iParty Corp. (AMEX: IPT - news), a party goods retailer that
operates 50 iParty retail stores, today reported financial results
for its third quarter of fiscal year 2005, which ended on September
24, 2005. For the quarter, consolidated revenues were $14.8
million, a 12.8% increase compared to $13.2 million for the third
quarter of 2004. The increase in third quarter revenues from the
year-ago period was due to a 2.5% increase in comparable store
sales and sales from eight new stores that opened since the end of
the third quarter of 2004. Consolidated gross profit margin was
39.1% for the third quarter compared to a margin of 40.0% for the
same period in 2004. Consolidated net loss was $2.4 million, or
$0.11 per basic and diluted share, compared to consolidated net
loss of $1.6 million, or $0.07 per basic and diluted share, in the
third quarter of 2004. For the nine-month year-to-date period,
consolidated revenues were $44.5 million, a 9.8% increase compared
to $40.6 million for the first nine months of 2004. This year's
nine-month year-to-date consolidated revenues included a 0.4%
increase in comparable store sales. Consolidated gross profit
margin was 39.9% for the nine-month period compared to 42.2% for
the same period in 2004. For the nine-month year-to-date period,
consolidated net loss was $4.1 million, or $0.19 per basic and
diluted share, compared to a net loss of $1.7 million, or $0.08 per
basic and diluted share, for the first nine months of 2004. Sal
Perisano, Chief Executive Officer of iParty Corp., commented, "We
are pleased with our continuing ability to implement our growth
strategy. We opened five new stores during the quarter bringing our
total number of stores to 50. Sales from our new stores contributed
towards a total sales increase of 12.8% for the quarter while our
comparable stores increased by 2.5%. The increase in comparable
store sales was mostly driven by higher sales of Boston Red Sox
related merchandise which we feel was due to increased exposure for
our brand through our Red Sox sponsorship program as well as better
inventory levels. Higher occupancy costs as a percentage of sales
continue to put pressure on our gross profit margin. The increase
in occupancy costs continues to be largely attributable to our new
stores, which, as we have previously reported, operate at a higher
occupancy to sales ratio until they reach maturity. Our marketing
and sales costs as a percentage of sales continue to run higher
than last year largely due to increased advertising, including our
sponsorship program with the Boston Red Sox and higher depreciation
costs associated with the acquisition of fixed assets for our new
stores. Our general and administrative expenses are higher than
last year primarily due to consultant costs associated with the
selection of a new merchandise system that we are currently
planning to install in 2006. We continue to believe that our
investment in growth, new stores and improved infrastructure will
yield longer-term increases in profitability." "We also continue to
seek out marketing opportunities to increase our public profile and
build our brand. The Red Sox sponsorship this past year was an
example of this focus. As another example, we are especially
excited about our partnership with Boston Medical Center in
connection with Halloween Town, a Halloween celebration for the
city of Boston that will be held on October 30, 2005 at the Seaport
World Trade Center. This is a fundraising event for Boston Medical
Center that we expect will draw thousands of children and parents.
We believe that our participation in Halloween Town, like our Red
Sox sponsorship, will help us reach new customers and continue to
meet our important goal of further establishing the iParty brand."
About iParty Corp. Headquartered in Dedham, Massachusetts, iParty
Corp. (AMEX: IPT - news) is a party goods retailer that operates 50
iParty retail stores and licenses the operation of an Internet site
for party goods and party planning at www.iparty.com. iParty's aim
is to make throwing a successful event both stress-free and fun.
With over 20,000 party supplies and costumes and an online party
magazine and party-related content, iParty offers consumers a
sophisticated, yet fun and easy-to-use, resource with an extensive
assortment of products to customize any party, including birthday
bashes, Easter get-togethers, graduation parties, summer barbecues,
and, of course, Halloween. iParty offers reliable, time-tested
knowledge of party-perfect trends, and superior customer service to
ensure convenient and comprehensive merchandise selections for
every occasion. Please visit our site at www.iparty.com. Safe
harbor statement under the Private Securities Litigation Reform Act
of 1995: This release contains forward-looking statements that are
based on our current expectations, beliefs, assumptions, estimates,
forecasts and projections, including those about future store
openings, future expectations of profitability and the industry and
markets in which iParty operates. The statements contained in this
release are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual outcomes and results may differ
materially from what is expressed in such forward-looking
statements, and such statements should not be relied upon as
representing iParty's expectations or beliefs as of any date
subsequent to the date of this press release. Important factors
that may affect future operating results include the effects of
adverse changes in overall economic conditions, the success or
failure of iParty's efforts to implement its business strategy; the
success or failure of iParty's marketing initiatives and its
efforts to build the iParty brand; iParty's inability to obtain
additional financing, if required; third-party suppliers' failure
to fulfill their obligations to iParty; unseasonable weather,
particularly in the New England region; intense competition from
other party supply stores and stores that merchandise and market
party supplies, including big discount retailers and dollar store
chains; the availability of retail store space on reasonable lease
terms; the failure of iParty's systems or those of its third-party
suppliers; general economic and other developments affecting
consumer confidence or spending patterns, particularly in the New
England region; compliance with evolving federal securities,
accounting, and stock exchange rules and regulations applicable to
publicly-traded companies listed on the American Stock Exchange;
and government regulation of the Internet. For a discussion of
these and other risks and uncertainties which could cause actual
results to differ from those contained in the forward-looking
statements, see "Cautionary Statements and Risk Factors" in
iParty's most recently filed Annual Report on Form 10-K and
"Factors That May Affect Future Results" in iParty's most recently
filed Quarterly Report on Form 10-Q. -0- *T iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the three For
the nine months ended months ended -------------------------
------------------------- Sep 24, 2005 Sep 25, 2004 Sep 24, 2005
Sep 25, 2004 ------------ ------------ ------------ ------------
Revenues $14,839,051 $13,157,546 $44,516,336 $40,554,000 Operating
costs: Cost of products sold and occupancy costs 9,042,165
7,897,580 26,752,342 23,454,594 Marketing and sales 6,204,540
5,276,532 16,316,817 14,367,835 General and administrative
1,852,047 1,509,548 5,187,189 4,674,898 ----------- -----------
----------- ----------- Operating loss (2,259,701) (1,526,114)
(3,740,012) (1,943,327) Other income - 28,000 - 382,500 -----------
----------- ----------- ----------- Loss before interest
(2,259,701) (1,498,114) (3,740,012) (1,560,827) Interest income 477
271 758 1,280 Interest expense (151,437) (77,580) (383,298)
(148,900) ----------- ----------- ----------- ----------- Net loss
$(2,410,661) $(1,575,423) $(4,122,552) $(1,708,447) ===========
=========== =========== =========== Basic and diluted net loss per
share $ (0.11) $ (0.07) $ (0.19) $ (0.08) =========== ===========
=========== =========== Weighted-average shares outstanding: Basic
and diluted 22,147,063 22,019,408 22,123,289 21,123,511 ===========
=========== =========== =========== iPARTY CORP. CONSOLIDATED
BALANCE SHEETS Sep 24, 2005 Dec 25, 2004 -------------
------------- (Unaudited) ASSETS Current assets: Cash and cash
equivalents $ 1,001,298 $ 1,757,157 Restricted cash 451,798 561,407
Accounts receivable 945,417 700,961 Inventory, net 17,399,118
11,400,971 Prepaid expenses and other assets 809,662 476,046
------------ ------------ Total current assets 20,607,293
14,896,542 Property and equipment, net 5,311,804 4,483,705 Other
assets 102,775 99,690 ------------ ------------ Total assets $
26,021,872 $ 19,479,937 ============ ============ LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
9,459,521 $ 3,421,195 Accrued expenses 3,036,100 2,615,835 Current
portion of capital lease obligations 425,847 365,674 Borrowings
under line of credit 9,519,470 5,257,690 ------------ ------------
Total current liabilities 22,440,938 11,660,394 Long-term
liabilities: Capital lease obligations, net of current portion
555,150 796,693 Other liabilities 565,146 471,759 ------------
------------ Total long-term liabilities 1,120,296 1,268,452
Commitments and contingencies Convertible preferred stock
14,217,861 14,308,002 Common stock 22,189 22,093 Additional paid-in
capital 50,570,243 50,448,100 Accumulated deficit (62,349,655)
(58,227,104) ------------ ------------ Total stockholders' equity
2,460,638 6,551,091 ------------ ------------ Total liabilities and
stockholders' equity $ 26,021,872 $ 19,479,937 ============
============ *T
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