Meanwhile, operating profit increased 37% as the company leveraged its selling, general and administrative expenses.
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Higher selling, general and administrative expenses also were factors dragging down its bottom line, as the company hired more people.
Earnings, however, decreased 37% because of higher selling, general and administrative expenses and a near doubling of research and development costs.
Its selling, general and administrative expenses as a percentage of sales also improved to 11.1% from 11.9% in the year-ago quarter.
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Selling, general and administrative expenses also dropped to 16.5% of net sales.
The company said a drop in selling, general and administrative expenses, and lower charges related to store closings helped decrease the red ink.
The growth in ARPU, coupled with lower selling, general and administrative Expenses, helped the operating profit margin expand by 362 basis points to 32.47%.
Operating margin is expected to be approximately 7.5 percent, or 100 basis points higher than the prior year quarter, primarily as a result of improved leverage on selling, general and administrative expenses.
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Sky high selling, general, and administrative expenses reduce the EBITDAR margin to the 66th percentile, which still looks pretty good.
Selling, general, and administrative expenses as well as manufacturing fixed costs were kept well under control, while the quarter was burdened by temporary inefficiencies related to the volume drop and an inventory reduction.
The bottler, which operates in North America, Turkey, Russia, Greece and Spain, said it would refine its selling and service organization, lower its general and administrative expenses, make its supply chain more efficient and modify its defined benefit pension plans in the U.S. and Canada.
Still, gross profit declined 2%, principally due to increased building material costs and selling, general and administrative expense rose 14%, primarily due to investments in personnel and other expenses related to plans for growth, including the start-up of its Lexington, Ky.
Most of Dell's expenses are made up of selling, general and administrative costs rather than research and development.
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