The net sales increase was driven by a 3.6% growth in direct net sales and a 100.7% growth in retail net sales. Growth was achieved in virtually all product categories.
The increase in retail net sales was primarily attributable to an increase of 12 stores in the third quarter of 2017 as compared to the same period a year ago.
Gross margin decreased 120 basis points to 56.6% compared to 57.8% in the prior-year third quarter. Adjusted EBITDA decreased 24.9% to $1.9 million compared to $2.5 million in the prior-year third quarter. Adjusted EBITDA decreased 24.9% to $1.9 million compared to $2.5 million in the prior-year third quarter.
Selling, general and administrative expenses increased 26.7% to $48.0 million, compared to $37.9 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses increased 80 basis points to 57.4%, compared to 56.6% in the corresponding prior-year period.
The company said, "Our 25% top line growth reflects our commitment to investing in our omnichannel model. We are growing our brand, attracting new customers, and the direct growth in our established store markets continues to perform well."
Looking ahead, the company reaffirmed EPS guidance for its fiscal year 2018 of $0.66-0.71, which falls in-line with expectations and reaffirmed its revenue outlook at $455-465 million, which falls a bit short of expectations. The company also reaffirmed its adjusted EBITDA in the range of $47.0-49.5 million.
Shares remain sharply lower this morning (down 16%) and just hit a new low for the day.
Sales and earnings fell short of expectations, gross margins declined, SG&A increased notably and the company's revenue guidance fell a little short of expectations (1.2% below the mid-point of the range), so there are some clear drivers to explain the weakness today. Let's see how the stock closes.