Geerlings & Wade Inc., Canton, MA, announced yesterday first-quarter sales of $5 million, down 32 percent from the 2002 first quarter. The company recorded a net loss of $985,000 compared with a net loss of $741,000 in first-quarter 2002.
During the quarter the company reduced selling, general and administrative expenses by $1.2 million.
Much of the problem was due to a switch to a new fulfillment operation, which resulted in a change in product flow that involved $750,000 of orders received during the quarter. Those orders would have been shipped and recognized as sales under the old fulfillment system. The effect of these orders not shipping resulted in a reduction in net income of about $255,000.
A company statement said sales were hurt during the war with Iraq, which resulted in orders being about 11 percent below plan for the quarter.
It also announced that as a result of weaker-than-expected sales and higher expenses, it violated certain financial covenants of the credit agreement with its outside directors during the quarter.
The directors agreed to waive the covenant violations and any future financial covenant violations through May, and the company intends to seek an amendment to the credit agreement to reflect new covenants based on revised financial projections. The company thinks it will have adequate cash flow to repay its loan to the directors upon the credit facility's scheduled termination without significant adjustments to its business plan in 2003.
Also, Restoration Hardware Inc., Corte Madera, CA, announced Friday that during the 2002 fiscal year ended Feb. 1 net sales totaled $400.3 million, a 9 percent increase from $366.5 million in the previous year ended Feb. 2, 2002. The company's net loss available to common stockholders was $4 million for fiscal 2002 compared with a net loss of $35.4 million in fiscal 2001.
The final net loss reported for fiscal 2002 increased $400,000 compared with preliminary 2002 results reported March 19. The change related mainly to two accounting corrections that are reflected in the current fiscal year. These accounting corrections decreased the net loss in fiscal 2001 by $500,000.