Preliminary net sales for the month of November 2006 decreased approximately 4.4% to approximately $45.6 million from $47.7 million reported for the month of November 2005. The decrease in net sales for November 2006 was primarily driven by a decrease in sales for the month from the Company's Oh Baby! by Motherhood(TM) licensed arrangement with Kohl's(R), reflecting a shift in the timing of shipments compared to last year and, to a lesser extent, by decreased comparable store sales. The decrease in sales from the Kohl's licensed arrangement reflects a shift in the timing of product shipments to Kohl's into October from November compared to last year. The Company's sales from the Kohl's licensed arrangement were significantly higher this October compared to last October and were higher than last year for the combined months of October and November 2006. Preliminary comparable store sales for November 2006 decreased approximately 1.0% (based on 1,463 locations) versus a comparable store sales increase of 4.0% (based on 1,029 locations) for November 2005. This comparable store sales decrease of approximately 1.0% for November is right in line with the Company's guidance range for November comparable store sales of between down 2.5% and up 0.5% provided in its November 21, 2006 press release. During November 2006, the Company opened three stores and closed one store, with the store closing related to a prior period multi-brand store opening. As of the end of November 2006, the Company operates 809 stores, 788 leased department locations and 1,597 total retail locations, compared to 854 stores, 741 leased department locations and 1,595 total retail locations operated at the end of November 2005.
Rebecca Matthias, President and Chief Operating Officer of Mothers Work, noted, "Our sales performance for the month of November 2006 was right in line with our previous guidance, we continue to feel very good about our product lines, our inventory position and our overall business, and we are reaffirming the sales and earnings guidance for the first quarter and full fiscal year 2007 that we provided in our November 21, 2006 press release. As we discussed in our November 21, 2006 press release, we believe our November sales have been hurt due to unseasonably warm weather in much of the United States during November and, thus, we expected our comparable store sales for November to be in the range of down 2.5% to up 0.5%. It is very important to note, however, that during October and throughout November, we have continued to experience very strong improvement in gross margin versus last year, driven by decreased price promotional activity compared to last year, as well as a continued reduction in our product costs.
"Looking forward, we are optimistic about building on our strong fiscal 2006 results and delivering even stronger financial results for fiscal 2007 and beyond and continuing our strategic transition, as we expect to see a continuation of our sales and gross margin increases and expect to realize increased earnings contribution from our strategic initiatives, including increased contribution from our marketing partnerships, our leased department and licensed relationships, and the continued rollout of our multi-brand stores. As for our outlook for fiscal 2007, we reaffirm the sales and earnings guidance for the first quarter and full fiscal year 2007 that we provided in our November 21, 2006 press release."
Mothers Work is the world's largest designer and retailer of maternity apparel, using its custom TrendTrack(TM) merchandise analysis and planning system as well as its quick response replenishment process to "give the customer what she wants, when she wants it." As of November 30, 2006, Mothers Work operates 1,597 maternity locations, including 809 stores, predominantly under the tradenames Motherhood Maternity(R), A Pea in the Pod(R), Mimi Maternity(R), and Destination Maternity(TM), and sells on the web through its DestinationMaternity.com and brand-specific websites. In addition, Mothers Work distributes its Oh Baby! by Motherhood(TM) collection through a licensed arrangement at Kohl's(R) stores throughout the United States and on Kohls.com.
The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made from time to time by management of the Company, including those regarding expected results of operations, liquidity and financial condition and new business initiatives, involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: our ability to successfully manage our new initiatives, future sales trends in our existing store base, changes in consumer spending patterns, raw material price increases, consumer preferences and overall economic conditions, the impact of competition and pricing, availability of suitable store locations, continued availability of capital and financing, ability to hire and develop senior management and sales associates, ability to develop and source merchandise, ability to receive production from foreign sources on a timely basis, potential stock repurchases, potential debt repurchases, war or acts of terrorism, and other factors set forth in the Company's periodic filings with the Securities and Exchange Commission, or in materials incorporated therein by reference.
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