New York / NY. (sga) Crumbs Bake Shop Inc. (formerly known as 57th Street General Acquisition Corporation), a national neighbourhood bakery and the largest U.S.-based cupcake specialty store chain, reported financial results for the third quarter ended September 30, 2011. Third quarter highlights as compared to year ago period include:
- Net sales increased 18,3 percent to 8,9 million USD; gross profit increased 14,9 percent to 5,1 million USD.
- Store operating weeks increased 41 percent to 468 from 332.
- GAAP net loss attributable to stockholders was (0,9) million USD or (0,17 USD) per diluted share.
- Adjusted Ebitda, a non GAAP measure, of (0,7) million USD compared to 0,5 million USD.
- Two new stores opened in both Illinois and New York.
Jason Bauer, Co-Founder of Crumbs: «Although we were disappointed with our third quarter results, we are taking definitive action to improve performance. To that point, I am very excited that Julian R. Geiger has agreed to become our new President and Chief Executive Officer, given his extensive experience building brands and fostering growth. I believe that his leadership will be an important ingredient in Crumbs´ development and I look forward to working closely with him in building the business over time».
Third Quarter Financial Results
Net sales for the third quarter of 2011 increased 18,3 percent to 8,9 million USD from 7,5 million USD in the same period last year. Store operating weeks increased 41 percent to 468 from 332.
Cost of sales increased 23,1 percent to 3,8 million USD from 3,1 million USD and as a percentage of net sales, increased 1,7 percentage points to 42,5 percent. Gross profit increased 14,9 percent to 5,1 million USD from 4,4 million USD compared to the third quarter of 2010 due to higher net sales.
General and administrative expenses were 0,7 million USD or 7,4 percent of net sales, compared to 0,3 million USD in the same period last year or 4,7 percent of net sales as the Company incurred higher professional fees and public company costs.
Adjusted Ebitda was negative (0,7) million USD compared to 0,5 million USD in the same period last year. See financial tables for a reconciliation of adjusted Ebitda (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to GAAP results.
GAAP net loss attributable to stockholders was (0,9) million USD or (0,17 USD) per diluted share, compared to a net loss of (39’000 USD) or (0,01 USD) per diluted share in the same period last year.
Store Development
During the third quarter of 2011, the Company opened four stores in New York and Illinois and ended the three-month period with a total of 39 stores opened across six states and the District of Columbia.
Outlook
Management is suspending its previously announced guidance for 2011 net sales and adjusted Ebitda but is reaffirming its new store development outlook of 16 to 18 store openings within existing markets. For 2012, the Company will continue to open stores in both existing markets and new markets such as Boston and Philadelphia and intends to address its overall outlook development and financial outlook when it reports year-end results early next year.
In a separate press release issued this week, the Company announced naming Julian R. Geiger as the Company´s new President and Chief Executive Officer, effective immediately. Jason Bauer, who co-founded the Company´s operating subsidiary, Crumbs Holdings LLC and served as its President and Chief Executive Officer since 2003, will become Senior Vice President of Business Development.
The process to identify and install a new independent director on the Company´s Board of Directors has begun. As required by the Nasdaq Corporate Governance Rules, the Company has notified Nasdaq of Geiger´s appointment and provided it with a plan for compliance with the requirements of Rule 5605 that the Board of Directors be comprised of a majority of independent directors by letter dated November 14, 2011. The plan for compliance includes increasing the size of the board to nine persons, the identification and review of several potential nominees being considered by the Company´s Nominating and Governance Committee and the Board´s plan to add such additional independent director as soon as possible but expected to be within the next 60 days.
