<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended April 30, 1997
-------------------------------------------------
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 0-12188
--------------------------------------------------------
DEB SHOPS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1913593
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9401 Blue Grass Road, Philadelphia, Pennsylvania 19114
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 676-6000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- -------------------------------------------------------------------------------
(Former name and 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 l934 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
--------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, Par Value $.01 12,844,680
- ---------------------------- -----------------------------------
(Class) (Outstanding at April 30, 1997)
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
I N D E X
Page
----
PART I. Financial Information:
Consolidated Balance Sheets -
April 30, 1997 and January 31, 1997 1
Consolidated Statements of Operations
Three Months Ended April 30, 1997 and April 30, 1996 2
Consolidated Statements of Cash Flows -
Three Months Ended April 30, 1997 and April 30, 1996 3
Notes to Consolidated Financial Statements -
April 30, 1997 4
Management's Discussion and Analysis of Financial Condition
and Results of Operations - April 30, 1997 5-9
PART II. Other Information 9
<PAGE>
DEB SHOPS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $44,933,188 $44,850,895
Merchandise inventories 22,641,119 22,907,072
Prepaid expenses and other 2,764,094 2,757,308
Current deferred income taxes 1,374,050 1,374,050
----------- -----------
Total Current Assets 71,712,451 71,889,325
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 150,000 150,000
Building 4,338,743 4,324,052
Leasehold improvements 29,124,905 29,131,896
Furniture and equipment 15,419,179 15,443,618
----------- -----------
49,032,827 49,049,566
Less accumulated depreciation
and amortization 32,441,167 31,745,736
----------- -----------
16,591,660 17,303,830
----------- -----------
OTHER ASSETS
Goodwill, net of accumulated amortization
of $339,207 and $285,648, respectively 2,879,198 2,932,757
Long term deferred income taxes 1,973,290 1,237,290
Other 1,167,514 1,167,514
----------- -----------
Total Other Assets 6,020,002 5,337,561
----------- -----------
$94,324,113 $94,530,716
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $15,033,430 $13,792,280
Accrued expenses 5,684,145 4,897,409
----------- -----------
Total Current Liabilities 20,717,575 18,689,689
----------- -----------
Capital Lease Obligation 1,777,956 1,826,787
----------- -----------
Commitments and Contingencies
Shareholders' Equity
Series A Preferred Stock, par value $1.00
a share:
Authorized - 5,000,000 shares
Issued and outstanding - 460 shares,
liquidation value $460,000 460 460
Common Stock, par value $.01 a share:
Authorized - 25,000,000 shares
Issued Shares - April 30, 1997: 15,688,290;
January 31, 1997: 15,688,290 156,883 156,883
Additional paid in capital 5,541,944 5,541,944
Retained earnings 83,705,718 85,891,376
----------- -----------
89,405,005 91,590,663
Less common treasury shares, at cost -
April 30, 1997: 2,843,610;
January 31, 1997: 2,843,610 17,576,423 17,576,423
----------- -----------
71,828,582 74,014,240
----------- -----------
$94,324,113 $94,530,716
=========== ===========
</TABLE>
The notes to consolidated financial statements are an integral
part of these financial statements.
-1-
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended April 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Revenues
Net Sales $ 43,928,678 $38,039,001
-------------- ------------
Costs and Expenses
Cost of Sales, including
buying and occupancy costs 35,943,192 31,472,800
Selling and administrative 9,637,922 9,244,138
Depreciation and amortization 1,053,864 811,605
-------------- ------------
46,634,978 41,528,543
------------- ------------
Operating Loss ( 2,706,300) ( 3,489,542)
Other income, principally interest 440,676 615,522
-------------- ------------
(Loss) Before Income Taxes ( 2,265,624) ( 2,874,020)
Income Taxes (Benefit) ( 736,000) ( 935,000)
-------------- -------------
Net (Loss) ($ 1,529,624) ($ 1,939,020)
============== =============
Net (Loss) Per Common Share ($ 0.12) ($ 0.15)
============== =============
Cash Dividend Declared
Per Common Share $ 0.05 $ 0.05
=============== ============
Weighted Average Number of
Common Shares Outstanding 12,844,680 12,844,680
============== ============
</TABLE>
The notes to consolidated financial statements are an integral
part of these financial statements.
-2-
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended April 30,
-------------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net (Loss) ($ 1,529,624) ($ 1,939,020)
Adjustments to reconcile net (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,053,864 865,164
Deferred income tax (benefit) ( 736,000) ---
Loss on retirement of property, plant and equipment 174,922 61,836
Change in assets and liabilities:
Decrease (increase) in merchandise inventories 265,953 ( 9,596,615)
(Increase) in prepaid expenses and other ( 6,786) ( 1,167,176)
Increase in trade accounts payable 1,241,150 9,509,659
Increase in accrued expenses 786,736 566,444
------------- ------------
Net cash provided by (used in) operating activities 1,250,215 ( 1,699,708)
------------- -------------
Cash flows (used in) investing activities:
Purchase of property, plant and equipment, net ( 463,057) ( 154,529)
------------- -------------
Net cash (used in) investing activities ( 463,057) ( 154,529)
------------- -------------
Cash flows (used in) financing activities:
Preferred Stock cash dividends paid ( 13,800) ( 13,800)
Common Stock cash dividends paid ( 642,234) ( 642,234)
Principal payment under capital lease obligations ( 48,831) ( 39,870)
------------- -------------
Net cash (used in) financing activities ( 704,865) ( 695,904)
------------- -------------
Increase (decrease) in cash and cash equivalents 82,293 ( 2,550,141)
Cash and cash equivalents at beginning of period 44,850,895 51,569,038
-------------- ------------
Cash and cash equivalents at end of period $44,933,188 $49,018,897
============== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on capital lease obligation $ 88,700 $ 97,600
Income taxes, net 16,236 19,747
</TABLE>
The notes to consolidated financial statements are an integral
part of these financial statements.
-3-
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
APRIL 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended April 30, 1997 are
not necessarily indicative of the results that may be expected for the fiscal
year ending January 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1997. The Balance
Sheet at January 31, 1997 has been derived from the audited financial statements
at that date.
NOTE B - INCOME TAXES
The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities and are measured
using enacted tax rates and laws that are expected to be in effect when the
differences reverse. Deferred income taxes result principally from differences
in the time of recognition of overhead in inventory, deductibility of certain
liabilities and depreciation expense. The tax benefit for the three months ended
April 30, 1997 is included in prepaid expenses and other on the accompanying
consolidated balance sheet.
NOTE C - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which the Company is required to adopt for both interim and annual
periods ending after December 15, 1997. SFAS No. 128 simplifies the EPS
calculation by replacing primary EPS with basic EPS. Basic EPS is computed by
dividing reported earnings available to common stockholders by weighted average
shares outstanding. Fully diluted EPS, now called diluted EPS, is still
required. Early application is prohibited, although footnote disclosure of
proforma EPS amounts computed is required. Under SFAS 128, proforma basic EPS
and diluted EPS for the three months ended April 30, 1997 would not have changed
from the amount reported. All other EPS amounts for the periods presented remain
the same.
-4-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Deb Shops, Inc. (the "Company") operates 269 women's specialty apparel retail
stores offering moderately priced, fashionable, coordinated sportswear, dresses,
coats, lingerie, accessories and shoes for junior and plus sized women. The
Company also operates 10 Tops `N Bottoms stores which sell moderately priced
men's and women's apparel.
The Company also operates 16 Atlantic book stores. The book division
includes 11 "Atlantic Book Shops", which are small limited selection book
stores, generally open seasonally in Delaware, Maryland and New Jersey shore
resort towns. Atlantic Books also operates five much larger "Atlantic Book
Warehouses" which carry a full line of best sellers, new titles and magazines in
addition to remainder books. The Atlantic Book Warehouse stores are located in
Delaware, Maryland, New Jersey and Pennsylvania.
Results of operations for the Company for the three months ended April
30, 1997 and 1996, are presented on a consolidated basis and are discussed here
on a segmented basis to provide relevant information concerning the Company's
retail apparel store business, which is the Company's principal line of
business, and the retail book business.
Results of Operations - Consolidated
Consolidated net sales increased $5,890,000 (15.5%) for the three
months ended April 30, 1997, as compared to a decrease of $1,062,000 (2.7%) for
the three months ended April 30, 1996. The increase during the three months
ended April 30, 1997, is primarily the result of increased sales in the apparel
business and, to a lesser extent, an increase in the number of book stores. The
decrease during the three months ended April 30, 1996 was primarily due to the
decrease in the number of apparel stores.
The changes in net sales, cost of sales, selling and administrative
expense and net loss are more fully described in the sections on "Apparel
Business" and "Book Business" that follow.
Other income, principally interest, decreased $175,000 (28.4%) for the
three months ended April 30, 1997 as compared to an increase of $27,000 (4.5%)
for the three months ended April 30, 1996. Interest income is offset by losses
on disposition of fixed assets. The decrease in the three months ended April 30,
1997 is primarily attributable to an increase in the losses incurred by the
Company on disposition of fixed assets which were incurred in connection with
store closings. The increase in the three months ended April 30, 1996 is
primarily the result of the increase in the interest rate as the Company moved
its investments from tax-free to higher yielding investments.
Net loss before income taxes decreased $608,000 (21.2%) for the three
months ended April 30, 1997, and decreased $584,000 (16.9%) for the three months
ended April 30, 1996. The improvement for the three months ended April 30, 1996
to 1997 is comprised of an increase in the apparel business sales partially
offset by a decline in the apparel business margins.
Results of Operations - Apparel Business
Net sales increased to $41,418,000 from $36,328,000 or $5,090,000
(14.0%) in the three months ended April 30, 1997 and 1996, respectively and
decreased to $36,328,000 from $39,101,000 or $2,773,000 (7.1%) in the three
months ended April 30, 1996 and 1995, respectively. The increase in net sales in
the three months ended April 30, 1997 was principally attributable to a return
of fashion direction in the woman's specialty apparel industry, the Company's
new focus on a younger customer, and improved visual merchandising in the
stores. The decrease in net sales in the three months ended April 30, 1996 was
principally attributable to the decrease in the number of apparel stores and to
continued customer resistance to product and pricing.
-5-
<PAGE>
The following table sets forth certain per store information.
Per Store Data(1)
Three Months Ended April 30,
----------------------------
1997 1996
---- ----
Stores open at end of the period 279 301
Average number in operation during the period 282 302
Average net sales per store (in thousands) $147 $120
Average operating loss per store (in thousands) ($ 10 ) ($ 12 )
Comparable Store Sales(2) - Percent Change 20.7% (0.04%)
Cost of sales, including buying and occupancy costs, increased to
$34,267,000 from $30,358,000 or $3,909,000 (12.9%) in the three months ended
April 30, 1997 and 1996, respectively, and decreased to $30,358,000 from
$32,771,000 or $2,413,000 (7.4%) in the three months ended April 30, 1996 and
1995, respectively. The increase in the three months ended April 30, 1997 in
cost of sales, including buying and occupancy costs, was principally due to the
increase in sales during the period. The decrease in the three months ended
April 30, 1996 in cost of sales, including buying and occupancy costs, was
principally due to a decline in the average number of stores in operation during
the period. As a percentage of net sales, these costs were 82.7% during the
three months ended April 30, 1997, and 83.6% during the three month period ended
April 30, 1996. For the three months ended April 30, 1997, the decreased cost of
sales percentage resulted primarily from decreased buying and occupancy costs
partially offset by declining margins. Buying and occupancy costs were 19.7% and
24.1% of sales for the three months ended April 30, 1997 and 1996, respectively.
The percentage decrease in the three months ended April 30, 1997 as compared to
the three months ended April 30, 1996, resulted principally from increase in
sales for the period.
Selling and administrative expenses increased to $9,117,000 from
$8,827,000 or $290,000 (3.3%) in the three months ended April 30, 1997 and 1996,
respectively and to $8,827,000 from $9,392,000 or $565,000 (6.0%) in the three
months ended April 30, 1996 and 1995, respectively. The increase in selling and
administrative costs for the three months ended April 30, 1997, was mainly due
to higher costs for insurance. The decrease in selling and administrative costs
for the three months ended April 30, 1996, was mainly due to cost controls and
the reduction in the number of stores. As a percentage of net sales, these
expenses were 22.0% during the three months ended April 30, 1997, and 24.3%
during the three months ended April 30, 1996. The percentage decrease in the
three months ended April 30, 1997, was the result of an increase in sales for
the period.
Depreciation expense increased $162,000 in the three months ended April
30, 1997, and decreased $192,000 in the three months ended April 30, 1996. The
increase is principally attributed to the write-off of leasehold improvements of
closed stores.
The operating loss decreased to $2,918,000 from $3,646,000 or $728,000
(20.0%) in the three months ended April 30, 1997 and 1996, respectively, and to
$3,646,000 from $4,047,000 or $401,000 (9.9%) in the three months ended April
30, 1996 and 1995, respectively. As a percentage of sales, the operating loss
was (7.0%) in the three months ended April 30, 1997, and (10.0%) in the three
months ended April 30, 1996. The decrease in operating loss for the three months
ended April 30, 1997 was primarily attributable to the increase in sales and was
partially offset by lower margins. The decrease in the operating loss for the
three months ended April 30, 1996, was primarily attributed to the decrease in
total sales for the period.
-6-
- -----------
(1) Includes Tops 'N Bottoms stores
(2) Comparable store sales include stores open for both periods in the current
format and location. A store is added to the comparable store base in its
13th month of operation.
<PAGE>
Results of Operations - Book Business
Fiscal 1997 was the first full year the Company operated its book
business. The book business was acquired in 1995 and was operated for four
months during fiscal 1996.
Net sales increased to $2,511,000 from $1,711,000 or $800,000 (46.7%)
in the three months ended April 30, 1997 and 1996, respectively. The increase
resulted primarily from the addition of two warehouse stores.
The following table sets forth certain per store information:
<TABLE>
<CAPTION>
Per Store Data
Three Months Ended April 30,
------------------------------
1997 1996
---- ----
<S> <C> <C>
Stores open at end of period-Resort Stores 11 10
Average number in operation during the period 10 10
Average net sales per Resort store (in thousands) $ 18 $ 18
Stores open at end of period - Warehouse Stores 5 3
Average number in operation during the period 5 3
Average net sales per Warehouse Store (in thousands) $ 467 $ 511
Comparable Store Sales(1) - Percent Change 2.8% N/A
</TABLE>
Cost of sales, including buying and occupancy costs, increased to
$1,721,000 from $1,115,000 or $606,000 (54.3%) in the three months ended April
30, 1997 and 1996, respectively. As a percentage of net sales, cost of sales,
buying and occupancy costs were 68.5% in the three months ended April 30, 1997
and 65.2% in the three months ended April 30, 1996. As a percentage of net
sales, buying and occupancy costs were 14.8% in the three months ended April 30,
1997 and 13.1% in the three months ended April 30, 1996.
Selling and administrative expenses increased to $520,000 from $359,000
or $161,000 (44.7%) in the three months ended April 30, 1997 and 1996,
respectively. As a percentage of net sales, selling and administrative costs
were 20.7% in the three months ended April 30, 1997 and 21.0% in the three
months ended April 30, 1996.
Depreciation and amortization expense increased $12,000 in the three
months ended April 30, 1997.
Operating income increased to $183,000 from $161,000 or $22,000 (13.6%)
in the three months ended April 30, 1997 and 1996, respectively. As a percentage
of net sales, operating income represents 7.3% in the three months ended April
30, 1997, and 9.4% in the three months ended April 30, 1996.
- -----------------
(1) Comparable store sales include stores open for both periods in the current
format and location. A store is added to the comparable store base in its
13th month of operation.
The "Percentage Change" for the three months ended April 30, 1996 is not
shown since the Company did not own this business during the three months
ended April 30, 1995.
-7-
<PAGE>
Liquidity and Capital Resources
During the three months ended April 30, 1997 and 1996, the Company
funded internally all of its operating needs, including capital expenditures for
the remodeling of existing apparel and book stores. Total cash provided by, or
(used in), operating activities for the three months ended April 30, 1997 and
1996 was $1,250,000 and ($1,700,000), respectively. For the three months ended
April 30, 1997, cash provided by operations was the result of increases in trade
accounts payable, accrued expenses and non-cash charges for depreciation and
amortization partially offset by the net loss and an increase in deferred income
tax benefit. For the three months ended April 30, 1996, cash used in operations
resulted from the net loss, increased prepaid expenses, and merchandise
inventories, partially offset by an increase in trade accounts payable and
non-cash charges for depreciation and amortization. The inventory turn-over rate
for the apparel business was approximately 0.8 times during the three months
ended April 30, 1997 and 1.1 times during the three months ended April 30, 1996.
The inventory turn-over rate for the book business was approximately 0.3 times
during the three months ended April 30, 1997.
Net cash used in investing activities was $463,000 and $155,000 for the
three months ended April 30, 1997 and 1996, respectively. The increase in net
cash used in investing activities was principally due to the remodeling of
existing stores.
Net cash used in financing activities was $705,000 and $696,000 for the
three months ended April 30, 1997 and 1996, respectively. For the three months
ended April 30, 1997 and 1996, these funds were principally used for the payment
of dividends on preferred and common stock.
As of April 30, 1997, the Company had cash and cash equivalents of
$44,933,000 compared with $49,019,000 at April 30, 1996. The Company opened a
plus sized operation during the first quarter of April 1996 in approximately
one-third of its stores. This required the hiring of a buying staff, the
remodeling of certain locations, and the purchase of inventory. At the end of
the first quarter of fiscal 1998, the Company reduced the size of the plus
operation by approximately 50%. As of June 30, 1996, the Company terminated its
private label credit card program. The Company paid a termination fee to the
bank, which assumed all future obligations associated with the portfolio. The
Company continues to accept third party credit cards at all of its stores.
The Company's present intention is to expand the book store business by
opening additional warehouse stores. Opening a warehouse book store is capital
intensive, because of the leasehold improvements and initial inventory required.
It is anticipated that the funds to finance this expansion will come from the
cash and cash equivalents on hand. As of the balance sheet date, there were no
commitments for the opening of any additional warehouse stores. During fiscal
1997, the Company opened two additional warehouse stores. One of those locations
was purchased in May 1996 for approximately $2,100,000. It is not the Company's
intention to purchase store locations; however, when the location and the
economics are suitable, such transactions will be evaluated. Other than these
items there are no known other trends or commitments, events or other
uncertainties that are reasonably likely to result in the Company's liquidity
increasing or decreasing in any material way. The Company believes that
internally generated funds will be sufficient to meet its anticipated capital
expenditures, none of which are material, and current operating needs.
Forward-Looking Statements
The Company has made in this report, and from time to time may
otherwise make, "forward-looking statements" (as that term is defined under
Federal Securities Laws) concerning the Company's future operations,
performance, profitability, revenues, expenses and financial condition. This
report includes, in particular, forward-looking statements regarding store
closings and other matters. Such forward-looking statements are subject to
various risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors. Such factors may
include, but are not limited to, the Company's ability to improve margins,
respond to changes in fashion, and the Company's ability to retain key
management personnel. Such factors may also include other risks and
uncertainties detailed in the Company's filings with the Securities and Exchange
Commission, including the Company's Quarterly Report on Form 10-Q for the fiscal
year ended April 30, 1997.
-8-
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
(Continued)
SEASONAL NATURE OF OPERATIONS
The following table shows the Company's net sales and net earnings per quarter
for the fiscal year ended January 31, 1997 on an unaudited basis.
Net Sales Net Income
-------------------------- ---------------------------
Amount % Amount %
------ --- ------ ---
(Dollars in Thousands)
1st Quarter $ 38,039 20.3% ($1,939) ( 50.3%)
2nd Quarter 48,460 25.9% ( 1,652) ( 42.8%)
3rd Quarter 46,386 24.7% ( 2,458) ( 63.8%)
4th Quarter 54,608 29.1% 2,194 56.9%
--------- ------ --------- -------
TOTAL $187,493 100.0% ($3,855) 100.0%
========= ====== ======== =======
Approximately 54% and (7%) of the Company's net sales and net (loss) income,
respectively, for fiscal 1997 occurred during the last six months, which
includes the Back-to-School and Christmas selling seasons.
PART II. OTHER INFORMATION
Items 1 - 5. NOT APPLICABLE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description of Document
----------- -----------------------
11 Computation of Earnings Per Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the quarter ended April 30, 1997.
-9-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DEB SHOPS, INC.
DATE: June 16, 1997 By /s/ Marvin Rounick
-------------------------
Marvin Rounick
President
DATE: June 16, 1997 By /s/ Lewis Lyons
----------------------
Lewis Lyons
Vice President, Finance
Chief Financial Officer
<PAGE>
EXHIBIT 11
DEB SHOPS, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY EARNINGS PER COMMON SHARE
Three Months Ended April 30
----------------------------------
1997 1996
---- ----
PRIMARY
Average shares outstanding 12,844,680 12,844,680
Net effect of dilutive stock
options and restricted incentive
stock based on the treasury stock
method using average market price 0 0
------------ ------------
12,844,680 12,844,680
============ ============
Net (Loss) Income ($ 1,529,624) ($ 1,939,020)
Preferred dividend paid 13,800 13,800
------------ ------------
($ 1,543,424) ($ 1,952,820)
============ ============
Per common share amount ($ .12) ($ .15)
============ ============
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-30-1997
<CASH> 44,933,188
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 22,641,119
<CURRENT-ASSETS> 71,172,451
<PP&E> 49,032,827
<DEPRECIATION> 32,441,167
<TOTAL-ASSETS> 94,324,113
<CURRENT-LIABILITIES> 20,717,575
<BONDS> 0
460
0
<COMMON> 156,883
<OTHER-SE> 89,247,662
<TOTAL-LIABILITY-AND-EQUITY> 94,324,113
<SALES> 43,928,678
<TOTAL-REVENUES> 44,369,354
<CGS> 27,441,354
<TOTAL-COSTS> 46,634,978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,265,624)
<INCOME-TAX> (736,000)
<INCOME-CONTINUING> (1,529,624)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,529,624)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
