(Filed Under Financial and General Interest News). Although Frederick’s of Hollywood Group Inc. cited sales drops during the first quarter ended October 30, the company’s financial position appears to be on the mend.

During the first quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $1 million, compared to a loss of $1 million during last year’s first quarter. The company’s net loss from continuing operations decreased to $297,000 from $2.6 million.

Net sales decreased 8 percent: to $28.6 million from $31.1 million during last year’s first quarter. Total store sales and comparable store sales dropped 9.6 percent and 7 percent, respectively. Direct sales, made up of catalog and website operations, decreased 5 percent. Gross margin as a percentage of sales increased to 40 percent from 35.2 percent.

“Our financial results from continuing operations for the first quarter of fiscal 2011 reflect the significant progress we have made in improving the performance of our continuing retail business,” said Thomas Lynch, chairman and C.E.O of Frederick’s of Hollywood. “This includes our improved gross margins as well as operating income […] While we are still facing many challenges associated with the macroeconomic environment, we believe the actions we have taken to transform the Frederick’s of Hollywood brand into a sexy lifestyle brand have placed us on a path toward profitability.”

Lynch said that the company’s licensing initiative is making progress. During the first quarter, Frederick’s of Hollywood signed entered in a licensing agreement with Lady Sandra Home Fashions Inc. to develop, manufacturer and distribute licensed beach towels, bedding and bath items throughout North America. Through the licensing business, Frederick’s has also entered the swimwear, sexy costume, jewelry and accessories categories.

As previously announced by Frederick’s of Hollywood and reported in BODY, the company sold Movie Star, its wholesale division, to Dolce Vita this fall.

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Published 12-14-2010 by Amanda Torres Price