$200 Million Stock Buyback Authorized;
Special Dividend Declared Along With Regular Quarterly Dividend
PEMBROKE PINES, Fla., Nov. 17 /PRNewswire-FirstCall/ -- Claire's Stores,
Inc. (NYSE: CLE) today announced financial results for the third quarter of
Fiscal 2006, provided guidance for the fourth fiscal quarter and Fiscal 2006
and announced the authorization of a stock buyback, a special dividend and the
regular quarterly dividend.
Third Quarter
Results for the third quarter of Fiscal 2006, which ended October 29,
2005, were as follows: Net income increased 40 percent to $38.1 million from
$27.2 million during the comparable period in Fiscal 2005, which ended October
30, 2004. On a per share basis, diluted net income during the third quarter
of Fiscal 2006 rose 41 percent to $0.38 per share compared to $0.27 per share
in Fiscal 2005.
For the third quarter of Fiscal 2006, net sales increased ten percent to
$327.3 million, compared with $296.7 million for the same period last year.
Comparable store sales for the third quarter of Fiscal 2006 increased nine
percent, equal to the nine percent increase in last year's third fiscal
quarter.
Third quarter comparable store sales results were as follows:
-- Claire's North America: positive high single digits
-- Claire's International: positive high single digits
-- Icing by Claire's: positive low teens
Commenting on third quarter results, Co-Chairman and Co-Chief Executive
Officer Marla Schaefer said, "Third quarter results were extremely strong.
Our back to school and fall merchandise selection was absolutely on target.
At the start of the quarter, we faced a possible slowdown in traffic amid
widespread predictions that rising fuel costs and declining consumer
confidence levels would depress retail sales. Also, we were in the early days
of what proved to be the worst storm season in decades. I am absolutely
delighted that we overcame all of these challenges and once again delivered
record results."
Bonnie Schaefer, Co-Chairman and Co-Chief Executive Officer, offered
additional commentary. "The third quarter of Fiscal 2006 was a particularly
exciting time for the Claire's International business. We delivered our sixth
consecutive quarter of positive same store sales growth, five of which
included gains that reached mid to high single digit level. I believe these
results are attributable to our ongoing efforts to improve our European
inventories and to focus on delivering enhanced customer service. We also
completed our first quarter of operations in Spain and launched our first
stores in the Netherlands. While our operating history in these new markets
is brief, I am nevertheless delighted to note that the performance of these
stores, in the aggregate, is on plan and quite a few of the stores are
actually exceeding our internal projections."
Year to Date Results
For the first nine months of Fiscal 2006, revenues grew eight percent to
$955.0 million from $883.5 million. Net income increased to $103.3 million or
$1.04 per diluted share, from $87.6 million or $0.88 per diluted share in
Fiscal 2005, an increase of 18 percent. Comparable store sales increased six
percent, compared with an increase of ten percent during the first nine months
of Fiscal 2005.
Store Count: End of the Third Fiscal Quarter:
October 29, 2005 October 30, 2004
Claire's North America 1,688 1,674
Claire's Europe 750 716
Icing by Claire's 443 454
Claire's Nippon 167 145
Total 3,048 2,989
Business Outlook for the Fourth Quarter and Full Year - Fiscal 2006
Fourth Quarter:
Fourth quarter revenues are estimated to range between $413 and
$417 million, an increase of five to six percent over last year's fourth
fiscal quarter. Comparable store sales are projected to rise by four to five
percent, following an increase of five percent in the fourth quarter of Fiscal
2005. Projected rates for the growth of revenues reflect the impact of the
strengthening of the dollar.
The Company intends to take advantage of the one time opportunity to
repatriate foreign earnings at a U.S. tax rate as low as 5.25%. The Board of
Directors has approved the repatriation of $95 million. The impact of this
transaction will be to increase taxes by approximately $5.0 million, which
will result in a $0.05 per share reduction in diluted EPS for the fourth
quarter. Before giving effect to the impact of the repatriation, net income
is projected to reach $65.5 to $68.0 million, or $0.66 to $0.68 per diluted
share, compared to $0.59 per diluted share last year from continuing
operations. After giving effect to the impact of the repatriation, under
Generally Accepted Accounting Principles (GAAP) net income is projected to
reach $60.5 to $63.0 million, or $0.61 to $0.63 per diluted share.
Full Year:
For Fiscal 2006 in its entirety, the Company is projecting that revenues
will grow by approximately seven percent to approximately $1.37 billion.
Comparable store sales are expected to grow by four to five percent, on top of
an eight percent increase for Fiscal 2005. Excluding the effect of the
repatriation of foreign earnings, diluted EPS will reach $1.70 to $1.72 per
share, versus $1.47 per share last year from continuing operations. After
giving effect to the impact of the repatriation, under Generally Accepted
Accounting Principles (GAAP) net income is projected to reach $1.65 to $1.67
per diluted share.
Stock Buyback
The Company also reported today that the Board of Directors has approved a
stock buyback program in the amount of $200 million. At current prices, this
would represent approximately 7% of the Company's outstanding common shares.
Share repurchases will be made on the open market or through privately
negotiated transactions at prices considered appropriate by the Company, and
will be funded from the Company's existing cash.
Bonnie Schaefer and Marla Schaefer jointly noted that, "Our large cash
position has been a subject of interest to our shareholders for some months
now. We made a commitment to examine the issue of how best to deploy that
cash to maximize shareholder value. We determined that reinvestment in our
business is and will remain our top priority. However, our business is
sufficiently strong to fund our growth and also permit us to undertake a stock
buyback. We believe this allocation of capital will enable us to provide
significant value to our shareholders."
Special Dividend and Regular Quarterly Dividend
The Board of Directors authorized the payment of a special cash dividend
of $0.25 for each share of Common Stock and $0.125 for each share of Class A
Common Stock. In addition, the Board of Directors 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 of both dividends
will be made on December 16, 2005 to shareholders of record on December 6,
2005.
Conference Call Information
The Company will host its third quarter conference call on November 17,
2005, at 10:00 a.m. (EST). The call in number is 1-210-795-9101 and the
password is "CLAIRES." A replay will be available through November 25, 2005.
The replay number is 203-369-1696 and the password is 25247. The conference
call is also being archived until November 25, 2005 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 October 29, 2005 Claire's Stores, Inc. operated
approximately 2,880 stores in the United States, Canada, Puerto Rico, the
Virgin Islands, the United Kingdom, Ireland, France, Switzerland, Austria,
Germany, Spain and Holland. Claire's Stores, Inc. also operates through its
subsidiary, Claire's Nippon, Co., Ltd., 167 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 operates 79 stores in the
Middle East and Turkey under a licensing and merchandising agreement with Al
Shaya Co., Ltd. and six 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, political and social conditions such as war,
political unrest and terrorism; natural disasters; currency fluctuations and
exchange rate adjustments; changes in laws; 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,
2005. 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.
Use of Non GAAP Financial Measures
Projected net income after giving effect to the tax repatriation and
projected earnings per share after giving effect to the tax repatriation are
non-GAAP financial measures relating to certain foreign earnings to be
repatriated in Fiscal 2006. These amounts represent key measures used by
management to evaluate its operations. Management does not consider the
repatriation of foreign earnings to be normal operating items and therefore
excludes them from the evaluation of the Company's operating performance.
These amounts should not be considered measures of financial condition or
performance in isolation or as an alternative to net income or net income per
share as reported in the Company's Statements of Income in accordance with
GAAP, and may not be comparable to similarly titled measures of other
companies.
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
October 29, 2005 October 30, 2004
Net sales $327,259,000 100.0% $296,702,000 100.0%
Cost of sales,
occupancy and buying
expenses 151,541,000 46.3% 139,232,000 46.9%
Gross profit 175,718,000 53.7% 157,470,000 53.1%
Other expenses
(income):
Selling, general
and administrative 112,631,000 34.4% 105,823,000 35.7%
Depreciation and
amortization 12,318,000 3.8% 11,439,000 3.9%
Interest and other
income (3,761,000) (1.1%) (1,301,000) (0.4%)
121,188,000 37.0% 115,961,000 39.1%
Income before income
taxes 54,530,000 16.7% 41,509,000 14.0%
Income taxes 16,403,000 5.0% 14,351,000 4.8%
Net income $38,127,000 11.7% $27,158,000 9.2%
Net income per share:
Basic:
Net Income per share $0.38 $0.27
Diluted:
Net Income per share $0.38 $0.27
Weighted average number
of shares outstanding:
Basic 99,140,000 98,935,000
Diluted 99,534,000 99,384,000
NINE MONTHS ENDED
October 29, 2005 October 30, 2004
Net sales $955,009,000 100.0% $883,516,000 100.0%
Cost of sales,
occupancy and buying
expenses 442,084,000 46.3% 406,675,000 46.0%
Gross profit 512,925,000 53.7% 476,841,000 54.0%
Other expenses
(income):
Selling, general
and administrative 334,722,000 35.0% 313,511,000 35.5%
Depreciation and
amortization 36,442,000 3.8% 33,042,000 3.7%
Interest and other
income (8,805,000) (0.9%) (3,779,000) (0.4%)
362,359,000 37.9% 342,774,000 38.8%
Income before income
taxes 150,566,000 15.8% 134,067,000 15.2%
Income taxes 47,279,000 5.0% 46,468,000 5.3%
Net income $103,287,000 10.8% $87,599,000 9.9%
Net income per share:
Basic:
Net Income per share $1.04 $0.89
Diluted:
Net Income per share $1.04 $0.88
Weighted average
number of shares
outstanding:
Basic 99,063,000 98,923,000
Diluted 99,448,000 99,306,000
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
October 29, 2005 October 30, 2004
ASSETS
Current assets:
Cash and cash equivalents $359,757,000 $229,260,000
Inventories 147,354,000 144,215,000
Prepaid expenses and other
current assets 56,224,000 54,256,000
Total current assets 563,335,000 427,731,000
Property and equipment:
Land and building 18,151,000 18,151,000
Furniture, fixtures and equipment 247,375,000 239,226,000
Leasehold improvements 231,800,000 206,759,000
497,326,000 464,136,000
Less accumulated depreciation and
amortization (279,775,000) (261,455,000)
217,551,000 202,681,000
Intangible assets, net 54,392,000 50,744,000
Other assets 14,363,000 14,312,000
Goodwill 198,977,000 200,456,000
267,732,000 265,512,000
Total assets $1,048,618,000 $895,924,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $74,849,000 $60,541,000
Income taxes payable 15,887,000 9,929,000
Accrued expenses 87,827,000 82,642,000
Total current liabilities 178,563,000 153,112,000
Long-term liabilities:
Deferred tax liability 22,094,000 18,611,000
Deferred rent expense 20,966,000 17,730,000
Total long-term liabilities 43,060,000 36,341,000
Stockholders' equity:
Class A stock - par value $0.05
per share 256,000 257,000
Common stock - par value $0.05
per share 4,713,000 4,692,000
Additional paid-in capital 59,129,000 50,044,000
Unearned compensation expense (3,027,000) -
Accumulated other comprehensive
income, net of tax 19,409,000 26,106,000
Retained earnings 746,515,000 625,372,000
Total stockholders' equity 826,995,000 706,471,000
Total liabilities and
stockholders' equity $1,048,618,000 $895,924,000
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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