Frederick's of Hollywood Group Inc. Reports First Quarter Fiscal 2014 Financial Results

HOLLYWOOD, Calif., Dec. 10, 2013 /PRNewswire/ -- Frederick's of Hollywood Group Inc. (OTCQB: FOHL) ("Company") today announced the financial results for its first quarter of fiscal 2014.

"The results for the first quarter of fiscal 2014 reflect certain marketing and inventory challenges faced during the period.  These have been ongoing challenges associated with the financial limitations of the business over the past several years. We are working with our lenders, manufacturers and partners to overcome these challenges, as well as to implement a long-term strategy for enhancing our business and driving future growth," stated Thomas Lynch, the Company's Chairman and Chief Executive Officer.

Fiscal 2014 First Quarter Compared to Fiscal 2013 First Quarter:

• Net loss applicable to common shareholders was $7.7 million or $(0.20) per basic and diluted share, compared with a net loss of $5.2 million or $(0.13) per basic and diluted share.  The current period includes a $0.8 million loss related to the valuation of the Company's warrant liability.
• Net sales decreased 12.1% to $19.7 million from $22.5 million.
  • Comparable store sales decreased 11.7%.
  • Total store sales decreased 15.2% to $12.9 million.
  • Direct sales (e-commerce and catalog) were flat year-over-year.
  • Other revenue decreased by $0.4 million, or 53.8%.  The decrease is primarily attributable to a decrease in shipping revenue due to an increase in online promotional shipping offers.
• Gross margin, as a percentage of net sales, was 21.4% as compared to 27.0%.
• Selling, general and administrative expenses decreased to $9.9 million, or 50% of sales, from $10.1 million, or 44.9% of sales.

As previously disclosed, in September 2013, a group consisting of HGI Funding LLC, a wholly owned subsidiary of Harbinger Group Inc., and certain of the Company's other common and preferred shareholders (the "Consortium") submitted a non-binding proposal to acquire all of the outstanding shares of common stock of the Company not owned by them at a proposed price of $0.23 per share as part of a going private transaction, subject to certain conditions. Although discussions continue between the Company and the Consortium, there can be no assurance that any definitive agreement will be reached or that this or any other transaction will be approved or consummated.

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.  There can be no assurance that any definitive agreement will be reached between the Company and the Consortium or that this or any other transaction will be approved or consummated.  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.  

CONTACT:                                                     
Frederick's of Hollywood Group Inc.                 
Thomas Rende, CFO                                                    
(212) 779-8300

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

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SOURCE Frederick's of Hollywood Group Inc.