Net Income Rises by 48 Percent;
Full Year Guidance Raised;
Quarterly Dividend Increased
PEMBROKE PINES, Fla., Aug. 19 /PRNewswire-FirstCall/ -- Claire's Stores,
Inc. (NYSE: CLE) today announced financial results for the second quarter of
Fiscal 2005 and provided guidance relating to the balance of the fiscal year.
Second Quarter
Results for the second quarter of Fiscal 2005, which ended July 31, 2004,
were as follows: Net income increased 48 percent to $32.7 million from $22.2
million during the comparable period in Fiscal 2004, which ended August 2,
2003. On a per share basis, diluted net income during the second quarter of
Fiscal 2005 rose 43 percent to $0.33 per share compared to $0.23 per share in
Fiscal 2004.
For the second quarter of Fiscal 2005, net sales increased 15 percent to
$305.2 million, compared with $264.9 million for the same period last year.
Comparable store sales for the second quarter of Fiscal 2005 increased ten
percent, after achieving a five percent increase in last year's second fiscal
quarter.
Second quarter comparable store sales by brand were as follows:
* Claire's North America: positive low double digits
* Claire's International: positive mid single digits
* Icing by Claire's: positive high teens
Commenting on second quarter results, Co-Chairman and Co-Chief Executive
Officer Marla Schaefer said, "We are very pleased that we were able to deliver
growth of this magnitude and another record quarter on top of a record second
quarter last year. We have recorded 27 months of consolidated positive
comparable store sales results and are committed to continuing that upward
progression. Our spring and summer inventory selection proved to be very much
on target with what our customers wanted, with the emphasis on jewelry
continuing unabated. Moving into fall, our back to school floor set is filled
with merchandise that complements apparel trends, and we expect sales to
maintain their momentum. As you will see below in our guidance, EPS growth in
the third fiscal quarter is expected to be more moderate than during the past
few quarters. Our activities during that quarter are intended to position us
for an extremely strong fourth quarter, so that Fiscal 2005 becomes another
record year for Claire's."
Bonnie Schaefer, Co-Chairman and Co-Chief Executive Officer, offered
additional commentary. "Our second fiscal quarter results reflect the
convergence of three positive events, namely the continued momentum at
Claire's North America, dramatic improvement in performance at Icing by
Claire's and the initial stages of a turnaround in our international
operation. Major shifts in merchandise and store presentation at Icing have
successfully differentiated this store concept from Claire's and drawn in the
older customer being targeted; as a result sales have improved greatly since
last year. The transfer of North American best practices to our international
division is continuing to move forward and early advances in comparable store
sales appear sustainable. Our task now is to continue the process, so that
our performance improves in each of the countries in which we operate. "
Year to Date Results
For the first six months of Fiscal 2005, revenues grew 16 percent to
$586.8 million from $504.7 million, while gross profit margins increased by
240 basis points to 54.4 percent versus 52.0 percent. Net income increased to
$60.4 million or $0.61 per diluted share, from $37.7 million or $0.38 per
diluted share, an increase of 60 percent in absolute terms, or 61 percent on a
diluted per share basis. Comparable store sales increased 11 percent,
compared with an increase of six percent during the first six months of Fiscal
2004.
Store Count: End of the Second Fiscal Quarter:
July 31, 2004 August 2, 2003
Claire's North America 1,664 1,654
Claire's Europe 712 674
Icing by Claire's 457 501
Claire's Nippon 134 119
Total 2,967 2,948
Business Outlook for the Second Half and Full Year - Fiscal 2005
Third Quarter: For the third quarter of Fiscal 2005, we are estimating
revenues between $300 and $302 million, an increase of approximately 14
percent. Comparable store sales are projected to rise by nine to ten percent.
This follows an increase of eight percent in the third quarter of Fiscal 2004.
Gross margins are expected to remain essentially flat compared to last
year, at approximately 52.8% of sales. This result is primarily due to an
increase in our cost of goods, as initial mark up (IMU) is projected to fall
in the third quarter due to accelerated shipments of accessories for the
holiday selling season, increased promotional activity as well as higher
freight costs. It is our belief that by accelerating these shipments and
placing accessories in the stores earlier, we will generate increased store
traffic and create excitement about our holiday season that will contribute to
a record fourth quarter.
SG&A as a percentage of sales is expected to decline slightly during the
third fiscal quarter to 35.3% compared to last year's third fiscal quarter's
35.5%. The improvement would have been higher except that we will be
increasing labor hours per store to enhance customer service. Also factored
in are higher bonus accrual requirements, resulting from our comparable store
sales gains and earnings improvements. In addition, the costs associated with
the initial implementation of Sarbanes-Oxley compliance could reach $1 million
in the quarter.
Net income is projected to reach $27 to $29 million, or $0.27 to $0.29 per
diluted share. This is compared to $0.26 per diluted share last year, which
amount would have been $0.24 absent the $0.02 per diluted share benefit
attributable to a tax examination that was concluded more favorably than
anticipated.
Fourth Quarter:
Fourth quarter revenues are being estimated to range between $412 and
$414 million compared to $364 million in Fiscal 2004. Comparable store sales
are projected to rise by nine to ten percent following an increase of seven
percent in Fiscal 2004. Net income is projected to reach $70 to $72 million,
or $0.70 to $0.72 per diluted share compared to $0.53 per diluted share last
year. The $0.53 amount includes a charge, in the amount of $0.06 per diluted
share, attributable to the retirement package granted to the Company's founder
and former Chairman of the Board.
Full Year:
For Fiscal 2005 in its entirety, the Company is now projecting that
revenues will grow by approximately 15 percent to approximately $1.3 billion
and that diluted EPS will reach $1.58 to $1.62 per share, versus $1.17 per
share last year, or $1.23 excluding the above-referenced $0.06 charge.
Comparable store sales are expected to grow by nine to ten percent, on top of
a seven percent increase for Fiscal 2004.
Quarterly Dividend
The Board of Directors has increased the regular quarterly cash dividend
payable on the Common Stock and Class A Common Stock to $0.08 per share and
$0.04 per share, respectively. Payment will be made on September 17, 2004 to
shareholders of record on September 7, 2004.
Conference Call Information
The Company will host its second quarter conference call on August 19,
2004, at 10:00 a.m. (EDT). The call in number is 210-795-9101 and the
password is "Claires." A replay will be available through August 27, 2004.
The replay number is 402-998-0463 and the password is 25247. The conference
call is also being archived until August 27th on the Company's corporate
website at http://www.clairestores.com, and can be accessed by clicking on the
"Conference Calls" link located under "Financial Information".
Company Overview
Claire's Stores, Inc., is a leading international specialty retailer
offering value-priced costume jewelry and accessories to fashion-aware tweens,
teens and young adults through its two store concepts: Claire's and Icing by
Claire's. While the latter operates only in North America, Claire's operates
internationally. As of July 31, 2004, Claire's Stores, Inc. operated
approximately 2,835 stores in the United States, Canada, Puerto Rico, the
Virgin Islands, the United Kingdom, Ireland, France, Switzerland, Austria and
Germany. Claire's Stores, Inc. also operates through its subsidiary, Claire's
Nippon, Co., Ltd., 134 stores in Japan as a 50:50 joint venture with AEON,
Co., Ltd. (fka JUSCO, Co. Ltd.), a $25 billion specialty retailer
headquartered in Japan. The Company also operates 55 stores in the Middle
East under a licensing and merchandising agreement with Al Shaya Co., Ltd. and
two stores in South Africa under similar agreements with The House of Busby
Limited.
Forward-looking Statements
This press release contains "forward-looking statements" which represent
the Company's expectations or beliefs with respect to future events. 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 pre-teen, teen and young adult apparel and accessories;
competition; general economic conditions; currency fluctuations and exchange
rate adjustments; uncertainties generally associated with the specialty
retailing business; disruptions in our supply of inventory; and uncertainty
that definitive financial results may differ from preliminary financial
results due to, among other things, final GAAP adjustments. 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 January 31,
2004. 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
most recent 10-K and 10-Q reports are available via Claire's corporate
website: http://www.clairestores.com. For information about our products and
stores, please go to http://claires.com.
CLAIRE'S STORES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
July 31, 2004 August 2, 2003
Net sales $305,223,000 100.0% $264,949,000 100.0%
Cost of sales, occupancy, and
buying expenses 141,920,000 46.5% 127,084,000 48.0%
Gross Profit 163,303,000 53.5% 137,865,000 52.0%
Other Expenses:
Selling and general
administrative expense 103,381,000 33.9% 93,602,000 35.3%
Depreciation and
amortization 10,944,000 3.6% 10,391,000 3.9%
Interest expense 32,000 0.0% 644,000 0.2%
Interest and other income (1,267,000) (0.4%) (900,000) (0.3%)
113,090,000 37.1% 103,737,000 39.2%
Income before income taxes 50,213,000 16.5% 34,128,000 12.9%
Income taxes 17,468,000 5.7% 11,947,000 4.5%
Net income $32,745,000 10.7% $22,181,000 8.4%
Net Income per share:
Basic:
Net Income per share $0.33 $0.23
Diluted:
Net Income per share $0.33 $0.23
Weighted average number of
shares outstanding:
Basic 98,917,000 97,802,000
Diluted 99,276,000 98,244,000
CLAIRE'S STORES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS ENDED
July 31, 2004 August 2, 2003
Net sales $586,814,000 100.0% $504,705,000 100.0%
Cost of sales, occupancy, and
buying expenses 267,444,000 45.6% 242,224,000 48.0%
Gross Profit 319,370,000 54.4% 262,481,000 52.0%
Other Expenses:
Selling and general
administrative expense 207,626,000 35.4% 184,592,000 36.6%
Depreciation and
amortization 21,603,000 3.7% 20,245,000 4.0%
Interest expense 62,000 0.0% 1,416,000 0.3%
Interest and other income (2,477,000) (0.4%) (1,844,000) (0.4%)
226,814,000 38.7% 204,409,000 40.5%
Income before income taxes 92,556,000 15.8% 58,072,000 11.5%
Income taxes 32,119,000 5.5% 20,325,000 4.0%
Net income $60,437,000 10.3% $37,747,000 7.5%
Net Income per share:
Basic:
Net Income per share $0.61 $0.39
Diluted:
Net Income per share $0.61 $0.38
Weighted average number of
shares outstanding:
Basic 98,916,500 97,750,000
Diluted 99,258,500 98,170,000
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
July 31, 2004 August 2, 2003
Assets
Current assets:
Cash and cash equivalents $217,770,000 $208,183,000
Inventories 114,649,000 90,458,000
Prepaid expenses and other
current assets 54,853,000 47,140,000
Total current assets 387,272,000 345,781,000
Property and equipment:
Land and buildings 18,151,000 18,134,000
Furniture, fixtures & equipment 233,817,000 212,872,000
Leasehold improvements 197,096,000 171,410,000
449,064,000 402,416,000
Less accumulated depreciation and
amortization (253,297,000) (225,626,000)
195,767,000 176,790,000
Intangible assets, net 45,646,000 32,891,000
Other assets 15,258,000 13,489,000
Goodwill 199,257,000 198,134,000
Total Assets $843,200,000 $767,085,000
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $- $41,291,000
Trade accounts payable 48,852,000 37,595,000
Income taxes payable 6,581,000 3,343,000
Accrued expenses 76,550,000 56,834,000
Total current liabilities 131,983,000 139,063,000
Long-term liabilities:
Long-term debt, excluding current
portion - 62,500,000
Deferred rent expense 17,789,000 16,049,000
Deferred tax liability 15,987,000 12,833,000
Total long-term liabilities 33,776,000 91,382,000
Stockholders' equity:
Class A stock - par value $0.05
per share 257,000 134,000
Common stock - par value $0.05
per share 4,689,000 2,312,000
Additional paid-in capital 49,415,000 33,856,000
Other comprehensive income 17,160,000 8,585,000
Retained earnings 605,920,000 491,753,000
Total Stockholders' Equity 677,441,000 536,640,000
Total Liabilities and
Stockholders' Equity $843,200,000 $767,085,000
SOURCE Claire's Stores, Inc.
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Related links:
http://www.clairestores.com
Company News On-Call:
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
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