PERF Perfumania Holdings,

Perfumania Holdings, Inc. (NASDAQ:PERF) (“Perfumania” or the “Company”) a U.S. specialty retailer and distributor of fragrances and related beauty products, today reported operating results for the three and twelve months ended January 28, 2017.

Michael Katz, President and Chief Executive Officer of Perfumania, commented, "Fiscal 2016 marked a challenging and transitional period for Perfumania. Our retail stores, in particular at locations in malls and tourist-dependent areas, were impacted by an intense promotional and competitive sales environment, reduced foot traffic and weaker than expected consumer spending. As a result of the ongoing headwinds, the Company has undertaken an exhaustive review of its operations to effect the significant changes needed to resolve the issues that challenge our ability to achieve sustainable profitability. As such, we are accelerating the closure of underperforming stores where we do not see the potential for long-term growth and profitability. This review, while on-going, has already resulted in the reduction of our store footprint to 287 stores as of fiscal 2016 year end, and since that time, we closed an additional 43 locations, amounting to a reduction of over 20% of our retail store footprint.

“To offset the challenges we are facing at our brick and mortar locations and with the rapidly increasing shift in consumer shopping patterns out of traditional retail to e-commerce, we are actively implementing initiatives that will afford us the ability to gain added leverage from our e-commerce platform and improve our utilization of social networking, mobile, and digital applications to engage our customers. Increasing sales volume through Perfumania's e-commerce platform is one of our key growth initiatives and during fiscal 2017 we plan to strategically allocate additional resources and focus on improving the overall online shopping experience and identifying opportunities to leverage digital technologies to enable Perfumania to more deeply connect with our customers.

“In addition, we have recently undertaken an exhaustive review of our human and infrastructure resources and will be making the appropriate changes that are expected to yield cost savings and better align our operational structure with the changing market dynamics.

“As it relates to our product offering, we have undertaken initiatives to drive efficiencies in promotional spending and further diversify our sales mix as we continue to emphasize a greater percentage of owned brands. The cornerstone of our marketing philosophy for our Perfumania stores is to develop consumer awareness that the stores offer an extensive assortment of brand name and designer fragrances at discount prices.

Mr. Katz, concluded, “As we look ahead, we understand that there is still much work to be done and that our continued success in implementing our strategic changes is imperative as we look to establish a foundation for sustainable long-term growth.”

Operating ReviewNet sales during the thirteen weeks ended January 28, 2017, decreased 12.9% to $141.5 million, compared to $162.5 million in the fourth quarter of fiscal 2015, reflecting a decrease in same store sales and lower store count as the average number of stores operated was 292, or 8.2% less compared to 318 stores in operation in the prior year period.

Retail segment net sales decreased 16.5% to $81.2 million, compared with last year’s fourth quarter, due in large part to overall lower foot traffic across Perfumania stores, compared with last year’s fourth quarter.

Wholesale segment net sales decreased 7.5% to $60.3 million during the fourth quarter of fiscal 2016 from the fourth quarter of fiscal 2015 reflecting decreased sales for Quality Fragrance Group of $3 million related to lower customer demand and a decrease in Parlux sales of approximately $1.9 million due to weaker consumer demand, principally in department stores.

Gross profit during the fourth quarter of fiscal 2016 was $65.3 million, a decrease of 16.1%, compared to last year’s fourth quarter due to lower net sales. This led to gross profit margin of 46.1%, compared to 47.9% in the fourth quarter of fiscal 2015.

Total operating expenses were $70.5 million for the fourth quarter, compared to $73.2 million during last year’s fourth quarter principally reflecting lower advertising expenses.

Interest expense was $1.9 million for the fourth quarter of fiscal 2016, comparable to the fourth quarter of fiscal 2015.

These factors resulted in a net loss of $6.9 million for the fourth quarter of fiscal 2016, or a net loss per diluted share of $0.45, compared to a net income of $2.3 million, or a net income per diluted share of $0.15 during last year’s fourth quarter.

Balance Sheet and LiquidityCash and cash equivalents were $7.5 million as of January 28, 2017, compared to $5.6 million at January 30, 2016.

Net cash provided by operating activities during the fifty-two weeks ended January 28, 2017 was approximately $19.3 million, compared with approximately $38.1 million provided by operating activities during the prior year period. The decrease in cash primarily reflected changes in working capital and increase in our net loss.

Net cash used in investing activities was approximately $3.1 million in the fifty-two weeks ended January 28, 2017, compared to $8.5 million in prior year period. The decrease in cash used in investing activities resulted from fewer new Perfumania store openings and renovations during the fifty-two weeks ended January 28, 2017, compared with the fifty-two weeks ended January 30, 2016.

The Company has a $175 million revolving credit facility with a syndicate of banks, which is used for the Company's general corporate purposes and those of its subsidiaries, including working capital. The Company was in compliance with all financial and operating covenants under the Senior Credit facility and as of January 28, 2017, the Company had $94.7 million available to borrow under the Senior Credit Facility.

About Perfumania Holdings, Inc.Perfumania Holdings, Inc. (NASDAQ:PERF) is the largest specialty retailer and distributor of fragrances and related beauty products across the United States. Perfumania has a 30 year history of innovative marketing and sales management, brand development, license sourcing and wholesale distribution making it the premier destination for fragrances and other beauty supplies. As of January 28, 2017 the Company operated 287 corporate-owned retail stores as well as e-commerce, specializing in the sale of fragrances and related products across the United States, Puerto Rico, and the U.S. Virgin Islands. The Company also operates a wholesale distribution network that addresses approximately 57,000 retail doors. For additional information please visit www.perfumaniaholdings.com or contact us at perf@jcir.com.

Forward-Looking StatementsThis press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” “objective,” “assume,” “strategies” and other words and terms of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Among the factors that could cause actual results, performance or achievement to differ materially from those described or implied in the forward-looking statements are our ability to service our obligations, our ability to comply with the covenants in our Senior Credit Facility, any deterioration of general economic conditions, including weaker than anticipated discretionary spending by consumers, competition, the ability to raise additional capital to finance our expansion and other factors included in our filings with the SEC. Copies of our SEC filings are available from the SEC or may be obtained upon request from us. You should also consider carefully the statements under “Risk Factors” in our Form 10-K which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. We cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Contact:
Perfumania Holdings, Inc.               
Michael Katz                            
President and Chief Executive Officer   
(631) 866-4156                          

JCIR
Joseph Jaffoni / Norberto Aja 
(212) 835-8500
perf@jcir.com

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