Frederick's of Hollywood Group Inc. Reports Fiscal 2013 Year-End and Fourth Quarter Financial Results

HOLLYWOOD, Calif., Oct. 25, 2013 /PRNewswire/ --Frederick's of Hollywood Group Inc. (OTCQB: FOHL) ("Company") today announced the financial results for its fiscal 2013 fourth quarter and year ended July 27, 2013.

"The financial results for fiscal 2013 reflect the previous financial challenges we have faced, which impacted our ability to fully deliver on our merchandising strategy and overall brand strategy. However, we believe that these challenges can be overcome given the ongoing support we've received from certain vendors, partners and our lenders, and their commitment to the Frederick's of Hollywood brand," stated Thomas Lynch, the Company's Chairman and Chief Executive Officer.

Fiscal 2013 Fourth Quarter Compared to Fiscal 2012 Fourth Quarter:

• Net loss applicable to common shareholders was $7.6 million or $(0.19) per basic and diluted share, compared with a net loss of $4.0 million or $(0.10) per basic and diluted share.
• Net sales decreased 19.0% to $16.5 million from $20.3 million.
  • Comparable store sales decreased 12.6%.
  • Total store sales decreased 16.0% to $11.4 million.
  • Direct sales (e-commerce and catalog) decreased 22.0% to $4.8 million.
  • Other revenue, consisting of shipping revenue, commissions earned on direct sell-through programs, breakage on gift cards and product sales to the Company's licensing partner in the Middle East, decreased 57.9% to $0.2 million.
• Gross margin, as a percentage of net sales, decreased to 24.1% from 32.4%.
• Selling, general and administrative expenses decreased to $9.1 million, or 55.3% of sales, from $9.5 million or 46.7% of sales.

Fiscal Year Ended July 27, 2013 Compared with Fiscal Year Ended July 28, 2012:

• Net loss applicable to common shareholders was $23.5 million, or $(0.60) per basic and diluted share, compared with a net loss of $6.5 million, or $(0.17) per basic and diluted share.
• Net sales decreased 22.3% to $86.5 million from $111.4 million.
  • Comparable store sales decreased 16.7%.
  • Total store sales decreased 20.1% to $56.5 million.
  • Direct sales (e-commerce and catalog) decreased 23.5% to $27.4 million.
  • Other revenue decreased 46.5% to $2.5 million.
• Gross margin, as a percentage of net sales, decreased to 29.1% from 37.4%
• Selling, general and administrative expenses decreased to $43.0 million, or 49.7% of sales, from $45.8 million or 41.1% of sales.

Forward Looking Statement
Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results may vary materially from those expressed or implied by the statements herein. Among the factors that could cause actual results to differ materially are the following: competition; working capital needs; competition; business conditions and industry growth; rapidly changing consumer preferences and trends; general economic conditions; continued compliance with government regulations; loss of key personnel; labor practices; product development; management of growth, increases in costs of operations or inability to meet efficiency or cost reduction objectives; timing of orders and deliveries of products; risks of doing business abroad; the ability to protect our intellectual property; and the other risks that are described from time to time in the Company's SEC reports. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

About Frederick's of Hollywood Group Inc.
Frederick's of Hollywood Group Inc., through its subsidiaries, sells women's intimate apparel and related products under its proprietary Frederick's of Hollywood^® brand through 112 specialty retail stores, a catalog and an online shop at http://www.fredericks.com/. With its exclusive product offerings including Seduction by Frederick's of Hollywood and the Hollywood Exxtreme Cleavage^® bra, Frederick's of Hollywood is the Original Sex Symbol^®.

Our press releases and financial reports can be accessed on our corporate website at http://www.fohgroup.com.

This release is available on the KCSA Strategic Communications Web site at http://www.kcsa.com.

CONTACT:
Frederick's of Hollywood Group Inc.
Thomas Rende, CFO
[phone]

Investor Contacts:
Todd Fromer / Garth Russell
KCSA Strategic Communications
212-896-1215 / 212-896-1250
[e-mail] / [e-mail]

(Tables Below)

FREDERICK'S OF HOLLYWOOD GROUP INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
							July 27,		July 28,
							2013		2012
	ASSETS
	CURRENT ASSETS:
		Cash					$ 201		$ 741
		Accounts receivable					926		997
		Merchandise inventories					11,333		12,915
		Prepaid expenses and other current assets					815		952
		Deferred income tax assets					93		48
			Total current assets				13,368		15,653
	PROPERTY AND EQUIPMENT, Net						3,196		6,806
	INTANGIBLE ASSETS						18,259		18,259
	OTHER ASSETS						1,376		756
				TOTAL ASSETS			$ 36,199		$ 41,474
	LIABILITIES AND SHAREHOLDERS' DEFICIENCY
	CURRENT LIABILITIES:
		Revolving credit facilities					$ 6,078		$ 7,356
		Accounts payable and other accrued expenses					19,639		14,623
			Total current liabilities				25,717		21,979
	DEFERRED RENT AND TENANT ALLOWANCES						3,006		3,887
	TERM LOANS						14,068		9,039
	DEFERRED INCOME TAX LIABILITIES						7,397		7,352
	WARRANT LIABILITY						3,402		-
	OTHER						10		-
				TOTAL LIABILITIES			53,600		42,257
				TOTAL SHAREHOLDERS' DEFICIENCY			(17,401)		(783)
				TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY			$ 36,199		$ 41,474

FREDERICK'S OF HOLLYWOOD GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
		Three Months Ended (Unaudited)				Year Ended
		July 27, 2013		July 28, 2012		July 27, 2013		July 28, 2012
Net sales		$ 16,471		$ 20,342		$ 86,507		$ 111,406
Cost of goods sold, buying and occupancy		12,503		13,761		61,328		69,782
Gross profit		3,968		6,581		25,179		41,624
Selling, general and administrative expenses		9,108		9,506		42,968		45,757
Loss on abandonment		-		-		755		-
Impairment of long-lived assets		889		-		2,184		-
Operating loss		(6,029)		(2,925)		(20,728)		(4,133)
Other income/(expense)
Interest expense, net		(625)		(925)		(2,137)		(2,224)
Fair value (loss)/gain on warrant		(571)		-		381		-
Loss before income tax benefit/(provision)		(7,225)		(3,850)		(22,484)		(6,357)
Income tax benefit/(provision)		37		(25)		(38)		(75)
Net loss		(7,188)		(3,875)		(22,522)		(6,432)
Less: Preferred stock dividends		431		84		933		84
Net loss applicable to common shareholders		$ (7,619)		$ (3,959)		$ (23,455)		$ (6,516)
Basic and diluted net loss per share applicable to common shareholders		$ (0.19)		$ (0.10)		$ (0.60)		$ (0.17)
Weighted average shares outstanding - basic and diluted		39,138		38,963		39,043		38,844

SOURCE Frederick's of Hollywood Group Inc.