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 July 31, 1999
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)
(954) 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 August 30, 1999 was 48,293,539 and 2,875,942,
respectively, excluding treasury shares.
<PAGE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at July 31,
1999 and January 30, 1999. 3
Condensed Consolidated Statements of Income and Comprehensive
Income for the Three and Six Months Ended July 31, 1999
and August 1, 1998. 4
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended July 31, 1999 and August 1, 1998. 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 7-9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Securities Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
July 31, Jan. 30,
1999 1999
ASSETS (In thousands)
Current assets:
<S> <C> <C>
Cash and cash equivalents $117,864 $117,546
Short-term investments 25,500 35,758
Inventories 76,694 63,334
Prepaid expenses and other current
assets 25,843 22,980
Total current assets 245,901 239,618
Property and equipment:
Land and building 17,136 15,969
Furniture, fixtures and equipment 134,305 123,390
Leasehold improvements 99,995 94,421
251,436 233,780
Less accumulated depreciation and
amortization (126,890) (118,272)
124,546 115,508
Goodwill, net 26,524 9,000
Other assets 31,752 30,146
$428,723 $394,272
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable to bank $ 839 $ 893
Trade accounts payable 32,762 23,165
Income taxes payable 11,576 16,803
Accrued expenses 24,699 26,199
Dividends payable 2,038 2,031
Total current liabilities 71,914 69,091
Deferred credits 12,272 10,963
Stockholders' equity:
Preferred stock par value $1.00 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 2,877,371 shares and 2,891,074
shares 144 145
Common stock par value $.05 per
share; authorized 150,000,000 shares,
issued 48,179,610 shares and 48,024,707
shares 2,409 2,401
Additional paid-in capital 26,814 25,398
Accumulated other comprehensive income (2,174) (895)
Retained earnings 317,796 287,621
344,989 314,670
Treasury stock, at cost,(109,882 shares) (452) (452)
344,537 314,218
Commitments and contingencies
$428,723 $394,272
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JULY 31, 1999 AND AUGUST 1, 1998
(Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
July 31, Aug. 1, July 31, Aug. 1,
1999 1998(1) 1999 1998(1)
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales $186,090 $148,482 $356,753 $279,974
Cost of sales, occupancy and
buying expenses 91,603 73,744 176,596 139,190
Gross profit 94,487 74,738 180,157 140,784
Other expenses:
Selling, general and
administrative 61,285 47,726 120,396 93,882
Depreciation and amortization 6,434 5,389 12,723 10,298
Interest income, net (1,358) (1,547) (2,992) (3,157)
Gain on investments (3,929) - (3,929) -
62,432 51,568 126,198 101,023
Income from continuing operations
before income taxes 32,055 23,170 53,959 39,761
Income taxes 11,735 8,558 19,839 14,698
Income from continuing operations 20,320 14,612 34,120 25,063
Discontinued operations:
Loss from discontinued operations
(less applicable income taxes) - 1,881 - 2,391
Net loss from discontinued
operations - 1,881 - 2,391
Net income 20,320 12,731 34,120 22,672
Other comprehensive income:
Foreign currency translation
adjustments (1,512) (529) (1,279) (343)
Unrealized gain on securities - 250 - 250
Comprehensive income $ 18,808 $ 12,452 $ 32,841 $ 22,579
Net income (loss)per share:
Basic:
From continuing operations $ .40 $ .29 $ .67 $ .50
From discontinued operations - (.04) - (.05)
Net income $ .40 $ .25 $ .67 $ .45
Diluted:
From continuing operations $ .40 $ .29 $ .66 $ .49
From discontinued operations - (.04) - (.05)
Net income $ .40 $ .25 $ .66 $ .44
Average common shares outstanding -
Basic 50,932 50,668 50,893 50,573
Average common shares outstanding -
Diluted 51,419 51,123 51,376 51,111
(1) Restated to reflect Just Nikki, Inc. as a discontinued operation.
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JULY 31, 1999 AND AUGUST 1, 1998
(Unaudited)
<CAPTION>
Six Months Ended
(In thousands)
July 31, Aug. 1,
1999 1998(1)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 34,120 $ 22,672
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss from discontinued operations, net of
tax benefit - 2,407
Depreciation and amortization 12,723 10,298
Tax benefit from options - 102
Gain on investments (3,929) -
Loss on retirement of property and equipment 647 606
Changes in assets and liabilities:
(Increase) decrease in -
Inventories (12,067) (14,919)
Prepaid expenses and other assets (4,177) (1,153)
Increase (decrease) in -
Trade accounts payable 8,544 3,271
Income taxes payable (5,228) (4,028)
Accrued expenses (1,919) (1,350)
Deferred credits 1,308 1,154
Net cash provided by continuing operations 30,022 19,060
Net cash used by discontinued operations - (3,717)
Net cash provided by operating activities 30,022 15,343
Cash flows from investing activities:
Acquisition of property and equipment (22,035) (18,677)
Sale(purchase)of short-term investments, net 14,186 (5,705)
Capital expenditures of discontinued
operations - (130)
Acquisition of minority interest in a
foreign subsidiary (18,000) -
Net cash used in investing activities (25,849) (24,512)
Cash flows from financing activities:
Principal borrowings (payments)on debt 31 (1,600)
Proceeds from stock options exercised 1,424 253
Dividends paid (3,963) (3,834)
Net cash used in financing activities (2,508) (5,181)
Effect of foreign currency exchange rate
changes on cash and cash equivalents (1,347) (544)
Net increase in cash and cash equivalents 318 (14,894)
Cash and cash equivalents at beginning of period 117,546 122,491
Cash and cash equivalents at end of period $117,864 $107,597
(1) Restated to reflect Just Nikki, Inc. as a discontinued operation.
</TABLE>
<PAGE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements
reflect all adjustments (consisting only of normal recurring 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 30, 1999 filed with the
Securities and Exchange Commission. Due to the seasonal nature of the
Company's business, the results of operations for the first six months of
the year are not indicative of the results of operations on an annualized
basis.
2. Basic net income per share is based on the weighted average number of
shares of Class A Common Stock and Common Stock outstanding during the
period (50,932,000 and 50,893,000 shares for the three months and six
months ended July 31, 1999, respectively and (50,668,000 and 50,573,000
shares for the three months and six months ended August 1, 1998,
respectively). Diluted net income per share includes the dilutive effect
of stock options ( 487,000 and 483,000 shares for the three months and six
months ended July 31, 1999, respectively and 455,000 and 538,000 shares
for the three months and six months ended August 1, 1998, respectively).
Options to purchase 150,000 and 305,000 shares of common stock, at a
price of $30.25 per share and prices ranging from $21.25 to $22.88 per
share, respectively, were outstanding for the quarters ended July 31,
1999 and August 1, 1998, respectively, but were not included in the
computation of diluted earnings per share because the options' exercise
prices were greater than the average market price of the common shares
for the respective fiscal quarter.
3. Certain items in the prior period financial statements have been
reclassified to conform with the current period presentation.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
The analysis below takes into account that prior year's balances have been
restated to reflect the discontinued operations of Just Nikki, Inc.
Net sales for the three months and six months ended July 31, 1999,
respectively, increased approximately 25% and 27% over the comparable
periods ended August 1, 1998. The increase for the period resulted primarily
from the addition of a net 246 stores and same-store sales increases of 9%
and 11% for the quarter and six months, respectively. Management believes
these same-store sales increases were achieved due to increased customer
traffic, a strong retail economic environment and the Company's merchandising
strategy of utilizing popular motifs in multiple product categories.
Cost of sales, occupancy and buying expenses increased 24% and 27% for the
three months and six months ended July 31, 1999, respectively, over the
comparable periods ended August 1, 1998. 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 were 49.2% and 49.5% for
the three months and six months ended July 31, 1999, respectively, and 49.7%
for the comparable periods ended August 1, 1998. Due to the same-store sales
increase of 9% and 11% in the three months and six months ended July 31, 1999,
respectively, rent, rent support and the cost of the merchandising
department, which are relatively fixed in nature, provided additional
leverage which resulted in higher margins for the three and six months ended
July 31, 1999 as compared to the comparable periods ended August 1, 1998.
Selling, general and administrative expenses (S,G&A), as a percentage of
sales for the three months and six months ended July 31, 1999 were 32.9% and
33.7% , respectively compared to 32.1% and 33.5% for the comparable periods
ended August 1, 1998. This increase is primarily attributable to increased
bonuses for store and field personnel, which is directly related to the
increase in same store sales discussed above and additional investment in our
operating infrastructure.
Depreciation and amortization as a percentage of sales was approximately 3.5%
and 3.6% for the three months and six months ended July 31, 1999,
respectively, which was comparable to the three months and six months ended
August 1, 1998.
Interest income, net of interest expense, totaled $1,358,000 and $2,992,000
for the three month and six months ended July 31, 1999, respectively,
compared to $1,547,000 and $3,157,000 for the comparable periods ended August
1, 1998. This slight decrease was primarily due to the decrease in the
average interest rate earned on cash and cash equivalents and short-term
investments balances during the three months and six months ended July 31,
1999.
Gain on investments totaled $3,929,000 during the three and six months ended
July 31, 1999.
Inflation has not affected the Company as it has generally been able to pass
along inflationary increases in its costs through increased sales prices.
<PAGE>
Liquidity and Capital Resources
Net cash increased $318,000 for the six months ended July 31, 1999 due to net
cash provided by operating activities of $30,022,000 and the sale of short
term investments of $14,186,000. These cash inflows were offset by net cash
used for the acquisition of property and equipment totaling $22,035,000, the
payment of dividends of $3,963,000 and a payment of $18,000,000 for the
acquisition of a minority interest in a foreign subsidiary.
Inventory at July 31, 1999 increased 21% compared to the inventory balance at
the end of the Company's January 30, 1999 fiscal year. The increase is
attributable to a net increase of 113 stores in the six months ended July 31,
1999 and the additional merchandise needed to maintain the current sales
momentum as the Company prepares for the back to school season.
The Company opened 131 stores in the six months ended July 31, 1999 and
remodeled 63 stores.
At July 31, 1999, 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 July 31, 2000. The Company's
non-U.S. subsidiaries have credit facilities totaling approximately $2,225,000
with a bank. The facilities are used for working capital requirements,
letters of credit and various guarantees. These credit facilities have been
arranged in accordance with customary lending practices in their respective
countries of operation. The Company believes that internally generated funds
and borrowings available under its credit agreements will be sufficient to
meet its current operating needs and its presently anticipated capital
expenditures.
Year 2000
In prior years, certain computer programs were written using two digits
rather than four to define the applicable year. These programs were written
without considering the impact of the upcoming change in the century and may
experience problems handling dates beyond the year 1999. This could cause
certain computer applications to fail or to create erroneous results unless
corrective measures are taken.
The Company has been executing a plan to identify and address any possible
deficiencies that the Year 2000 issue may have on its computer systems, which
include both proprietary and third party computer systems; related hardware,
software and data and telephone networks and information systems service
providers. This plan addresses the Year 2000 issue in multiple phases
including (i) identification of critical systems, vendors and third party
administrators that may be vulnerable to system failures or processing
errors as a result of Year 2000 issues, (ii) assessment and prioritization of
identified risks associated with the failure to be Year 2000 compliant, (iii)
testing of systems to determine Year 2000 compliance, (iv) remediation and
implementation of systems and equipment, and (v) contingency planning to
assess reasonably likely worst case scenarios. As of July 1999, the Company
has completed phases (i) and (ii), and is currently working to complete with
phases (iii) and (iv), referred to above. Phase (v) will be addressed in the
upcoming months. Project plans call for the completion of the solution
implementation phase and testing of those solutions by the end of 1999, prior
to any anticipated impact on the Company's systems.
The Company is dependent on basic public infrastructure, such as
telecommunications and utilities, in order to function normally. Significant
long-term interruptions of this infrastructure could have an adverse effect
on the operations of the Company. Additionally, the Company must rely on
assurances from suppliers and vendors that their information systems and key
services will be Year 2000 compliant. The Company is in the process of
evaluating each major supplier, vendor and third party administrator to
assess their Year 2000 readiness and initiatives. The Company anticipates
completion by the end of 1999. While the Company plans to validate
representations from these parties, it cannot be sure that their tests will
be adequate, or that, if problems are identified, they will be addressed in a
timely and satisfactory manner. Even if the Company, in a timely manner,
completes all of its assessments, implements and tests all remediation plans
it believes to be adequate, and develops contingency plans believed to be
adequate, some problems may not be identified or corrected in time to prevent
material adverse consequences or business interruptions to the Company.
Furthermore, there may be certain third parties such as utilities,
telecommunications companies, or vendors where alternative arrangements or
sources are limited or unavailable. The Company has not yet determined the
extent of contingency planning that may be required as this is dependent on
completion of these ongoing assessments of its vendors, suppliers and third
party administrators.
<PAGE>
The extent and magnitude of the Year 2000 issue is difficult to predict or
quantify for a number of reasons including the lack of control over third
party systems and complexities associated with testing interconnected systems
networks and applications. The Company expects that the maximum external cost
which could be incurred in conjunction with the testing and remediation of
all hardware and software systems and applications is approximately $350,000
through completion in 1999, of which, approximately $250,000 has been
incurred to date. Such costs have been and will be funded by the Company's
operating cash flows. This estimate of maximum costs does not include the
costs, if any, that might be incurred as a result of Year 2000-related
failures that occur despite the Company's implementation of the Year 2000
plan.
The cost of the Company's plan to address the Year 2000 issue and the
anticipated date on which the Company plans to complete the necessary Year
2000 conversion efforts are based on management's best estimates, which were
derived from numerous assumptions of future events, including the
availability of resources, vendor remediation plans, and other factors.
Although the Company is not currently aware of any material operational
issues associated with preparing its systems for the Year 2000, or material
issues with respect to the adequacy of major vendors', suppliers' or third
party administrators' systems, there can be no assurance, due to the overall
complexity of the Year 2000 issue, that the Company will not experience
material unanticipated negative consequences and/or material costs caused by
undetected errors or defects in such systems or by the Company's failure to
adequately prepare for the results of such errors or defects, including costs
or related litigation, if any. Such consequences could have a material
adverse effect on the Company's business, financial condition or results of
operations.
Special Note Regarding Forward-Looking Statements
The Company and its representatives may from time to time make oral or
written "forward-looking statements" within the meaning of the Private
Securities Reform Act of 1995 (the "Reform Act"), including any statements
that may be contained in the foregoing "Management's Discussion and Analysis
of Financial Condition and Results of Operations," in this report and in
other filings with the Securities and Exchange Commission and in its reports
to stockholders, which represent the Company's expectations or beliefs with
respect to future events and future financial performance. These forward-
looking statements are subject to certain risks and uncertainties. Important
factors currently known to management that could cause actual results to
differ materially from those in forward-looking statements are set forth in
the safe harbor compliance statement for forward-looking statements in the
Company's Annual Report on Form 10-K for the year ended January 30, 1999, and
that statement is hereby incorporated by reference in this Form 10-Q.
The Company does not undertake to update or revise any forward-looking
statement to reflect changed assumptions, the occurrence of unanticipated
events or changes to operating results over time.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1999 Annual Meeting of Stockholders (the "Annual Meeting") was
held on June 17, 1999 in New York City to elect seven directors to the Board
of Directors of the Company, each for a one-year term.
Proxies for the Annual Meeting were solicited pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition to the Company's solicitation.
At the Annual Meeting, every holder of record of Common Stock, $.05 par value
(the "Common Stock") and Class A Common Stock, $.05 par value (the "Class A
Common Stock"), of the Company at the close of business on May 7, 1999
(the "Record Date") was entitled to vote, in person or by proxy, one vote for
each share of Common Stock and ten votes for each share of Class A Common
Stock, as the case may be, held by such holder. As of the Record Date, the
Company had outstanding 48,125,587 shares of Common Stock and 2,882,467
shares of Class A Common Stock.
The holders of record of an aggregate of 41,693,242 shares of Common Stock
and an aggregate of 2,386,807 shares of Class A Common Stock were either
present in person or represented by proxy, and constituted a quorum for the
transaction of business at the Annual Meeting.
All of the Company's nominees for directors were elected to serve a one-year
term by more than the required plurality of affirmative votes of the holders
of Common Stock (one vote per share) and Class A Common Stock (ten votes per
share), voting together as a single class:
Director Nominee Votes For Votes Withheld
Rowland Schaefer 65,227,915 333,397
Ira D. Kaplan 65,216,431 344,881
Bruce G. Miller 65,180,795 380,517
Irwin L. Kellner, Ph.D. 65,187,574 373,738
Steven H. Tishman 65,191,193 370,119
Marla L. Schaefer 65,215,384 345,928
E. Bonnie Schaefer 65,157,358 403,954
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
99.1 Press Release of the Company dated August 12, 1999
(b) Reports on Form 8-K
None
<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: September 8, 1999 /s/ Ira D. Kaplan
Ira D. Kaplan
Senior Vice President and Chief
Financial Officer
(Mr. Kaplan is the Senior Vice
President and Chief Financial
Officer and has been duly authorized
to sign on behalf of the registrant)
<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: September 8, 1999
Ira D. Kaplan
Senior Vice President and Chief
Financial Officer
(Mr. Kaplan is the Senior Vice
President and Chief Financial Officer
and has been duly authorized
to sign on behalf of the registrant)
<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> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-29-2000 JAN-29-2000
<PERIOD-START> MAY-02-1999 JAN-31-1999
<PERIOD-END> JUL-31-1999 JUL-31-1999
<CASH> 117,864 117,864
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 76,694 76,694
<CURRENT-ASSETS> 245,901 245,901
<PP&E> 251,436 251,436
<DEPRECIATION> 126,890 126,890
<TOTAL-ASSETS> 428,723 428,723
<CURRENT-LIABILITIES> 71,916 71,916
<BONDS> 0 0
0 0
0 0
<COMMON> 2,409 2,409
<OTHER-SE> 342,127 342,127
<TOTAL-LIABILITY-AND-EQUITY> 428,723 428,723
<SALES> 186,090 356,753
<TOTAL-REVENUES> 186,090 356,753
<CGS> 0 0
<TOTAL-COSTS> 91,603 176,596
<OTHER-EXPENSES> 62,432 126,198
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 32,055 53,959
<INCOME-TAX> 11,735 19,839
<INCOME-CONTINUING> 20,320 34,120
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 20,320 34,120
<EPS-BASIC> .40 .67
<EPS-DILUTED> .40 .66
</TABLE>
NEWS BULLETIN RE: Claire's STORES, INC.
3 SW 129th AVENUE PEMBROKE PINES, FLORIDA 33027 (954) 433-3900
CLAIRE'S STORES REPORTS RECORD SALES AND EARNINGS FOR THE SECOND QUARTER:
SALES UP 25%; EARNINGS FROM CONTINUING OPERATIONS UP 39%, NET INCOME UP 60%
PEMBROKE PINES, Florida, August 12, 1999 - Claire's Stores, Inc.
(NYSE:CLE) reported record results for the second quarter of Fiscal 2000,
ended July 31, 1999.
Income from continuing operations for the second quarter increased 39%
to $20,337,000 or $.40 per diluted share compared with $14,612,000 or $.29
per diluted share for the second quarter of Fiscal 1999, ending August 1,
1998. Income from continuing operation's includes a pre-tax gain of
$3,929,000 or $.05 per diluted share after taxes, realized from the sale of
certain investments.
Net income for the second quarter increased 60% to $20,337,000 or $.40
per diluted share compared with $12,731,000 or $.25 per diluted share in the
same period last year.
Sales for the second quarter of Fiscal 2000 were a record $186,063,000
and increased 25% over sales of $148,482,000 for the same period last year.
Same store sales increased nine percent for the second quarter of Fiscal
2000.
All figures have been restated to reflect the disposition of Just Nikki,
Inc.
<PAGE>
Rowland Schaefer, Claire's Chairman and Chief Executive Officer, said,
"We are extremely pleased with the topline and same stores sales results for
the second quarter of Fiscal 2000. We are especially pleased with the
improvement in the company's gross margins, which increased 50 basis points
for the second quarter over the same period last year. This was achieved
through better buying.
"We are continuing our U.S. expansion and see a huge opportunity for
Claire's in Europe. Teens all over the world want to have their own store to
shop in and no one does it like Claire's. We see the potential for over 2000
stores in Europe. As previously announced, Claire's plan was to open
approximately 260-280 new stores worldwide in Fiscal 2000. In accordance
with our aggressive growth strategy for the UK and Europe, we have increased
those store opening plans to approximately 300 stores worldwide, which
represents a 14% increase in square footage. In the UK, we have revised our
store opening plan from 80 to 95 new stores so that we will finish the year
with 279 stores, a 54% increase in store square footage. While we had not
planned to open any new European stores this fiscal year, the strong results
following the conversion of Bijoux One format to Claire's allowed us to
escalate our store opening plans; we will now open at least one store in
Austria and one in Switzerland this fiscal year. We will finish the year with
55 stores in Europe." Mr. Schaefer added.
Claire's Stores, Inc., the nation's premier retailer specializing in
teen fashion accessories, currently owns and operates more than 2100 stores
in 50 states, the Caribbean, Canada, Japan, the United Kingdom, Switzerland,
Austria and Germany.
<PAGE>
This release contains "forward looking statements" that represent the
company's expectations or beliefs with regard 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.
These factors include, without limitation, changes in consumer preferences,
competition and economic conditions.
For additional information:
At Claire's Stores, Inc.
Glenn Canary
Director of Investor Relations
(954) 433-3900
[email protected]
or
Sonia Rohan
Associate Director of Investor Relations
(212) 594-3127
[email protected]
Note: Other Claire's Stores, Inc. press releases, a corporate profile and
most recent 10-K and
10-Q reports are available by fax at no charge. For a menu of available
material, call 1-800-CLENYSE (1-800-253-6973). For such materials via
Claire's Internet home page : http://www.clairestores.com
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<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
Restated to Include Lux Corp. and Reflect Just Nikki as a Disc. Op.
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDING
July 31, 1999 Aug 1, 1998
<S> <C> <C> <C> <C>
Net sales $186,063,000 100.0% $148,482,000 100.0%
Cost of sales, occupancy
and buying expenses 91,578,000 49.2% 73,744,000 49.7%
94,485,000 50.8% 74,738,000 50.3%
Expenses:
Selling, general
and administrative 61,260,000 32.9% 47,726,000 32.1%
Depreciation and amortization 6,430,000 3.5% 5,389,000 3.6%
Interest income, net (1,348,000) -0.7% (1,547,000) -1.0%
Loss (gain) on investments (3,929,000) -2.1% 0 0.0%
62,413,000 33.5% 51,568,000 34.7%
Income from continuing
ops. before income taxes 32,072,000 17.2% 23,170,000 15.6%
Income taxes 11,731,000 6.3% 8,558,000 5.8%
Income from continuing
operations 20,341,000 10.9% 14,612,000 9.8%
Discontinued operations:
Loss from discontinued operations
(less applicable income taxes) 1,881,000 1.3%
Loss on disposal from discontinued
operations (less applicable income
taxes)
Net loss from discontinued operations 0 0.0% 1,881,000 1.3%
Net income $ 20,341,000 10.9% $ 12,731,000 8.6%
Net income (loss) per share:
Basic:
From continuing ops $0.40 $0.29
From discontinued ops 0.00 (0.04)
Net income $0.40 $0.25
Diluted:
From continuing ops $0.40 $0.29
From discontinued ops 0.00 (0.04)
Net income $0.40 $0.25
Weighted average shares
outstanding:
Basic 50,932,000 50,668,000
Diluted 51,419,000 51,123,000
</TABLE>
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<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
Restated to Include Lux Corp. and Reflect Just Nikki as a Disc. Op.
(UNAUDITED)`
<CAPTION>
SIX MONTHS ENDING
Jul 31, 1999 Aug 1, 1998
<S> <C> <C> <C> <C>
Net sales $356,726,000 100.0% $279,974,000 100.0%
Cost of sales, occupancy
and buying expenses 176,571,000 49.5% 139,190,000 49.7%
180,155,000 50.5% 140,784,000 50.3%
Expenses:
Selling, general
and administrative 120,371,000 33.7% 93,882,000 33.5%
Depreciation and amortization 12,719,000 3.6% 10,298,000 3.7%
Interest income, net (2,982,000) -0.8% (3,157,000) -1.1%
Loss (gain) on investments (3,929,000) -1.1% 0 0.0%
126,179,000 35.4% 101,023,000 36.1%
Income from continuing
ops. before income taxes 53,976,000 15.1% 39,761,000 14.2%
Income taxes 19,835,000 5.6% 14,698,000 5.2%
Income from continuing
operations 34,141,000 9.6% 25,063,000 9.0%
Discontinued operations:
Loss from discontinued operations
(less applicable income taxes) 2,391,000 0.9%
Loss on disposal from discontinued
operations (less applicable income
taxes)
Net loss from discontinued operations 0 0.0% 2,391,000 0.9%
Net income $ 34,141,000 9.6% $ 22,672,000 8.1%
Net income (loss) per share:
Basic:
From continuing ops $0.67 $0.50
From discontinued ops 0.00 (0.05)
Net income $0.67 $0.45
Diluted:
From continuing ops $0.66 $0.49
From discontinued ops 0.00 (0.05)
Net income $0.66 $0.44
Weighted average shares
outstanding:
Basic 50,893,000 50,573,000
Diluted 51,376,000 51,111,000
</TABLE>
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<TABLE>
CLAIRE'S STORES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
CONSOLIDATED
Jul 31, 1999 Aug 1, 1998
(Restated)
Assets
Current Assets:
<S> <C> <C>
Cash and equivalents $116,067,000 $107,766,000
Short-term investments 25,500,000 16,315,000
Inventories 77,456,000 67,060,000
Prepaid expenses and
other current assets 25,796,000 20,233,000
Total current assets 244,819,000 211,374,000
Property and Equipment:
Land and building 17,136,000 10,139,000
Furniture, fixtures and
equipment 133,588,000 110,289,000
Leasehold improvements 98,680,000 85,299,000
249,404,000 205,727,000
Less accumulated depreciation
and amortization (126,513,000) (105,408,000)
122,891,000 100,319,000
Other Assets 58,032,000 21,459,000
$425,742,000 $333,152,000
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of debt $ 838,000
Trade accounts payable 31,446,000 $ 22,940,000
Income taxes payable 11,412,000 6,663,000
Dividends payable 2,038,000 55,000
Accrued expenses 22,825,000 16,082,000
Total current liabilities 68,559,000 45,740,000
Long-Term Liabilities:
Long-term debt 0 0
Deferred credits 12,121,000 9,698,000
Total long-term Liabilities 12,121,000 9,698,000
Stockholders' equity:
Common stock- par 2,409,000 2,394,000
Class A stock - par value 144,000 145,000
Additional paid-in capital 26,814,000 22,396,000
Other comprehensive inc. (1,415,000) (706,000)
Retained earnings 317,562,000 253,937,000
345,514,000 278,166,000
Less Treasury stock at
cost, (452,000) (452,000)
345,062,000 277,714,000
$425,742,000 $333,152,000
</TABLE>
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