In the short term, we expect this dynamic to cause selling and distribution expenses, where the majority of costs are shipping related, to increase year over year as a percentage of net sales, and to a lesser extent, to result in more difficult year-over-year comparisons for fulfillment expenses expressed as a percentage of net sales in upcoming quarters. Now that we are more than 12 months into the COVID-19 pandemic and considering the recent relative strength in the sales of dresses (a category with a higher-than-average return rate), consistent with previous commentary, we expect these return rate tailwinds to reverse beginning in the second quarter of 2021. Operational efficiency benefit from lower return rates year over year: For the fourth consecutive quarter, net income benefitted from a lower return rate year over year as operating efficiency within fulfillment and selling and distribution expenses continued to benefit from customers returning a lower proportion of their purchases.Net income was a record $22.3 million, a year-over-year increase of 435%, and more than four times greater than Q1 2019 net income, the most recent first quarter before the onset of the COVID-19 pandemic.Gross margin benefitted from very healthy inventory dynamics that contributed to a year-over-year increase in the percentage of net sales at full-price and a year-over-year decrease in the depth of markdowns, partially offset by a lower contribution from owned brands that is consistent with the outlook shared on recent investor conference calls. Gross margin was 54.0%, a year-over-year increase of approximately 540 basis points and the highest-ever gross margin reported for a first quarter.As a result, in the above tables, we have provided data for the first quarter of 2019 to serve as an additional reference point for comparison. federal government stimulus payments distributed to U.S. We believe that the 2021 results were also positively impacted by U.S. The quarterly year-over-year comparison was helped by easier comparisons to the prior year beginning in the second week of March.
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