strategic alternative being announced or consummated.
We have also announced that a special committee of independent members of our Board of Directors has considered various alternatives to address our financial condition and capital structure and has contacted members of the Nussdorf family, our principal shareholders, to begin discussions over possible approaches that could result in value to all shareholders. No decision has been made by our Board, and there can be no assurance that any such alternatives would be undertaken. However, the result of this process may have a material impact on our capital structure and the shareholders’ investments.