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 (Date of earliest event reported) June 2, 1998
CPI CORP.
________________________________________________________________
(exact name of registrant as specified in its charter)
Delaware 0-11227 43-1256674
________________________________________________________________
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) Number) Identification No.)
1706 Washington Avenue, St. Louis, Missouri 63103-1790
_________________________________________________________________
(Address of principal executive offices) (Zip code)
Registrants' telephone number, including area code (314) 231-1575
_________________________________________________________________
_________________________________________________________________
(Former name or former address, if changes since last report.)
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ITEM 5. OTHER EVENTS
On June 2, 1998 CPI Corp. issued the following press
release:
CPI CORP. ANNOUNCES FIRST QUARTER RESULTS
- Diluted EPS loss of 5 cents versus prior-year loss of
21 cents
- Sales up 4.5%, but operating earnings down due to
higher portrait studio expenses
- Prints Plus segment shows improvement
St. Louis, MO., June 2, 1998 - CPI Corp. (NYSE - CPY)
today reported a 1998 first-quarter net loss of $506,000
(5 cents per share, diluted), compared to a loss of $2.4
million (21 cents per share, diluted) in the 1997 first
quarter. Among other factors, the current quarter
included a pre-tax gain of $1.2 million (pro-rata
amortization of the $10 million received in connection
with the 2-year Kodak noncompete agreement), while the
1997 quarter included a pre-tax loss of $1.8 million
from the company's minority interest in the Fox Photo,
Inc. joint venture. In the 1998 quarter, there were
15.4% fewer weighted average shares outstanding (on a
diluted basis) than in the 1997 first quarter, due to
the repurchase of 2.0 million common shares in January
1998.
First-quarter sales increased 4.5%, to $73.4 million from
from $70.2 million, as the Portrait Studio and Wall Decor
segments recorded revenue gains of 3.6% and 9.2%,
respectively. Operating earnings declined to $776,000
from $1.6 million, however, as increased operating
expenses resulted in a $1.2 million reduction in portrait
studio profits. Wall Decor recorded the first year-to-
year bottom-line improvement in ten quarters with a first-
quarter operating loss of $866,000 compared to 1997's
quarterly loss of $1.3 million.
Sales for the 53 weeks ended May 2, 1998 were $369.9
million versus $432.5 million reported for the 52 weeks
ended April 26, 1997, with the reduction due mainly to the
absence of photofinishing sales in the recent period. Net
earnings were $14.6 million compared to $14.1 million in
the prior period, which included a $3.9 million after-tax
gain on the Fox joint venture transaction, partially
offset by losses from the company's minority interest
in Fox. Diluted earnings per share were $1.27 compared
to $1.08 in the prior period.
<PAGE>
Discussing first quarter results, Alyn V. Essman, chairman
and chief executive officer, said, "Sales in the Sears
Portrait Studios increased to $60.1 million compared to
the prior year's $58.1 million, with year-to-year gains
continuing in the post-Easter period. Operating earnings
declined to $1.6 million from $2.8 million, however, due
to increased employment, advertising and depreciation
expenses. The year will continue to require investment
as we roll out the latest technology developments and
introduce new marketing programs which we expect will
drive future growth in sales and earnings."
Continuing, Essman said, "Our Prints Plus segment recorded
a 9.2% first-quarter sales increase to $13.2 million from
$12.1 million, with much of the gain due to new product
introductions. Operating losses declined by 30.9%,
mainly the result of incremental profits from the higher
revenues, despite somewhat higher expenses. While we
don't expect to sustain the first-quarter growth rate, we
anticipate moderate sales gains throughout the year as a
result of focused efforts to improve operations."
This release contains certain "forward looking statements"
that are subject to risks and uncertainties. The
company's actual results and performance could differ
materially from those anticipated depending on, among
other things, the company's ongoing ability to develop
and introduce attractive new products, the effectiveness
of marketing activities of major competitors, and the
overall level of economic activity in the company's
major markets.
CPI is a consumer services company with $366.7 million in
fiscal 1997 sales from continuing operations, operating
approximately 1,200 retail locations, including 1,027
Sears Portrait Studios in the U. S., Puerto Rico and
Canada and 154 Prints Plus wall decor stores.
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 12 WEEKS ENDED
MAY 2, 1998 AND APRIL 26, 1997 (in thousands of dollars except
per share amounts) (Unaudited)
<CAPTION>
12 Weeks Ended
----------------------
05/02/98 04/26/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 60,145 $ 58,074
Wall decor 13,209 12,100
Photofinishing - -
---------- ----------
Total net sales $ 73,354 $ 70,174
Operating earnings:
Portrait studios $ 1,642 $ 2,843
Wall decor (866) (1,254)
Photofinishing - -
---------- ----------
Total operating earnings 776 1,589
General corporate expense 2,578 3,033
---------- ----------
Income (loss) from operations (1,802) (1,444)
Net interest expense 229 595
Interest in joint venture loss - 1,849
Gain (loss) on sale of
interest in Photofinishing
segment - -
Other income 1,253 61
---------- ----------
Earnings (loss) from
operations before income
taxes (778) (3,827)
Income tax expense (benefit) (272) (1,416)
---------- ----------
Net earnings (loss) $ (506) $ (2,411)
========== ==========
Earnings (loss) per common
share:
Diluted $ (0.05) $ (0.21)
Basic $ (0.05) $ (0.21)
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 9,920 11,726
Basic 9,920 11,726
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 53 WEEKS ENDED
MAY 2, 1998 AND THE FIFTY-TWO WEEKS ENDED APRIL 26, 1997 (in
thousands of dollars except per share amounts) (Unaudited)
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
---------- ----------
05/02/98 04/26/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 305,736 $ 291,054
Wall decor 64,144 63,061
Photofinishing - 78,425
---------- ----------
Total net sales $ 369,880 $ 432,540
Operating earnings:
Portrait studios $ 43,396 $ 33,993
Wall decor (576) 2,815
Photofinishing - 2,157
---------- ----------
Total operating earnings 48,820 38,965
General corporate expense 14,980 17,443
---------- ----------
Income (loss) from operations 27,840 21,522
Net interest expense 1,635 3,395
Interest in joint venture loss 1,455 2,333
Gain (loss) on sale of
interest in Photofinishing
segment (4,189) 6,180
Other income 3,385 363
---------- ----------
Earnings (loss) from
operations before income
taxes 23,946 22,337
Income tax expense (benefit) 9,328 8,265
---------- ----------
Net earnings (loss) $ 14,618 $ 14,072
========== ==========
Earnings (loss) per common
share:
Diluted $ 1.27 $ 1.08
Basic $ 1.30 $ 1.09
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 11,509 13,027
Basic 11,239 12,915
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR MAY 2, 1998 AND
APRIL 26, 1997 (in thousands - unaudited)
<CAPTION>
MAY 2, APRIL 26,
1998 1997
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 6,787 $ 9,817
Other current assets 78,801 44,514
Net property and equipment 121,311 129,014
Investment in Fox joint venture - 46,257
Other assets 9,403 4,072
----------- ------------
Total assets $ 216,302 $ 233,674
=========== ============
Liabilities and stockholders' equity
Current liabilities $ 36,973 $ 42,866
Long-term obligations 59,501 44,889
Other liabilities 17,721 10,211
Stockholders' equity 102,107 135,708
----------- ------------
Total liabilities and
stockholders' equity $ 216,302 $ 233,674
=========== ============
</TABLE>
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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 thereunto duly authorized.
CPI CORP.
(Registrant)
/s/ Barry Arthur
-----------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: June 5, 1998
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