FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
( X )Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended April 29, 1995
OR
( )Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-8899
CLAIRE'S STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-0940416
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 S.W. 129th Avenue Pembroke Pines, Florida 33027
(Address of principal executive offices) (Zip Code)
(305) 433-3900
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares of the registrant's Common Stock and Class A Common Stock
outstanding as of May 31, 1995 was 19,579,006 and 1,316,516 respectively,
excluding treasury shares.
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CLAIRE'S STORES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at April 29, 1995 and
January 28, 1995 3
Consolidated Statements of Income for the
Three Months Ended April 29, 1995 and April 30, 1994 4
Consolidated Statements of Cash Flows for the
Three Months Ended April 29, 1995 and April 30, 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
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<TABLE>
PART I. FINANCIAL INFORMATION
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
April 29, January 28,
ASSETS 1995 1995
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 37,323,000 $ 48,473,000
Inventories 25,208,000 24,330,000
Prepaid expenses and other current assets 10,209,000 5,867,000
Total current assets 72,740,000 78,670,000
Property and Equipment:
Land and building 8,274,000 8,267,000
Furniture, fixtures and equipment 64,135,000 61,088,000
Leasehold improvements 74,021,000 73,617,000
146,430,000 142,972,000
Less accumulated depreciation and
amortization ( 75,724,000) ( 72,705,000)
70,706,000 70,267,000
Other Assets 9,849,000 9,641,000
$153,295,000 $158,578,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 3,000,000 $ -
Trade accounts payable 11,029,000 11,705,000
Income taxes payable 522,000 7,500,000
Accrued expenses 10,464,000 10,086,000
Dividends payable 674,000 672,000
Total current liabilities 25,689,000 29,963,000
Long-term debt - 3,000,000
Deferred credits 3,575,000 3,464,000
Stockholders' equity:
Preferred stock par value $l.00 per share;
authorized 1,000,000 shares, issued and
outstanding -0- shares - -
Class A common stock par value $.05 per
share; authorized 20,000,000 shares,
issued 1,317,006 and 1,315,627 shares 66,000 66,000
Common stock par value $.05 per share;
authorized 50,000,000 shares, issued
19,578,516 and 19,554,895 shares 979,000 978,000
Additional paid-in capital 13,895,000 13,618,000
Foreign currency translation adjustments 56,000 ( 115,000)
Retained earnings 109,803,000 108,372,000
124,799,000 122,919,000
Treasury stock, at cost, (82,759 shares) ( 768,000) ( 768,000)
124,031,000 122,151,000
Commitments and contingencies - -
$153,295,000 $158,578,000
</TABLE>
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<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
APRIL 29, 1995 AND APRIL 30, 1994
(Unaudited)
THREE MONTHS ENDED
<CAPTION>
April 29, April 30,
1995 1994
<S> <C> <C>
Net sales $68,054,000 $63,656,000
Cost of sales, occupancy and
buying expenses 33,168,000 30,337,000
Gross profit 34,886,000 33,319,000
Other expenses:
Selling, general and
administrative 28,387,000 25,852,000
Depreciation and amortization 3,716,000 3,371,000
Interest income, net ( 504,000) ( 182,000)
31,599,000 29,041,000
Income before income taxes 3,287,000 4,278,000
Income taxes 1,249,000 1,626,000
Net income $ 2,038,000 $ 2,652,000
Net income per share $ .10 $ .13
Dividends per common share $ .03 $ .03
Dividends per class A common $ .015 $ -
share
Average number of shares of
common stock and equivalents 20,807,000 20,765,000
</TABLE>
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<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
APRIL 29, 1995 AND APRIL 30, 1994
(Unaudited)
THREE MONTHS ENDED
<CAPTION>
April 29, April 30,
1995 1994
Cash flows from operating
activities:
<S> <C> <C>
Net income $ 2,038,000 $ 2,652,000
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 3,716,000 3,371,000
Loss on retirement of property
and equipment 199,000 168,000
Changes in assets and
liabilities
(Increase) decrease in -
Inventories ( 878,000) 631,000
Prepaid expenses and other
assets ( 4,553,000) ( 2,153,000)
Increase (decrease) in -
Trade accounts payable ( 676,000) ( 1,638,000)
Income taxes payable ( 6,978,000) ( 6,170,000)
Accrued expenses 378,000 ( 506,000)
Deferred credits 111,000 449,000
Net cash used in operating
activities ( 6,643,000) ( 3,196,000)
Cash flows from investing activities:
Acquisition of property and
equipment which represents net
cash used in investing activities ( 4,351,000) ( 3,405,000)
Cash flows from financing activities:
Proceeds from stock options
exercised 278,000 692,000
Dividends paid ( 605,000) ( 486,000)
Net cash provided by (used
in) financing activities ( 327,000) 206,000
Effect of foreign currency exchange
rate changes on cash and cash
equivalents 171,000 -
Net decrease in cash and cash
equivalents (11,150,000) ( 6,395,000)
Cash and cash equivalents at beginning
of period 48,473,000 41,128,000
Cash and cash equivalents at end of
period $37,323,000 $34,733,000
</TABLE>
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CLAIRE'S STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for
the interim periods. These financial statements have been
prepared in accordance with the instructions to Form 10-Q and
therefore do not include all of the information or footnotes
necessary for a complete presentation. They should be read in
conjunction with the Company's audited financial statements
included as part of the Annual Report on Form 10-K for the year
ended January 28, 1995 filed with the Securities and Exchange
Commission.
2. Due to the seasonal nature of the Company's business, the
results of operations for the first three months of the year
are not indicative of the results of operations on an
annualized basis.
3. Income per share is based on the weighted average number of
shares of common stock and equivalents outstanding during the
period.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Net sales for the three months ended April 29, 1995 increased
approximately 7% compared to the comparable period ended April 30,
1994. The increase for the period resulted primarily from the addition
of a net 120 stores. The sales increase from the additional stores was
partially offset by a decrease in same-store sales of 3%. The same-store
sales decline was due to the late arrival of spring merchandise,
a soft retail environment and a lack of a significant fashion trend.
Cost of sales, occupancy and buying expenses increased 9% for the three
months ended April 29, 1995 over the comparable period ended April 30,
1994. The principal reason for this increase was the rise in the
number of stores and the volume of merchandise sold. As a percentage
of net sales, these expenses increased to 48.7% for the three months
ended April 29, 1995 compared to 47.7% for the three months ended April
30, 1994. The increase as a percentage of sales was primarily due to
the decrease in same-store sales. As same-store sales declined, rent,
rent support and merchandising costs, which are fixed, increased as a
percentage of sales.
Selling, general and administrative expense (SG&A) as a percentage of
sales for the three months ended April 29, 1995 was 41.7% compared to
40.6% for the comparable period ended April 30, 1994. The increase in
SG&A as a percentage of sales is primarily attributable to the decrease
in same-store sales discussed above. The increase would have been more
acute had the Company not implemented steps to control overhead during
the period. On a per store basis, SG&A decreased 1%.
Depreciation and amortization as a percentage of sales was 5% for the
three months ended April 29, 1995, which was comparable to the three
months ended April 30, 1994. No significant change in depreciation
expense as a percentage of sales was expected given the increase in net
sales previously discussed. This increase in net sales offset the
increase in depreciation expense associated with the new stores opened
and stores which were remodeled.
Interest income, net of interest expense, totaled $504,000 for the
three month period ended April 29, 1995 compared to $182,000 for the
comparable period ended April 30, 1994. This increase was primarily due
to the increase in the average cash balance to $42,700,000 during the
three months ended April 29, 1995 compared to $39,100,000 during the
same period ended April 30, 1994. In addition, the average outstanding
debt balance decreased to $3,000,000 during the three month period
ended April 29, 1995 compared to $6,000,000 during the three month
period ended April 30, 1994.
Inflation has not affected the Company as it has generally been able to
pass along inflationary increases in its costs through increased sales
prices.
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<PAGE>
Liquidity and Capital Resources
Net cash decreased $11,150,000 for the three months ended April 29,
1995 due to cash used by operations of $6,643,000, the acquisition of
property and equipment totaling $4,351,000 and the payment of dividends
of $605,000, partially off-set by proceeds from stock options exercised
of $278,000.
Inventory at April 29, 1995 was 3.6% higher than the inventory level at
the end of the Company's January 28, 1995 fiscal year. The Company
believes these inventory levels are appropriate given the current
economic environment and the level of sales currently being achieved.
The Company opened twenty-seven stores in the three months ended April
29, 1995 and remodeled thirty-four stores.
At April 29, 1995, the Company had available a $10 million credit line
with a bank to finance the Company's letters of credit and working
capital requirements. This credit facility matures on January 31,
1997. In addition, the Company has a term note with a bank, which
matures on January 31, 1996. The term note, had an outstanding balance
of $3 million at April 29, 1995. The Company believes that its cash on
hand, internally generated funds and borrowings available under its
credit agreements will be sufficient to meet its current operating
needs and its minimum required capital expenditures.
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<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.
CLAIRE'S STORES, INC.
(Registrant)
Date: June 2, 1995 /S/Ira D. Kaplan
Ira D. Kaplan
Chief Financial Officer and
Treasurer
(Mr. Kaplan is the Chief
Financial Officer and
Treasurer and has been duly
authorized to sign on
behalf of the registrant)
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<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.
CLAIRE'S STORES, INC.
(Registrant)
Date: June 2, 1995
Ira D. Kaplan
Chief Financial Officer and Treasurer
(Mr. Kaplan is the Chief
Financial Officer and
Treasurer and has been
duly authorized to sign on
behalf of the registrant)
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> OTHER 3-MOS
<FISCAL-YEAR-END> FEB-03-1996 FEB-03-1996
<PERIOD-START> JAN-29-1995 JAN-29-1995
<PERIOD-END> APR-29-1995 APR-29-1995
<CASH> 37,323 37,323
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 25,208 25,208
<CURRENT-ASSETS> 72,740 72,740
<PP&E> 146,430 146,430
<DEPRECIATION> 75,724 75,724
<TOTAL-ASSETS> 153,295 153,295
<CURRENT-LIABILITIES> 25,689 25,689
<BONDS> 0 0
<COMMON> 1,045 1,045
0 0
0 0
<OTHER-SE> 124,031 124,031
<TOTAL-LIABILITY-AND-EQUITY> 153,295 153,295
<SALES> 68,054 68,054
<TOTAL-REVENUES> 68,054 68,054
<CGS> 0 0
<TOTAL-COSTS> 33,168 33,168
<OTHER-EXPENSES> 31,599 31,599
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 3,287 3,287
<INCOME-TAX> 1,249 1,249
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,038 2,038
<EPS-PRIMARY> .10 .10
<EPS-DILUTED> .10 .10
</TABLE>
