NET SALES INCREASE 9.2%;
COMPARABLE STORE SALES INCREASE 1.3%
PEMBROKE PINES, Fla., June 19 /PRNewswire/ -- Claire's Stores, Inc., a
leading specialty retailer offering value-priced jewelry and accessories,
today reported its financial results for the first quarter of Fiscal 2008,
which ended May 5, 2007.
The Company reported net sales of $340.6 million for the quarter, a
9.2% increase over the first quarter of Fiscal 2007, which ended April 29,
2006. The increase was primarily attributable to the growth in our new
store base, particularly in Europe, an increase in our consolidated
comparable store sales and foreign currency translation gains.
First quarter consolidated comparable store sales of 1.3% were derived
as follows:
-- Claire's North America: positive 2.4%
-- Claire's Europe: negative 0.7%
-- Icing: positive 0.6%
Please note that our comparable store sales numbers are calculated in
local currencies. Net sales numbers give effect to the impact of foreign
exchange.
First quarter results were driven by strong growth in accessories.
Merchandise margins increased despite some softness in jewelry sales. Gross
margins declined 20 basis points primarily because comparable store sales
increases and merchandise margin gains collectively did not offset the
increase in rent and rent related expenses. Our first quarter results were
also impacted by acquisition related activities and their associated costs.
For the quarter, Adjusted EBITDA rose 3.9% to $60.9 million, compared
to $58.6 million in the first quarter of Fiscal 2007. The Company defines
Adjusted EBITDA as earnings before interest, income taxes, depreciation and
amortization, excluding the impact of transaction expenses incurred during
the first quarter of Fiscal 2008 in connection with the May 29, 2007
acquisition of the Company by Apollo Management VI, L.P. and certain
affiliated co- investment partnerships, and other non-recurring or non-cash
expenses, and normalizing occupancy costs for certain rent-related
adjustments.
Net income for the first fiscal quarter fell 3.0% to $28.8 million,
compared to $29.7 million during the first quarter of Fiscal 2007.
During the first quarter of Fiscal 2008, cash provided by operating
activities rose to $20.3 million from $13.3 million during the first
quarter of Fiscal 2007 and cash and cash equivalents were $330.8 million as
of May 5, 2007. The use of cash in the first fiscal quarter primarily
reflects customary working capital requirements, capital expenditures
related to new store openings along with store remodels and the quarterly
dividend. For the first fiscal quarter, the Company had capital
expenditures of $22.3 million compared to $23.2 million in last year's
first fiscal quarter.
Store Count: End of First Fiscal Quarter:
May 5, 2007 April 29, 2006
Claire's North America 1,685 1,682
Claire's Europe 877 792
Icing 441 432
Claire's Nippon 203 180
Total 3,206 3,086
Conference Call Information
Claire's Stores, Inc., will begin holding quarterly conference calls in
September 2007, following the completion of the second quarter of Fiscal
2008.
Company Overview
Claire's Stores, Inc. is a leading specialty retailer of value-priced
jewelry and accessories for girls and young women through its two store
concepts: Claire's and Icing. While the latter operates only in North
America, Claire's operates internationally. As of June 2, 2007, Claire's
Stores, Inc. operated approximately 3,005 stores in the United States,
Canada, Puerto Rico, the Virgin Islands, the United Kingdom, Ireland,
France, Switzerland, Austria, Germany, Spain, Portugal, Belgium, and the
Netherlands. Claire's Stores, Inc. operates through its subsidiary,
Claire's Nippon, Co., Ltd., approximately 205 stores in Japan as a 50:50
joint venture with AEON, Co., Ltd. The Company also franchises 145 stores
in the Middle East, Turkey, Russia, Poland, and South Africa.
Forward-looking Statements
This press release contains "forward-looking statements" which
represent the Company's expectations or beliefs with respect to future
events. Statements that are not historical are considered forward-looking
statements. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those anticipated. Those factors include, without limitation: changes in
consumer preferences and consumer spending for girls and young women's'
apparel, jewelry and accessories; competition; general economic conditions
such as inflation and increased energy costs; general and political social
conditions such as war, political unrest and terrorism; natural disasters
or severe weather events; currency fluctuations and exchange rate
adjustments; changes in laws; uncertainties generally associated with the
specialty retailing business; disruptions in our supply of inventory;
inability to increase comparable store sales at historical rates;
significant increases in our merchandise markdowns; inability to design and
implement new information systems; delays in anticipated store openings or
renovations; uncertainty that definitive financial results may differ from
preliminary financial results due to, among other things, final GAAP
adjustments; changes in applicable laws, rules and regulations; loss of key
members of management; increases in the cost of labor; labor disputes;
increases in the cost of borrowings; unavailability of additional debt or
equity capital; and the impact of our substantial indebtedness on our
operating income and our ability to grow. These and other applicable risks,
cautionary statements and factors that could cause actual results to differ
from the Company's forward-looking statements are included in the Company's
filings with the SEC, specifically as described in the Company's Annual
Report on Form 10-K for the fiscal year ended February 3, 2007 and Form
10-Q Equivalent for the quarterly period ended May 5, 2007. The Company
undertakes no obligation to update or revise any forward-looking statements
to reflect subsequent events or circumstances. The historical results
contained in this press release are not necessarily indicative of the
future performance of the Company.
Additional Information:
Note: Other Claire's Stores, Inc. press releases, a corporate profile
and the most recent Annual Report on Form 10-K and Form 10-Q Equivalent are
available on Claire's business website at: http://www.clairestores.com.
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
May 5, 2007 April 29, 2006
(In thousands)
Net sales $340,571 100.0% $311,927 100.0%
Cost of sales, occupancy and
buying expenses 161,591 47.4% 147,174 47.2%
Gross profit 178,980 52.6% 164,753 52.8%
Other expenses (income):
Selling, general and
administrative 127,170 37.3% 111,620 35.8%
Depreciation and amortization 15,234 4.5% 13,158 4.2%
Other income (1,341) (0.4%) (330) (0.1%)
141,063 41.4% 124,448 39.9%
Operating income 37,917 11.1% 40,305 12.9%
Interest expense (income), net (3,753) (1.1%) (4,181) (1.3%)
Income before income taxes 41,670 12.2% 44,486 14.3%
Income taxes 12,888 3.8% 14,785 4.7%
Net income $28,782 8.5% $29,701 9.5%
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
May 5, 2007 April 29, 2006
(In thousands, except per
share amounts)
ASSETS
Current assets:
Cash and cash equivalents $330,785 $386,354
Inventories 127,272 128,341
Prepaid expenses 49,879 42,883
Other current assets 43,760 36,560
Total current assets 551,696 594,138
Property and equipment:
Land and building 17,272 17,350
Furniture, fixtures and equipment 289,873 261,565
Leasehold improvements 304,251 252,374
611,396 531,289
Less accumulated depreciation and
amortization (335,802) (296,272)
275,594 235,017
Intangible assets, net 56,365 48,700
Other assets 35,547 26,343
Goodwill 201,842 199,660
293,754 274,703
Total assets $1,121,044 $1,103,858
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $68,358 $72,642
Income taxes payable 19,726 27,609
Accrued expenses and other liabilities 97,627 86,578
Total current liabilities 185,711 186,829
Long-term liabilities:
Deferred tax liability 20,031 21,513
Deferred rent expense 26,835 22,302
Other liabilities 10,936 992
Total long-term liabilities 57,802 44,807
Stockholders' equity:
Class A stock - par value $0.05 per share 243 244
Common stock - par value $0.05 per share 4,411 4,702
Additional paid-in capital 76,315 71,982
Accumulated other comprehensive income,
net of tax 43,279 28,730
Retained earnings 753,283 766,564
Total stockholders' equity 877,531 872,222
Total liabilities and stockholders'
equity $1,121,044 $1,103,858
Net income reconciliation to EBITDA and Adjusted EBITDA
EBITDA represents net income before provision for income taxes,
interest income and expense, and depreciation and amortization. Adjusted
EBITDA represents EBITDA further adjusted to exclude non-cash and unusual
items. Management uses Adjusted EBITDA as an important tool to assess our
operating performance. Management considers Adjusted EBITDA to be a useful
measure in highlighting trends in our business and in analyzing the
profitability of similar enterprises. Management believes that Adjusted
EBITDA is effective, when used in conjunction with net income, in
evaluating asset performance, and differentiating efficient operators in
the industry. Furthermore, management believes that Adjusted EBITDA
provides useful information to potential investors and analysts because it
provides insight into management's evaluation of our results of operations.
In addition, our calculation of Adjusted EBITDA is consistent with the
equivalent measurement in the covenants for the indentures governing the
senior notes.
EBITDA and Adjusted EBITDA are not measures of financial performance
under GAAP, are not intended to represent cash flow from operations under
GAAP and should not be used as an alternative to net income as an indicator
of operating performance or to cash flow from operating, investing or
financing activities as a measure of liquidity. Management compensates for
the limitations of using EBITDA and Adjusted EBITDA by using it only to
supplement our GAAP results to provide a more complete understanding of the
factors and trends affecting our business. Each of EBITDA and Adjusted
EBITDA has its limitations as an analytical tool, and you should not
consider them in isolation or as a substitute for analysis of our results
as reported under GAAP.
Some of the limitations of EBITDA and Adjusted EBITDA are:
-- EBITDA and Adjusted EBITDA do not reflect our cash used for capital
expenditures;
-- Although depreciation and amortization are non-cash charges, the assets
being depreciated or amortized often will have to be replaced and
EBITDA and Adjusted EBITDA do not reflect the cash requirements for
such replacements;
-- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital requirements;
-- EBITDA and Adjusted EBITDA do not reflect the cash necessary to make
payments of interest or principal on our indebtedness; and
-- EBITDA and Adjusted EBITDA do not reflect non-recurring expenses which
qualify as extraordinary items such as one-time write-offs to inventory
and reserve accruals.
While EBITDA and Adjusted EBITDA are frequently used as a measure of
operations and the ability to meet indebtedness service requirements, they
are not necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of calculation.
While management believes that these measures provide useful
information to investors, the SEC may require that EBITDA and Adjusted
EBITDA be presented differently or not at all in filings we will make with
the SEC.
For the three months ended May 5, 2007 and April 29, 2006, a
reconciliation of net income to EBITDA, EBITDA after rent related
adjustments and Adjusted EBITDA is set forth in the following table:
CLAIRE'S STORES, INC. AND SUBSIDIARIES
(UNAUDITED)
THREE MONTHS ENDED
May 5, April 29,
2007 2006
(In thousands)
Net income $28,782 $29,701
Income taxes 12,888 14,785
Interest expense 67 56
Interest income (3,820) (4,237)
Depreciation and amortization 15,234 13,158
EBITDA 53,151 53,463
Book to cash rent adjustment (a) 500 520
EBITDA after rent related adjustments 53,651 53,983
Amortization of intangible assets(b) 444 348
Equity income (c) (648) (22)
Loss (gain) on retirement of property
and equipment (d) 872 (147)
Stock compensation expense (e) 1,275 2,435
Legal settlement costs (f) 100 -
Consulting expenses (g) 251 460
Fixture leases (h) 376 899
Cost savings (i) 747 682
Transaction related costs (j) 3,836 -
Adjusted EBITDA $60,904 $58,638
(a) Represents (i) the elimination of non-cash straight-line rent expense
of $189 and $353 and non-cash landlord allowance amortization of
$(330) and $(200) and (ii) the inclusion of cash landlord allowances
received of $641 and $367 for the three months ended May 5, 2007 and
April 29, 2006.
(b) Represents the elimination of non-cash amortization of lease rights.
(c) Represents the elimination of non-cash equity income related to our
50:50 joint venture with AEON Co. Ltd.
(d) Represents the elimination of non-cash losses and cash gains, net, on
store related property and equipment primarily associated with
remodels, relocations and closures. The net gain during the three
months ended April 29, 2006 includes the gain recorded on the sale of
land and buildings.
(e) Represents the elimination of stock compensation expense related to
restricted stock grants and performance based awards granted under our
long-term incentive plans.
(f) Represents the elimination of legal fees accrued in connection with
wage and hour class action litigation currently pending in California.
(g) Represents the elimination of consulting expenses related to our
European distribution center. We centralized our distribution
operations in continental Europe by transitioning to a third party
distribution center in the Netherlands.
(h) Represents the elimination of non-cash amortization expenses
associated with synthetic leases of store fixtures. The Company has
not entered into any new synthetic leases after 2001.
(i) Reflects the adjustment of executive air travel and other costs to the
Company's estimate for such costs on a normalized basis and the
estimated savings on directors' and officers' insurance reflective of
the Company no longer being a public company. For purposes of
estimating these savings, we have assumed an annual air travel budget
of $250 for our senior executive officers.
(j) Represents transaction related costs consisting primarily of the
following: (i) settlement and legal expenses relating to shareholder
lawsuits of $2,100, (ii) professional fees of $965 relating to a
fairness opinion, (iii) proxy printing services of $275 and (iv)
travel and associated costs of $300.
SOURCE Claire's Stores, Inc.
 back to top
Related links:
http://www.clairestores.com/
http://www.prnewswire.com/comp/174913.html/
CONTACT:
Marisa F. Jacobs, Vice President of Corporate
Communications and Investor Relations, of Claire's Stores, Inc.,
+1-212-594-3127, Fax, +1-212-244-4237, marisa.jacobs@claires.com
|
