Revenues Increase Six Percent; Diluted Net Income Per Share Increases to
$0.39; Company Declares Regular Quarterly Dividend
PEMBROKE PINES, Fla., Nov. 16 /PRNewswire-FirstCall/ -- Claire's
Stores, Inc. (NYSE: CLE) today announced financial results for the third
quarter of Fiscal 2007. The Company also provided guidance relating to the
fourth quarter of Fiscal 2007 as well as the full fiscal year.
Third Quarter Results
Results for the third quarter of Fiscal 2007, which ended October 28,
2006, were as follows: Net income fell four percent to $36.6 million
compared to $38.1 million during the third quarter of Fiscal 2006, which
ended October 29, 2005. On a per share basis, diluted net income during the
third quarter of Fiscal 2007 rose three percent to $0.39 compared to $0.38
during the third quarter of Fiscal 2006.
For the third quarter of Fiscal 2007, net sales increased six percent
to $347.6 million from $327.3 million for the same period last year.
Comparable store sales for the third quarter of Fiscal 2007 were flat,
after achieving a nine percent increase in last year's third fiscal
quarter.
Third quarter comparable store sales were as follows:
* Claire's North America: positive low single digits
* Claire's Europe: negative low single digits
* Icing by Claire's: negative mid single digits
Commenting on third quarter results, Co-Chairman and Co-Chief Executive
Officer Marla Schaefer said, "In August, we advised the financial community
that we were taking a more cautious approach to our third quarter guidance
due to the difficult comparisons between this third quarter and last year's
third fiscal quarter. Over the past four years, we have created a robust
jewelry business as increasing levels of consumer demand for fashion
jewelry drove sales. While current trends continue to emphasize fashion
jewelry, our customers are moving towards simpler, more streamlined looks
and value priced items. Additionally, there is renewed interest in our
accessory offerings which are, for the most part, lower margin products.
Our third quarter financial results have been impacted by this shift in
trends, and we have adjusted our fourth quarter and full year forecast as
well. As we move into spring and a new fashion season, we anticipate a
return to a more robust performance."
Bonnie Schaefer, Co-Chairman and Co-Chief Executive Officer, offered
additional commentary on the third quarter of Fiscal 2007. "As stated last
quarter, we are making progress in terms of addressing issues relating to
store performance in Europe. The look of our stores and the quality of the
day to day shopping experience, in terms of things such as customer
service, better marketing materials and improved compliance with
plan-o-grams is coming up to the standards of our North American operation.
At the same time, I referenced various operational issues relevant to our
international stores where further improvements will be implemented. Our
focus now is on planning and allocation and pricing practices that we are
examining and modifying to better serve our European customers. As these
and other initiatives move forward, we believe that our performance in
Europe will begin to show improvements."
Year to Date Results
For the first nine months of Fiscal 2007, sales grew six percent to
$1,008.7 million from $955.0 million. Net income decreased one percent to
$102.3 million from $103.3 million and on a diluted per share basis, net
income increased one percent to $1.05 per diluted share from $1.04 per
diluted share during the first nine months of Fiscal 2006. Comparable store
sales increased two percent, compared with an increase of six percent
during the first nine months of Fiscal 2006.
Store Count: End of Third Fiscal Quarter:
October 28, 2006 October 29, 2005
Claire's North America 1,699 1,688
Claire's Europe 842 750
Icing by Claire's 446 443
Claire's Nippon 192 167
Total 3,179 3,048
Business Outlook for the Fourth Fiscal Quarter and Full Year - Fiscal 2007
Fourth Quarter:
For the fourth quarter of Fiscal 2007, we are estimating revenues
between $461 and $474 million, an increase of 11 to 14 percent. Comparable
store sales are projected to rise by one to two percent. This follows an
increase of six percent in the fourth quarter of Fiscal 2006. Net income is
projected to reach $0.78 to $0.84 per diluted share, assuming an average of
approximately 93.3 million shares outstanding.
Full Year:
For Fiscal 2007 in its entirety, the Company's revised projections are
for revenues to grow by approximately seven to eight percent to
approximately $1.47 billion to $1.48 billion. Comparable store sales are
expected to increase by one to two percent.
Gross margins as a percentage of sales are anticipated to decline
approximately 100 basis points. SG&A is projected to decrease as a
percentage of sales, resulting in a 10 to 30 basis point improvement.
Net income on a diluted per share basis is projected to reach $1.82 to
$1.87. This projection assumes that the diluted weighted average number of
shares outstanding will approximate 96.2 million for Fiscal 2007.
Stock Buyback Activity
As of the end of the third quarter of Fiscal 2007, we repurchased
approximately 7.1 million shares of common stock at a total cost of
approximately $200 million, thereby completing the authorized buyback.
Quarterly Dividend
The Board of Directors has declared the regular quarterly cash dividend
of $0.10 per share payable on the Common Stock and $0.05 per share payable
on the Class A Common Stock. Payment will be made on December 15, 2006 to
shareholders of record on December 5, 2006.
Conference Call Information
The Company will host its third quarter conference call on November 16,
2006, at 10:00 a.m. (EST). The call in number is 210-795-9101 and the
password is "Claires." A replay will be available through November 24,
2006. The replay number is 203-369-1696 and the password is 25247. The
conference call is also being webcast and archived until November 24th on
the Company's corporate website at http://www.clairestores.com, where it
can be accessed by clicking on the "Conference Calls" link located under
"Financial Information" for a replay or download as an MP3 file.
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 October 28, 2006, Claire's Stores,
Inc. operated approximately 2,985 stores in the United States, Canada,
Puerto Rico, the Virgin Islands, the United Kingdom, Ireland, France,
Switzerland, Austria, Germany, Belgium, Holland, Portugal and Spain.
Claire's Stores, Inc. operates through its subsidiary, Claire's Nippon,
Co., Ltd., approximately 190 stores in Japan as a 50:50 joint venture with
AEON, Co., Ltd. (fka JUSCO, Co. Ltd.), a $40 billion specialty retailer
headquartered in Japan. The Company also licenses approximately 110 stores
in the Middle East and Turkey under a licensing and merchandising agreement
with Al Shaya Co., Ltd. and seven 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. 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 pre-teen, teen and young
adult apparel and accessories; competition; general economic, political and
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 recent historical rates;
inability to design and implement new information systems; delays in
anticipated store openings or renovations; 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 28, 2006. 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 Internet
home page: http://www.clairestores.com.
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
October 28, 2006 October 29, 2005
Net sales $347,593,000 100.0% $327,259,000 100.0%
Cost of sales, occupancy
and buying expenses 165,487,000 47.6% 151,541,000 46.3%
Gross profit 182,106,000 52.4% 175,718,000 53.7%
Other expenses (income):
Selling, general and
administrative 118,860,000 34.2% 112,631,000 34.4%
Depreciation and amortization 14,249,000 4.1% 12,318,000 3.8%
Interest and other income (3,933,000) (1.1%) (3,761,000) (1.1%)
129,176,000 37.2% 121,188,000 37.0%
Income before income taxes 52,930,000 15.2% 54,530,000 16.7%
Income taxes 16,303,000 4.7% 16,403,000 5.0%
Net income $36,627,000 10.5% $38,127,000 11.7%
Net income per share:
Basic:
Net Income per share $0.39 $0.38
Diluted:
Net Income per share $0.39 $0.38
Weighted average number of shares
outstanding:
Basic 94,414,000 99,140,000
Diluted 94,605,000 99,534,000
NINE MONTHS ENDED
October 28, 2006 October 29, 2005
Net sales $1,008,680,000 100.0% $955,009,000 100.0%
Cost of sales, occupancy
and buying expenses 480,540,000 47.6% 442,084,000 46.3%
Gross profit 528,140,000 52.4% 512,925,000 53.7%
Other expenses (income):
Selling, general and
administrative 348,645,000 34.6% 334,722,000 35.0%
Depreciation and amortization 41,319,000 4.1% 36,442,000 3.8%
Interest and other income (13,181,000) (1.3%) (8,805,000) (0.9%)
376,783,000 37.4% 362,359,000 37.9%
Income before income taxes 151,357,000 15.0% 150,566,000 15.8%
Income taxes 49,067,000 4.9% 47,279,000 5.0%
Net income $102,290,000 10.1% $103,287,000 10.8%
Net income per share:
Basic:
Net Income per share $1.05 $1.04
Diluted:
Net Income per share $1.05 $1.04
Weighted average number of shares
outstanding:
Basic 97,045,000 99,063,000
Diluted 97,324,000 99,448,000
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
October 28, 2006 October 29, 2005
ASSETS
Current assets:
Cash and cash equivalents $244,551,000 $359,757,000
Inventories 158,853,000 147,354,000
Prepaid expenses 24,457,000 21,027,000
Other current assets 44,680,000 35,197,000
Total current assets 472,541,000 563,335,000
Property and equipment:
Land and building 17,350,000 18,151,000
Furniture, fixtures and equipment 274,278,000 247,375,000
Leasehold improvements 284,032,000 231,800,000
575,660,000 497,326,000
Less accumulated depreciation and
amortization (314,745,000) (279,775,000)
260,915,000 217,551,000
Intangible assets, net 61,461,000 54,392,000
Other assets 17,725,000 14,363,000
Goodwill 200,227,000 198,977,000
279,413,000 267,732,000
Total assets $1,012,869,000 $1,048,618,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $77,880,000 $74,849,000
Income taxes payable 20,892,000 15,887,000
Accrued expenses 101,374,000 87,827,000
Total current liabilities 200,146,000 178,563,000
Long-term liabilities:
Deferred tax liability 19,896,000 22,094,000
Deferred rent expense 24,411,000 20,966,000
Other liabilities 2,274,000 -
Total long-term liabilities 46,581,000 43,060,000
Stockholders' equity:
Class A stock - par value $0.05
per share 244,000 256,000
Common stock - par value $0.05
per share 4,408,000 4,713,000
Additional paid-in capital 74,373,000 56,102,000
Accumulated other comprehensive
income, net of tax 30,961,000 19,409,000
Retained earnings 656,156,000 746,515,000
Total stockholders' equity 766,142,000 826,995,000
Total liabilities and
stockholders' equity $1,012,869,000 $1,048,618,000
SOURCE Claire's Stores, Inc.
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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, Claire's Stores, Inc.,
+1-212-594-3127, Fax: +1-212-244-4237, marisa.jacobs@claires.com
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