5.	Discontinued Operations

During the second quarter of fiscal 2012, the Company exited its European Direct business and provided formal termination notice to its vendor, who had provided all web store design, order processing, fulfillment and customer call center services for the Company’s European web stores. Included in the loss from discontinued operations for the second quarter and first six months of fiscal 2012 is an early termination fee and settlement of $1.1 million that was paid to Company’s vendor for early termination. The Company’s European Direct business has been unprofitable since inception, with net losses of $2.1 million, $2.0 million, and $1.5 million on net sales of $1.8 million, $1.6 million and $1.2 million in the years ended January 28, 2012, January 29, 2011 and January 30, 2010, respectively.

The results of the European Direct business have been reclassified to reflect the operating results as discontinued operations for all periods presented. The following table summarizes the results from discontinued operations from the Company’s European Direct business for the periods presented.


	For the three months ended						For the six months ended
(in thousands)	July 28, 2012			July 30, 2011			July 28, 2012			July 30, 2011
Sales	$	439		$	499		$	813		$	940
Gross margin		(218	)		133			(84	)		306
Selling, general and administrative expenses		(1,534	)		(704	)		(1,845	)		(1,256	)
Depreciation and amortization		(4	)		(4	)		(8	)		(8	)
Benefit from income taxes		—			—			—			—

Loss from discontinued operations, net of taxes	$	(1,756	)	$	(575	)	$	(1,937	)	$	(958	)