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The multichannel retailer of modern furniture reports a 17.7% drop in online sales for the first quarter and an even steeper 25.1% decline in sales at its studios. The company has hired an investment banker to evaluate its options.
There are no signs the recession is over at Design Within Reach Inc., which sells modern furniture through stores and the web. The retailer has hired an investment banker to help it evaluate its options, including the possibility of a sale or merger.
Web sales fell 17.5% in the first quarter ended April 4, to $5.2 million from $6.3 million during the same period a year ago. Store sales declined 25% to $23.5 million from $31.3 million. Total sales for the quarter were $34.1 million, down 27.3% from $46.9 million in the year-ago quarter. The web represented 15.2% of net sales in Q1, up from 13.4% in the first quarter of 2008.
The Q1 results are in line with those from the fourth quarter of 2008 when the retailer reported an 18% decline in web sales and a 35% decrease in total sales.
The company had 71 stores of various types as of the end of the first quarter, after closing two studios and opening an outlet during Q1. It says it may have to close some underperforming studios, which display furniture that is shipped from a central warehouse in Kentucky. The company reduced expenses by $3 million in the first quarter and expects expense reductions will total $15 million for the full year, in part by cutting back on inventory and catalog mailings.
However, if the retailer does not generate sales at the rate it expects, or obtain additional financing, “it is unlikely that we will be able to maintain sufficient liquidity to continue as a going concern,” the company says in its latest 10-Q filing with the U.S. Securities and Exchange Commission. The company in February engaged investment banker Thomas Weisel Partners LLC to help it evaluate an unsolicited offer and other strategic options, which could include a sale or merger, the company says in its filing.
Design Within Reach is No. 323 in the Internet Retailer Top 500 Guide.