<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 26, 1999.
TRACK 'n TRAIL
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(Exact name of registrant as specified in its charter)
DELAWARE 0-22359 91-1778085
- ---------------------------- ----------- ----------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
4961-A WINDPLAY DRIVE, EL DORADO HILLS, CA 95762
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(Address of principal executive offices) (Zip code)
(916) 933-4525
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(Registrant's telephone number,
including area code)
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Item 5. Other Events.
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On October 26, 1999, Track 'n Trail, a Delaware corporation
("Track 'n Trail"), issued a press release announcing financial results for
the third quarter ended September 25, 1999, and termination of the Company's
President, Gregory M. Kilgore. A copy of the press release is included as an
exhibit to this Form 8-K.
Item 7. Exhibits.
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(99) Press release, dated October 26, 1999, issued by Track 'n Trail.
-2-
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: October 26, 1999.
Track 'n Trail
By /S/ Daniel J. Nahmens
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Daniel J. Nahmens
Executive Vice President -- Finance,
Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
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Exhibit No. Description Sequentially
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<S> <C> <C>
(99) Press release, dated October 26, 1999,
issued by Track 'n Trail
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Approved: Daniel J. Nahmens
Chief Financial Officer
Track 'n Trail
(916) 933-4525
FOR IMMEDIATE RELEASE
Contact: Chad A. Jacobs/Christine DiSanto
Integrated Corporate Relations
(203) 222-9013
TRACK 'n TRAIL ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
-- TERMINATION of COMPANY PRESIDENT --
EL DORADO HILLS, Calif., October 26, 1999 -- Track 'n Trail (NASDAQ: TKTL), a
premier destination specialty retailer of branded casual, outdoor and
adventure footwear and apparel, today announced financial results for the
third quarter ended September 25, 1999 and the termination of Company
President, Gregory M. Kilgore.
Net sales for the quarter ended September 25, 1999 of $29.7 million,
representing a 15.6% increase over net sales of $25.7 million for the same
period in fiscal 1998. Comparable store net sales for the third quarter
increased 5.1%. The Company experienced a net loss for the third quarter of
$509,000, or ($0.07) per diluted share, as compared to net income of $97,000
or $0.01 per diluted share, for the comparable quarter in 1998. The number
of diluted shares outstanding for the third quarter of 1999 was 6,889,000
compared to 7,070,000 for the same period in 1998.
The Company also reported net sales for the nine-months of fiscal 1999 of
$81.3 million, representing a 21.5% increase over net sales of $66.9 million
for the corresponding period in fiscal 1998. Comparable store sales for the
first nine months of fiscal 1999 increased 4.1%. Net loss per diluted share
for the nine month period ended September 25, 1999 was ($0.30) compared to
($0.07) for the nine months ended September 26, 1998. The increase in net
loss was primarily attributable to results of operations related to the
Eagles Nest stores. The number of diluted shares outstanding for the nine
months ended September 25, 1999 and September 26, 1998 was 6,873,000 and
6,845,000, respectively.
During the quarter, the Company opened three new stores and closed four
underperforming stores. The Company ended the quarter with 190 stores in 35
states.
Gross margin for the third quarter increased 70 basis points to 46.4%
compared to 45.7% for the corresponding period in fiscal 1998. The increase
was primarily attributable to Track 'n Trail and Overland Trading having
lower markdowns than in the previous year, which increase was partially
offset by sales at Eagles Nest, which typically carry lower margins.
Excluding the Eagles Nest stores, gross margin would have been 47.3%
Separately, the Company's Chairman, David L. Suechting Jr., announced the
termination of Company President, Gregory M. Kilgore. Although the Company
did not name a successor, Mr. Suechting indicated the Board had been
conducting a search for the newly created position of Chief Executive Officer
and Mr. Suechting expressed optimism that such position will be filled in the
near future. Until such position is filled, David L. Suechting Jr., Chairman
of the Board, will assume the responsibilities previously performed by
Gregory M. Kilgore."
--more--
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Page 2 -- Track 'n Trail Reports Third Quarter Sales and Earnings
Mr. Suechting commented, "While we are disappointed with our bottom line
results, there were many positive highlights during the quarter. Our core
footwear businesses performed well in a competitive retail environment,
evidenced by a 5.1% same store sales gain; we posted a solid increase in
gross margin and our inventories are clean as we head into the holiday
season. However, these improvements were negatively impacted by the poor
performance at the Eagles Nest chain. Recently, we have made strategic
adjustments which we believe will address the situation and we believe we are
already beginning to see signs of improvement in that business."
Mr. Suechting concluded, "We remain confident that both Track 'n Trail and
Overland Trading represent compelling, mall-based, retail footwear concepts
that target an underserved niche and offer future growth opportunities. As we
continue to fine-tune our product mix and operations, we believe we can
return the Company to historic sales levels. Additionally, we are committed
to improving the performance of the Eagles Nest chain, as we believe it is
not only a strong compliment to our footwear business, but represents a
potential source of increased sales and profitability. Track 'n Trail remains
committed to being the destination store for branded casual, outdoor and
adventure footwear."
--more--
Track 'n Trail is one of the largest full-service specialty retailers in the
United States, focusing on a broad range of branded casual, outdoor and
adventure footwear and apparel. As of September 25, 1999, the Company
operated 138 Track 'n Trail stores, 46 Overland Trading stores, and 6 Eagles
Nest stores in 35 states. The Track 'n Trail and Overland Trading stores
offer a wide range of rugged walking and fashion casual shoes, sandals and
boots, featuring brands such as Timberland, Dr. Martens, Birkenstock, Teva,
Vans, Airwalk, Clarks, Ecco and Rockport. In addition to offering many of the
same outdoor and adventure footwear names as Track 'n Trail, Eagles Nest also
specializes in sport and outdoor clothing lines such as The North Face,
Columbia, Patagonia, Woolrich and Ex Officio.
-TABLES TO FOLLOW-
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Except for the historical information presented, the matters discussed
in this release are forward-looking statements and are subject to risks and
uncertainties that could cause actual results to differ materially, including
the ability of the Company to adequately address operational issues
associated with its Eagles Nest stores, the dependency of the Company's
expansion plans on securing suitable store sites and the ability to adjust to
changing fashion patterns. These and other factors related to the Company's
business are described under "Risk Factors" in the Company's Annual Report on
Form 10-K and its Quarterly Report on Form 10-Q for the quarter ended
September 25, 1999.
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Page 3 -- Track 'n Trail Reports Third Quarter Sales and Earnings
TRACK 'n TRAIL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 25, December 26,
1999 1998
(unaudited)
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 978 $ 1,808
Accounts receivable 1,037 2,510
Income taxes receivable -- 130
Inventories 38,393 36,998
Prepaid expenses 367 432
Prepaid income taxes 1,458 --
Deferred income taxes 675 675
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Total current assets 42,908 42,553
Fixed assets, net 11,842 11,849
Goodwill, net 4,656 4,852
Deferred income taxes 2,025 2,025
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Total assets $ 61,431 $ 61,279
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $ 17,184 $ 1,574
Current portion of long-term debt 52 172
Accounts payable 9,560 12,481
Accrued payroll and bonuses 712 561
Sales tax payable 552 952
Income taxes payable -- 687
Accrued expenses and
other liabilities 1,111 1,010
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Total current liabilities 29,171 17,437
Deferred rent 1,710 1,540
Long-term debt, net of
current portion 6 9,764
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Total liabilities 30,887 28,741
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Stockholders' equity:
Preferred stock, $0.01 par value;
2,000,000 shares authorized; no
shares issued or outstanding -- --
Common stock, $0.01 par value;
20,000,000 shares authorized;
6,891,476 and 6,851,961 shares issued
and outstanding at September 25, 1999
and December 26, 1998, respectively 69 69
Additional paid-in capital 25,892 25,831
Retained earnings 4,583 6,638
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Total stockholders' equity 30,544 32,538
Total liabilities and
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stockholders' equity $61,431 $61,279
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Page 4 - Track 'n Trail Reports Third Quarter Sales and Earnings
TRACK 'n TRAIL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
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<CAPTION>
PERIOD ENDED
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Septeber 25, September 26, September 25, September 26,
1999 1998 1999 1998
(13 weeks) (13 weeks) (39 weeks) (39 weeks)
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<S> <C> <C> <C> <C>
NET SALES $ 29,671 $ 25,662 $ 81,267 $ 66,881
Cost of sales 15,906 13,927 43,056 35,377
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Gross profit 13,765 11,735 38,211 31,504
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Operating expenses:
Selling and marketing 11,709 9,511 33,579 26,273
Administrative and
distribution 2,090 1,945 6,794 5,860
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Total operating
expenses 13,799 11,456 40,373 32,133
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Operating income (loss) (34) 279 (2,162) (629)
Other expense:
Interest expense 317 89 875 140
Other, net 66 29 117 38
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Income (loss) before
income taxes (417) 161 (3,154) (807)
Income tax provision
(benefit) 92 64 (1,099) (323)
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Net income (loss) $ (509) $ 97 $ (2,055) $ (484)
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Earnings (loss) per share:
Basic $ (0.07) $ 0.01 $ (0.30) $ (0.07)
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Diluted $ (0.07) $ 0.01 $ (0.30) $ (0.07)
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