Financials: Management's Discussion & Analysis of Financial Condition & Results of Operations
General
The Company was founded in 1917 and currently operates 180 retail bookstores,
including 135 superstores, concentrated in the southeastern United States.
The Company's growth strategy is focused on opening superstores in new and existing market areas, particularly in the Southeast. In addition to opening new stores, management intends to continue its practice of reviewing the profitability trends and prospects of existing stores and closing or relocating underperforming stores or converting stores to different formats.
Results of Operations
The following table sets forth statement of operations data expressed as a
percentage of net sales for the periods presented.
Fiscal 2000 Compared to Fiscal 1999
Net sales increased $56.2 million, or 16.1%, to $404.1 million in fiscal 2000
from $347.9 million in fiscal 1999. Comparable store sales increased 8.2% for
fiscal year 2000. The increase in net sales resulted from net sales generated by
12 new stores opened during fiscal 2000, and 11 new stores opened in the second
half of fiscal 1999. In addition, the Company closed five underperforming stores
in fiscal 2000.
The factors affecting the future trend of comparable store sales include, among others, overall demand for products the Company sells, the Company's marketing programs, pricing strategies, store operations and competition.
Gross profit increased $16.6 million, or 18.3%, to $107.7 million in fiscal 2000 from $91.1 million in fiscal 1999. Gross profit as a percentage of net sales increased to 26.6% in fiscal 2000 from 26.2% in fiscal 1999, primarily due to decreased occupancy costs and lower warehouse distribution costs as a percentage of net sales.
Operating, selling and administrative expenses increased $13.7 million, or 20.7%, to $80.1 million in fiscal 2000, from $66.4 million in fiscal 1999. Operating, selling and administrative expenses as a percentage of net sales increased to 19.8% in fiscal 2000 from 19.1% in fiscal 1999, primarily due to costs incurred related to the development of new business opportunities.
Depreciation and amortization increased $0.8 million, or 6.6%, to $13.8 million in fiscal 2000 from $13.0 million in fiscal 1999. Depreciation and amortization as a percentage of net sales decreased to 3.4% in fiscal 2000 from 3.7% in fiscal 1999, primarily the result of lower capital expenditures due to fewer stores opened in fiscal 2000 than in the previous year.
Net interest expense was relatively constant with last year at $4.2 million in fiscal 2000 versus net interest expense of $4.4 million in fiscal 1999.