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 recorded) December 15,1998
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's telephone number including area code:(314)231-1575
________________________________________________________________
(Former name or former address, if changes since last report.)
<PAGE>
ITEM 5. OTHER EVENTS
A. On December 15, 1998, CPI Corp. issued the following press
release announcing third quarter results.
CPI CORP ANNOUNCES THIRD QUARTER RESULTS
- Sales up 14.7%, mainly from Sears Portrait Studio results
- Diluted EPS of 59 cents vs. 1997 loss of 6 cents
- Gains due in part to one-week shift in seasonal sales
ST. LOUIS, MO., December 15, 1998, -- CPI Corp. (NYSE - CPY)
today reported that third quarter sales and net earnings
increased significantly over those of last year's comparable
period, mainly due to strong performance by its Sears Portrait
Studio division. The increase, however, was impacted by the
shift of one week of seasonal sales from the fourth quarter,
in effect replacing a mid-summer week with the strong holiday-
season week that ended November 14.
Net sales for the 16 WEEKS ENDED NOVEMBER 14, 1998 increased
14.7% to $124.0 million compared to last year's $108.2
million, with the Portrait Studio and Wall Decor segments up
16.5% and 5.0%, respectively. Net earnings were $6.1 million
compared to a loss of $725,000 in last year's third quarter.
The company attributes a significant portion of the 1998
quarter's earnings to the previously mentioned one-week shift.
In addition, the current quarter's results benefited from $1.5
million in amortization of the Kodak non-compete agreement,
while last year's quarter reflected a $1.5 million operational
loss from CPI's interest in joint venture in Fox Photo, Inc.,
plus a $4.2 million loss from the sale of its equity interest
in the venture.
Diluted earnings per share were 59 cents compared to a loss of
six cents per share in 1997. The weighted average number of
common and equivalent shares outstanding declined 14.1%.
For the 40 WEEKS ENDED NOVEMBER 14, 1998, the company recorded
sales of $268.4 million compared to $246.8 million, and net
earnings of $6.9 million (68 cents EPS), including $3.8
million in amortization (pre-tax) of the non-compete
agreement, compared to the prior period's $1.8 million
loss (15 cents loss EPS).
For the 53 WEEKS ENDED NOVEMBER 14, 1998, sales were $388.2
million compared to $358.3 million for the 52 weeks ended
November 8, 1997. Net earnings were $21.4 million ($2.03 EPS)
vs $10.5 million ($0.88 EPS), including $5.1 million and
$522,000 in amortization of the non-compete agreement for the
respective periods.
<PAGE>
Discussing third quarter Sears Portrait Studio results, Alyn
V. Essman, chairman and chief executive officer, said, "While
we can report a 16.5% increase in sales - $106.2 million vs.
last year's $91.2 million - a more realistic comparison comes
from matching 1997 calendar weeks with those of the 1998
quarter, which reveals an 8.3% increase. The segment's
reported operating earnings were up 33.0% at $13.6 million
compared to $10.2 million, although this increase was also
distorted by the calendar shift in the same manner as was the
reported sales increase."
Continuing, Essman said, "Combining portrait studio third
quarter sales increases and the continuing increases
experienced in the important 4-week holiday period following
the close of the third quarter, sales for the 20-week period
ended December 12, 1998 increased 11.5% over the comparable
calendar period of 1997. If sales for the final eight weeks
of the fiscal year maintain the 11.5% pace established during
that 20-week period, total portrait studio sales for the 52
weeks of fiscal 1998 will approach $324 million compared to
$303.7 million for the 53 weeks of fiscal 1997. Assuming
those sales results, we estimate that full-year portrait
studio operating margins will be 1% to 2% of sales lower in
fiscal 1998 than in fiscal 1997 due to increases in operating
expenses -- primarily employment-related -- incurred to
improve customer service and attract new employees in
a tight labor market."
Turning to the Wall Decor segment, Essman said, "Sales in our
Prints Plus business showed moderate growth to $17.8 million
from $17.0 million, and gross profit was marginally higher, as
operating losses decreased slightly to $674,000 from last
year's $904,000 loss."
The statements contained in this report which are not
historical facts are forward-looking statements that involve
risks and uncertainties. Management wishes to caution the
reader that these forward-looking statements, such as the
Company's outlook for Sears Portrait Studios and Prints Plus,
are not predictions; actual events or results may differ
materially as a result of risks facing the Company. Such
risks include, but are not limited to, the Company's ongoing
ability to develop and introduce attractive new products, the
overall level of economic activity in the Company's major
markets, the effectiveness of marketing activities of major
competitors, manufacturing interruptions, dependence on
certain suppliers, fluctuations in operating results, the
attraction and retention of qualified personnel, Year 2000
compliance issues and other risks as may be described in the
Company's filings with the Securities and Exchange Commission,
including its Form 10-K for the year ended February 7, 1998.
<PAGE>
CPI is a consumer services company with $366.7 million in
fiscal 1997 sales, operating approximately 1,200 retail
locations, including 1,032 Sears Portrait Studios in the U.S.,
Puerto Rico and Canada and 154 Prints Plus wall decor stores.
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 16 WEEKS ENDED
NOVEMBER 14, 1998 (in thousands except per share amounts -
unaudited)
<CAPTION>
16 Weeks Ended
----------------------
11/14/98 11/08/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 106,171 $ 91,166
Wall decor 17,834 16,990
---------- ----------
Total net sales $ 124,005 $ 108,156
Operating earnings:
Portrait studios $ 13,577 $ 10,209
Wall decor (674) (904)
---------- ----------
Total operating earnings 12,903 9,305
General corporate expense 4,879 3,992
---------- ----------
Income (Loss) from operations 8,024 5,313
Net interest expense 311 711
Interest in joint venture loss - (1,474)
Gain (Loss) from sale of
interest in Photofinishing
segment - (4,189)
Other income 1,596 628
---------- ----------
Earnings (Loss) from
operations before income
taxes 9,309 (433)
Income tax expense (benefit) 3,258 292
---------- ----------
Net earnings (loss) $ 6,051 $ (725)
========== ==========
Earnings (Loss) per
common share:
Diluted $ 0.59 $ (0.06)
Basic $ 0.61 $ (0.06)
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 10,200 11,871
Basic 9,961 11,871
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 40 WEEKS ENDED
NOVEMBER 14, 1998 (in thousands except per share amounts -
unaudited)
<CAPTION>
40 Weeks Ended
----------------------
11/14/98 11/08/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 224,646 $ 205,623
Wall decor 43,710 41,201
---------- ----------
Total net sales $ 268,356 $ 246,824
Operating earnings:
Portrait studios $ 20,099 $ 19,873
Wall decor (2,620) (3,196)
---------- ----------
Total operating earnings 17,479 16,677
General corporate expense 10,056 9,898
---------- ----------
Income (Loss) from operations 7,423 6,779
Net interest expense 823 2,226
Interest in joint venture loss - (3,304)
Gain (Loss) from sale of
interest in Photofinishing
segment - (4,189)
Other income 4,065 877
---------- ----------
Earnings (Loss) from
operations before income
taxes 10,665 (2,063)
Income tax expense (benefit) 3,733 (311)
---------- ----------
Net earnings (loss) $ 6,932 $ (1,752)
========== ==========
Earnings (loss) per
common share:
Diluted $ 0.68 $ (0.15)
Basic $ 0.70 $ (0.15)
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 10,246 11,794
Basic 9,963 11,794
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 53 WEEKS ENDED
NOVEMBER 14, 1998 AND THE 52 WEEKS ENDED NOVEMBER 8, 1997 (in
thousands except per share amounts - unaudited)
<CAPTION>
53 Weeks 52 Weeks
----------------------
11/14/98 11/08/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 322,689 $ 295,809
Wall decor 65,543 62,506
---------- ----------
Total net sales $ 388,232 $ 358,315
Operating earnings:
Portrait studios $ 44,824 $ 39,420
Wall decor (389) 1,554
---------- ----------
Total operating earnings 44,435 40,974
General corporate expense 15,594 14,096
---------- ----------
Income (Loss) from operations 28,841 26,878
Net interest expense 598 2,842
Interest in joint venture loss - (3,359)
Gain (Loss) from sale of
interest in Photofinishing
segment - (4,189)
Other income 5,381 898
---------- ----------
Earnings (loss) from
operations before income
taxes 33,624 17,386
Income tax expense (benefit) 12,228 6,885
---------- -----------
Net earnings (loss) $ 21,396 $ 10,501
========== ==========
Earnings (loss) per
common share:
Diluted $ 2.03 $ 0.88
Basic $ 2.08 $ 0.89
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 10,541 11,975
Basic 10,265 11,782
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR NOVEMBER 14, 1998 AND
NOVEMBER 8, 1997 (in thousands - unaudited)
<CAPTION>
NOVEMBER 14, NOVEMBER 8,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 10,247 $ 35,356
Other current assets 96,566 98,047
Net property and equipment 113,183 125,576
Other assets 8,905 5,479
----------- ------------
Total assets $ 228,901 $ 264,458
=========== ============
Liabilities and stockholders' equity
Current liabilities $ 50,650 $ 49,186
Long-term obligations 59,547 59,798
Other liabilities 16,856 19,869
Stockholders' equity 101,848 135,605
----------- ------------
Total liabilities and
stockholders' equity $ 228,901 $ 264,458
=========== ============
</TABLE>
<PAGE>
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)
By: /s/ Barry Arthur
-----------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: December 21, 1998
<PAGE>
