CLAIRE'S STORES THIRD QUARTER SALES UP 35%;
EBITDA PER SHARE UP 43%;
EARNINGS PER SHARE UP 12%;
PEMBROKE PINES, Florida, November 16, 2000 - Claire's Stores, Inc.
(NYSE:CLE) today announced sales and earnings for the third quarter ended
October 28, 2000. Diluted earnings per share from continuing operations
increased 12 percent to $0.28, compared to $0.25 for the same period in the
prior year.
Third quarter net sales increased 35% to $247,536,000 compared with
$182,750,000 for the third quarter of fiscal 2000. The Company's third quarter
comparable store sales increased 6% on a consolidated basis. EBITDA for the
third quarter increased 43% to $0.70 per diluted share compared with $0.49 per
diluted share in the prior year.
Net sales for the first nine months of fiscal 2001 increased 36 percent to
$731,518,000 from $539,503,000 for the same period last year. Net income for
the first nine months of fiscal 2001 decreased 25 percent to $34,950,000 or
$0.69 per diluted share, compared with $46,846,000 or $0.91 per diluted share
for the first nine months of fiscal 2000. Comparable store sales were flat for
the first nine months.
Rowland Schaefer, Claire's Chairman and Chief Executive Officer, said, "The
first half of the year was difficult for us as we integrated the Afterthoughts
stores with Claire's. We are pleased that we returned to positive same store
sales comparisons in the third quarter and we feel we are well positioned to
capitalize on the holiday selling season. Our merchandise margins were better
than planned due to increased buying power from our Claire's Accessories and
Afterthoughts divisions. We were also able to leverage our operating expenses
and reported a 120 basis point improvement in SG&A as a percentage of sales for
the third quarter.
As discussed in our first quarter conference call, we made the decision to
close 300 stores over the next two years, 100 Claire's and 200 Afterthoughts, in
malls which cannot support multiple stores. This will help us achieve even
greater profitability in the stores that remain open, as the majority of the
proposed store closings were non-performing. To date 46 Claire's and 113
Afterthoughts stores were closed while an additional 27 Claire's and 51
Afterthought stores will be closed in the fourth quarter. We are happy to
report that in the last couple of months, we have seen a 31% increase in sales
in the stores remaining open in those malls." Mr. Schaefer added.
Mr. Schaefer continued: "Our inventories at the end of October were on plan. We
would like to point out that our inventory is in line with our square footage
and same store sales growth over last year and we are comfortable with these
levels. The transition from Halloween to holiday has already been completed and
we are optimistic for the fourth quarter."
"I would like to update you on the president's position at Claire's North
America. After the departure of Marty Nealon, we began to re-examine how we
function as an organization by speaking with our department heads in Hoffman
Estates. In the past we had tried to overlay a corporate hierarchy on what is
essentially an entrepreneurial entity. We have decided to work with a flat
organizational structure which is how we have been operating for years. Our
department heads, many of whom have been doing their jobs at Claire's for more
than 10 years, communicate directly with each other and with me. We will be
cleaner and more efficient. We will monitor this new structure and adapt it if
needed."
Store count at the end of the third quarter for fiscal 2001 was as follows:
Claire's North America 1,644
Claire's U.K. 330
Claire's Japan 96
Claire's Bijoux One (Austria, Switzerland & Germany) 69
Claire's Cleopatre (France) 42
Afterthoughts 742
Mr. Rags 154
Velvet Pixies 3
Total 3,080
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Pursuant to the $50 million stock repurchase program authorized on May 3,
2000 by the Company's Board of Directors, the Company has purchased 2,466,200
shares of the Company's common stock at an average price of approximately $19.44
per share as of November 15, 2000.
The Company will host a conference call for the third quarter of fiscal
2001 today at 10:00 a.m. (EST). The call in number is 888-809-8969 and the
password is "Claires." A replay will be available through Friday November 24th.
The replay number is 888-568-0743 and the password is 25247.
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially.
** The company expects revenue for the fourth quarter of fiscal 2001 to increase
17 percent to approximately $360 million from revenue of $307 million for the
fourth quarter last year. Same store sales increases for the fourth quarter are
projected to be 4 percent.
** The company expects gross margin as a percentage of sales for the fourth
quarter to be approximately 54.8 percent of sales, versus 54.3 percent of sales
for the fourth quarter last year. The increase in gross margin is primarily due
to increased buying power in our Claire's Accessories and Afterthoughts
divisions.
** Selling, General & Administrative expenses (SG&A) in the fourth quarter are
expected to be approximately 26.7 as a percent of sales, versus 27 percent of
sales for the fourth quarter last year. The decrease in SG&A as a percent of
sales is mainly due to leverage from same store sales and operating expense
synergies realized in the Claire's Accessories and Afterthoughts divisions.
** The company expects depreciation and amortization to be 3.2 percent of sales
compared with 3.0 percent of sales for the same period last year. The increase
in depreciation and amortization is due to a larger store base and the goodwill
associated with the acquisitions of the Afterthoughts and Cleopatre operations.
** The company expects interest expense, net of interest income for the fourth
quarter of 2001 to be .6 percent of sales compared with .4 percent of sales for
the fourth quarter of last year. Interest expense, net of interest income
depends on interest rates and invested cash balances during the quarter.
** The effective tax rate for the fourth quarter is expected to be 35 percent
compared with 36.5 percent in the fourth quarter last year. The decrease is due
to lower Federal tax rates realized from the company's overseas operations.
** Net income for the fourth quarter is expected to be approximately $57 million
or 15.8 percent of sales compared with $41 million or 13.4 percent of sales in
the same period last year.
** There were 49,728,000 fully diluted shares outstanding at the end of the
third quarter and there should be approximately 49,100,000 at the end of the
fourth quarter due to the share repurchase program. Management expects to
complete the repurchase program of $50 million of stock in the fourth quarter.
The company remains comfortable with earnings consensus estimates of $1.16 for
the fourth quarter.
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CLAIRE'S INITIATES ITS BUSINESS OUTLOOK PROCEDURE
In connection with the recent adoption of new SEC rules on
corporate disclosure, Claire's is changing its procedures for updating investors
by initiating a Business Outlook for forward-looking statements. This Outlook
will be updated on a quarterly basis in our quarterly Earnings Release. Claire's
will continue its current practice of having corporate representatives meet
privately during the quarter with investors, the media, investment analysts and
others. At these meetings Claire's may reiterate the Outlook published in the
Earnings Release. At the same time, Claire's will keep its Earnings Release and
Outlook publicly available on its Web site (www.clairestores.com). Prior to the
start of the Quiet Period (described below), the public can continue to rely on
the Outlook on the Web site as still being Claire's current expectations on
matters covered, unless Claire's publishes a notice stating otherwise.
Towards the end of each fiscal quarter Claire's will have a "Quiet
Period" when it no longer publishes or updates the Outlook as its current
expectations. Claire's representatives will not comment concerning the Outlook
or Claire's financial results or expectations. The Quiet Period will extend
until the day when Claire's next quarterly Earnings Release is published. For
the fourth quarter, the Quiet Period will be January 15, 2001 through February
22, 2001.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This release contains "forward-looking statements" which represent the
Company's expectations or beliefs with respect 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. Those
factors include, without limitation, changes in consumer preferences for
pre-teen and teen apparel and accessories, competition, and economic conditions
in North America, Europe, United Kingdom and Japan.
Claire's Stores, Inc., the leading mall-based retailer of popular-priced
pre-teen and teens accessories, costume jewelry and apparel, currently operates
more than 3,000 stores under the following trade names: Claire's Accessories,
Afterthoughts, the Icing, Mr. Rags and Velvet Pixies. The stores are located
throughout North America, Japan, United Kingdom, Ireland, Switzerland, Austria,
Germany and France.
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) or via Claire's
Internet home page: http://www.clairestores.com.
Contact:
Sonia Rohan
Director of Investor Relations
Phone: (212) 594-3127
Fax: (212) 244-4237
E-mail: [email protected]
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CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -------------------
OCT. 28, 2000 OCT. 30, 1999 OCT. 28, 2000 OCT. 30, 1999
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales $247,536,000 100.0% $182,750,000 100.0% $731,518,000 100.0% $539,503,000 100.0%
Cost of sales, occupancy
and buying expenses 127,505,000 51.5% 92,658,000 50.7% 380,951,000 52.1% 269,254,000 49.9%
------------ ------------- ------------ ------------
120,031,000 48.5% 90,092,000 49.3% 350,567,000 47.9% 270,249,000 50.1%
------------ ------------- ------------ ------------
Expenses:
Selling, general & administrative 84,974,000 34.3% 64,819,000 35.5% 256,685,000 35.1% 185,215,000 34.3%
Depreciation and amortization 11,079,000 4.5% 6,872,000 3.8% 32,785,000 4.5% 19,595,000 3.6%
Interest expense (income), net 2,674,000 1.1% (1,574,000) -0.9% 7,016,000 1.0% (4,566,000) -0.8%
Gain on investments - - - (3,929,000) -0.7%
------------ ------------ ------------ -----------
98,727,000 39.9% 70,117,000 38.4% 296,486,000 40.5% 196,315,000 36.4%
------------ ------------ ------------- ------------
Income before income taxes 21,304,000 8.6% 19,975,000 10.9% 54,081,000 7.4% 73,934,000 13.7%
Income taxes 7,460,000 3.0% 7,249,000 4.0% 19,131,000 2.6% 27,088,000 5.0%
------------ ------------ ------------- -----------
Net income $ 13,844,000 5.6% $ 12,726,000 7.0% $ 34,950,000 4.8% $ 46,846,000 8.7%
============ ============= ============ ============
Net income per share:
Basic $ 0.28 $ 0.25 $ 0.69 $ 0.92
============ ============ ============ =============
Diluted $ 0.28 $ 0.25 $ 0.69 $ 0.91
============ ============ ============ =============
Weighted avg shares outstanding:
Basic 49,594,000 51,043,000 50,342,000 50,943,000
============ ============ ============ =============
Diluted 49,728,000 51,271,000 50,524,000 51,341,000
============ ============ ============ =============
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