ARCA reported a first quarter 2009 operating loss of $1.7 million compared to operating income of $0.6 million during the same period of 2008. The first quarter 2009 operating loss was due primarily to lower retail gross profit compared to 2008. Gross profit as a percentage of total revenues declined to 24.2% for the first quarter of 2009 compared to 31.4% for the first quarter of 2008. The decline was due primarily to price compression on product to remain competitive with other retailers in the current economic environment and to lower same store sales. The company reported a loss from continuing operations of $2 million or $0.43 per diluted share for the first quarter of 2009 compared to income from continuing operations of $0.3 million or $0.07 per diluted share for the same period of the previous year.
Comparable store revenues from the fifteen ApplianceSmart Factory Outlets operating during the entire first quarters of 2009 and 2008 decreased 8.9%, while total store revenues increased 11.0% to $20.9 million from $18.9 million during the same period of 2008 due to the opening of five factory outlet stores later in 2008 and early 2009. The decline in comparable store revenues was due primarily to the price compression previously mentioned along with the lower same store sales. Revenues from ARCA’s recycling segment decreased 23.8% to $5.2 million in the first quarter of 2009 compared to revenues of $6.8 million in the same period of 2008. The decrease was due primarily to lower recycling volumes in California and, to a lesser extent, lower scrap metal prices compared to the first quarter of 2008. Selling expenses as a percentage of total revenues in the first quarter of 2009 increased to 21.3% compared to 18.7% for the previous year. General and administrative expenses as a percentage of total revenues decreased to 9.3% in the first quarter of 2009 from 10.3% in the first quarter of 2008.
Edward R. (Jack) Cameron, president and chief executive officer, stated: The first quarter of 2009 continued to be a very difficult operating environment. While our ApplianceSmart Factory Outlets actually performed well in the Minnesota and Ohio markets, the Georgia market was very challenging. The Georgia market has two new retail outlets that have been open for less than two quarters, so it will take some time before they gain momentum in the continued sluggish retail economy. For our appliance recycling business, we feel good overall about our operating results in the first quarter. While total revenues were down, the operating profit before corporate allocations for the recycling segment increased 18% compared to the first quarter of 2008.
