UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Washington, D.C. 20549
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1996
AND
| x | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from December 31, 1995 to February 3, 1996
Commission file number 0-15385
ONE PRICE CLOTHING STORES, INC.
(Exact name of Registrant as specified in its Charter)
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DELAWARE 57-0779028
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 290, Commerce Park
1875 East Main Street
Duncan, South Carolina 29334
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 433-8888
---------------
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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 outstanding as of May 29,
1996 was 10,335,031.
<PAGE>
INDEX
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
First Quarter Ended May 4, 1996
Condensed consolidated balance sheets -- May 4, 1996,
December 30, 1995 and April 29, 1995
Condensed consolidated statements of income --
Three-month periods ended May 4, 1996 and April 29, 1995
Condensed consolidated statements of cash flows --
Three-month periods ended May 4, 1996 and April 29, 1995
Five Week Transition Period Ended February 3, 1996
Condensed consolidated balance sheets -- February 3,
1996 and January 28, 1995
Condensed consolidated statements of operations --
One-month periods ended February 3, 1996 and January 28,
1995
Condensed consolidated statements of cash flows -- One
month periods ended February 3, 1996 and January 28,
1995
Notes to unaudited condensed consolidated financial statements -- May 4, 1996
Independent accountants' report on review of interim financial information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
One Price Clothing Stores, Inc. and Subsidiary
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May 4, December 30, April 29,
1996 1995 1995
(Unaudited) (1) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,149,000 $ 668,000 $ 416,000
Merchandise inventories 44,407,000 28,961,000 43,140,000
Prepaid Federal and state income taxes 4,405,000 1,363,000 2,577,000
Deferred income taxes 2,202,000 2,093,000 2,164,000
Other current assets 5,571,000 2,865,000 3,697,000
------------- ------------- ------------
TOTAL CURRENT ASSETS 57,734,000 35,950,000 51,994,000
------------ ------------ ------------
PROPERTY AND EQUIPMENT, at cost 57,148,000 58,759,000 53,814,000
Less accumulated depreciation 18,804,000 17,575,000 14,656,000
------------ ------------ ------------
38,344,000 41,184,000 39,158,000
------------ ------------ ------------
OTHER ASSETS 3,024,000 2,230,000 1,387,000
------------- ------------- -------------
$99,102,000 $79,364,000 $92,539,000
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $18,268,000 $10,298,000 $17,909,000
Note payable 16,466,000 412,000 18,121,000
Current portion of long-term debt 1,316,000 921,000 --
Sundry liabilities 8,110,000 6,963,000 5,621,000
------------- ------------- -------------
TOTAL CURRENT LIABILITIES 44,160,000 18,594,000 41,651,000
------------ ------------ ------------
LONG-TERM DEBT 6,184,000 6,579,000 --
------------- ------------- ------------
DEFERRED INCOME TAXES AND
OTHER NON-CURRENT LIABILITIES 2,364,000 2,310,000 1,900,000
------------- ------------- -------------
SHAREHOLDERS' EQUITY
Preferred Stock, par value $0.01
--authorized and unissued 500,000 shares
Common Stock, par value $0.01
--authorized 35,000,000 shares,
issued and outstanding 10,335,031,
10,335,031 and 10,311,781 shares 103,000 103,000 103,000
Additional paid-in capital 11,002,000 11,002,000 10,927,000
Retained earnings 35,289,000 40,776,000 37,958,000
------------ ------------ ------------
46,394,000 51,881,000 48,988,000
------------ ------------ ------------
$99,102,000 $79,364,000 $92,539,000
=========== =========== ===========
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(1) Derived from audited financial statements.
See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Three-Month Period Ended
May 4, April 29,
1996 1995
------------- ------------
NET SALES $76,294,000 $67,722,000
Cost of goods sold, distribution and
buying costs 47,567,000 42,995,000
------------ -----------
GROSS MARGIN 28,727,000 24,727,000
------------ -----------
Selling, general and administrative expenses 18,392,000 16,350,000
Store rent and related expenses 6,548,000 6,013,000
Depreciation and amortization expense 1,189,000 982,000
Interest expense 561,000 301,000
------------ -----------
26,690,000 23,646,000
Interest income 11,000 11,000
------------ -----------
NET EXPENSES 26,679,000 23,635,000
------------ -----------
INCOME BEFORE INCOME TAXES 2,048,000 1,092,000
Provision for income taxes 811,000 425,000
------------ -----------
NET INCOME $ 1,237,000 $ 667,000
============ ===========
Net income per common share -- Note B $ 0.12 $ 0.06
============ ===========
Weighted average common shares outstanding 10,343,946 10,379,212
============ ===========
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See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Three-Month Period Ended
May 4, April 29,
1996 1995
OPERATING ACTIVITIES:
Net income $1,237,000 $ 667,000
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 1,189,000 982,000
Decrease (increase) in other noncurrent assets 175,000 (113,000)
Deferred income tax provision (benefit) 508,000 (362,000)
Loss on disposal of property and equipment 206,000 237,000
Changes in operating assets and liabilities (6,934,000) (9,291,000)
----------- ------------
NET CASH USED IN OPERATING ACTIVITIES (3,619,000) (7,880,000)
----------- ------------
INVESTING ACTIVITIES:
Purchases of property and equipment (431,000) (3,613,000)
Purchases of other noncurrent assets (44,000) (8,000)
----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (475,000) (3,621,000)
----------- ------------
FINANCING ACTIVITIES:
Net borrowings from revolving credit facility 3,651,000 10,057,000
Proceeds from issuance of long-term debt 7,500,000 --
Repayment of long-term debt (5,500,000) --
Debt financing costs incurred (800,000) (60,000)
Decrease in amount due to related party (12,000) (10,000)
Proceeds from exercise of Common Stock options -- 25,000
----------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 4,839,000 10,012,000
------------ -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 745,000 (1,489,000)
Cash and cash equivalents at beginning of period 404,000 1,905,000
------------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,149,000 $ 416,000
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 576,000 $ 242,000
Income taxes paid 33,000 320,000
</TABLE>
See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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February 3, January 28,
1996 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 404,000 $ 1,905,000
Merchandise inventories 39,773,000 34,875,000
Prepaid Federal and state income taxes 4,674,000 3,132,000
Deferred income taxes 2,281,000 1,709,000
Other current assets 5,385,000 2,940,000
----------- ------------
TOTAL CURRENT ASSETS 52,517,000 44,561,000
----------- ------------
PROPERTY AND EQUIPMENT, at cost 57,130,000 50,660,000
Less accumulated depreciation 17,849,000 13,902,000
----------- ------------
39,281,000 36,758,000
----------- ------------
OTHER ASSETS 2,382,000 1,272,000
----------- ------------
$94,180,000 $ 82,591,000
=========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $22,998,000 $ 19,272,000
Note payable 10,815,000 8,064,000
Current portion of long-term debt 1,053,000 --
Sundry liabilities 5,803,000 5,142,000
----------- ------------
TOTAL CURRENT LIABILITIES 40,669,000 32,478,000
----------- ------------
LONG-TERM DEBT 6,447,000 --
----------- ------------
DEFERRED INCOME TAXES AND
OTHER NON-CURRENT LIABILITIES 1,907,000 1,817,000
----------- ------------
SHAREHOLDERS' EQUITY
Preferred Stock, par value $0.01
--authorized and unissued 500,000 shares
Common Stock, par value $0.01
--authorized 35,000,000 shares,
issued and outstanding 10,335,031
and 10,307,506 shares 103,000 103,000
Additional paid-in capital 11,002,000 10,902,000
Retained earnings 34,052,000 37,291,000
------------ ------------
45,157,000 48,296,000
$94,180,000 $ 82,591,000
=========== ============
</TABLE>
See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Month Ended
February 3, January 28,
1996 1995
(5 weeks) (4 weeks)
-------------- ------------
NET SALES $15,022,000 $12,173,000
Cost of goods sold, distribution and
buying costs 14,545,000 12,861,000
------------ -----------
GROSS MARGIN 477,000 (688,000)
------------ ------------
Selling, general and administrative expenses 6,957,000 5,042,000
Store rent and related expenses 2,030,000 1,792,000
Depreciation and amortization expense 411,000 297,000
Interest expense 173,000 34,000
------------ -----------
9,571,000 7,165,000
Interest income 3,000 3,000
------------ ----------
NET EXPENSES 9,568,000 7,162,000
------------ -----------
LOSS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES (9,091,000) (7,850,000)
Income tax benefit (3,457,000) (3,061,000)
------------ ------------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES (5,634,000) (4,789,000)
Cumulative effect on prior years of changes
in accounting principles, net of income tax benefit of
$706,000 -- Note C (1,090,000) --
------------ ------------
NET LOSS $(6,724,000) $(4,789,000)
============ ============
PER SHARE AMOUNTS -- Notes B and C:
Loss per common share before cumulative
effect of changes in accounting principles $ (0.55) $ (0.46)
Cumulative effect on prior years of changes
in accounting principles per common share,
net of income tax benefit (0.10) --
------------ ------------
NET LOSS PER COMMON SHARE $ (0.65) $ (0.46)
============ =============
Weighted average common shares outstanding 10,335,031 10,305,738
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Month Ended
February 3, January 28,
1996 1995
(5 weeks) (4 weeks)
------------ -----------
OPERATING ACTIVITIES:
Net loss $ (6,724,000) $ (4,789,000)
Adjustments to reconcile net loss
to net cash used in operating activities:
Cumulative effect of changes in accounting principles 1,090,000 --
Depreciation and amortization 411,000 297,000
(Increase) decrease in other noncurrent assets (161,000) 15,000
Deferred income tax benefit (146,000) --
Gain on disposal of property and equipment (31,000) --
Changes in operating assets and liabilities (4,975,000) (387,000)
-------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (10,536,000) (4,864,000)
-------------- --------------
INVESTING ACTIVITIES:
Purchases of property and equipment (80,000) (1,664,000)
Purchases of other noncurrent assets (41,000) --
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (121,000) (1,664,000)
-------------- --------------
FINANCING ACTIVITIES:
Net borrowings from revolving credit facility 10,403,000 8,064,000
Decrease in amount due to related party (10,000) (4,000)
Proceeds from exercise of Common Stock options -- 11,000
-------------- --------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 10,393,000 8,071,000
-------------- -------------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (264,000) 1,543,000
Cash and cash equivalents at beginning of period 668,000 362,000
-------------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 404,000 $ 1,905,000
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 244,000 $ 3,000
Income taxes paid -- --
</TABLE>
See notes to unaudited condensed consolidated financial statements
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
One Price Clothing Stores, Inc. and Subsidiary
May 4, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited and
include the accounts of One Price Clothing Stores, Inc. and its wholly-owned
subsidiary (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
For interim and year-end reporting, the Company uses an estimated gross profit
as calculated on a current quarterly basis by its inventory management system.
Beginning with the one month transition period ended February 3, 1996 ("the
Transition Period"), inventories are stated on the first-in, first-out (FIFO)
retail method (see Note C).
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Due
to the seasonality of the Company's sales, operating results for the three-month
period ended May 4, 1996 are not necessarily indicative of the results that may
be expected for the year ending February 1, 1997. For further information, refer
to the financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 30, 1995.
NOTE B -- EARNINGS PER SHARE
Earnings per share were computed based upon the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares are
represented by shares under stock options.
NOTE C -- CHANGES IN ACCOUNTING PRINCIPLES
The Financial Accounting Standards Board ("FASB") issued Statement No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." This statement essentially requires that when the
Company commits to closing specific stores and for other stores which may be
impaired, the fixed assets for such stores must be written down to fair market
value. The adoption of SFAS 121, required for years beginning after December 15,
1995, resulted in a decrease in net fixed assets for stores to be
closed of approximately $1,630,000 and a charge of approximately $1,397,000
(net of income taxes) which is included in the cumulative effect of changes in
accounting principles in the Statement of Operations for the Transition Period.
The Company also elected to change certain methods of accounting for merchandise
inventories beginning in the Transition Period. The Company changed from the
lower of average first-in, first-out (FIFO) cost or market method of accounting
to the lower of cost (computed using the FIFO retail method) or market. The
Company believes that the FIFO retail method provides improved information for
the operation of its business in a manner consistent with the method used widely
in the retail industry. The Company is also capitalizing into inventory certain
merchandise acquisition and distribution costs to provide a better matching of
revenues and expenses, particularly in interim periods. The effect of the change
to the FIFO retail method
<PAGE>
was to reduce merchandise inventories by approximately $1,207,000, and the
effect of capitalizing into inventory certain merchandise acquisition and
distribution costs was to increase merchandise inventories by approximately
$1,698,000. The resulting net increase in merchandise inventories of
approximately $491,000 and a benefit of approximately $307,000 (net of income
taxes) is included in the cumulative effect of changes in accounting principles
in the Statement of Operations for the Transition Period.
NOTE D -- CHANGE IN FISCAL YEAR END
Beginning in fiscal 1996, the Company changed its fiscal year end from the
Saturday nearest December 31 to the Saturday nearest January 31. This change was
made to conform the Company's fiscal calendar to the seasonal patterns it
experiences, as well as to enhance comparability of its fiscal quarter and
annual results with other retail companies.
To aid in comparative analysis, the Company has elected to present the unaudited
proforma results of operations for the 12 month period (53 weeks) ended February
3, 1996 (Fiscal 1995):
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Proforma
53 Weeks
Ended
February 3,
1996
NET SALES $297,541,000
Cost of goods sold, distribution and buying costs 196,987,000
------------
GROSS MARGIN 100,554,000
------------
Selling, general and administrative expenses 73,414,000
Store rent and related expenses 25,048,000
Depreciation and amortization expense 4,508,000
Interest expense 1,465,000
------------
104,435,000
Interest income 45,000
------------
NET EXPENSES 104,390,000
LOSS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (3,836,000)
Income tax benefit (1,687,000)
LOSS BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES (2,149,000)
Cumulative effect on prior years of changes
in accounting principles, net of income tax benefit
of $706,000 (1,090,000)
-------------
NET LOSS $ (3,239,000)
=============
PER SHARE AMOUNTS:
Loss per common share before cumulative effect of changes
in accounting principles $ (0.21)
Cumulative effect on prior years of changes in accounting
principles per common share, net of income tax benefit (0.10)
-------------
NET LOSS PER COMMON SHARE $ (0.31)
-------------
Weighted average common shares outstanding 10,316,471
</TABLE>
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Unaudited proforma fiscal 1995 quarterly results (before the cumulative effect
of the changes in accounting principles effective in January 1996) are presented
below to reflect the change in fiscal year end. Each quarter consists of 13
weeks except the fourth quarter of 1995 which consists of 14 weeks. Unaudited
proforma fiscal 1994 quarterly results are also presented to reflect the change
in fiscal year. Each quarter of fiscal 1994 consists of 13 weeks.
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Fiscal 1995 Quarters Ended - Proforma
April 29, July 29, October 28, February 3,
1995 1995 1995 1996
----------- ---------- ---------------- -----------
(In Thousands)
Net sales $ 67,722 $ 86,157 $ 69,451 $ 74,211
Gross margin 24,727 31,141 22,712 21,974
Income (loss) before cumulative effect
of changes in accounting principles 667 2,936 (2,276) (3,476)
Net income (loss) per common share before
cumulative effect of changes in accounting
principles 0.06 0.28 (0.22) (0.34)
Fiscal 1994 Quarters Ended - Proforma
April 30, July 30, October 29, January 28,
1994 1994 1994 1995
--------- ----------- --------------- ----------
(In Thousands)
Net sales $ 69,504 $ 80,898 $ 61,825 $ 72,767
Gross margin 25,849 27,362 19,311 20,982
Net income (loss) 3,886 3,204 (1,904) (2,440)
Net income (loss) per common share 0.37 0.30 (0.18) (0.23)
</TABLE>
In the above presentation, certain distribution and buying costs were
reclassified to cost of sales from selling, general and administrative expenses
to enhance comparability to fiscal 1996 operating results.
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina
We have reviewed the accompanying condensed consolidated balance sheets of One
Price Clothing Stores, Inc. and subsidiary (the "Company") as of May 4, 1996,
February 3, 1996, April 29, 1995, and January 28, 1995, and the related
condensed consolidated statements of operations and of cash flows for the
one-month periods ended February 3, 1996 and January 28, 1995 and for the
three-month periods ended May 4, 1996 and April 29, 1995. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of One Price Clothing Stores, Inc. and
subsidiary as of December 30, 1995, and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 15, 1996 (March 25, 1996 as
to Note B and Note H), we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 30, 1995 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
May 20, 1996
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
In March 1996, the Company elected to change its fiscal year end from the
Saturday nearest December 31 to the Saturday nearest January 31. This change was
made to conform the Company's calendar to the seasonal patterns it experiences,
as well as to enhance comparability of its quarterly and annual results with
other retail companies.
The Company's operating results reflect the change in fiscal year, as well as
the impact of certain changes in accounting for merchandise inventories and the
adoption of the new accounting standard (SFAS No. 121) relating to long-lived
assets. The cumulative effect of these changes in accounting methods was
included in the five-week transition period ended February 3, 1996 (discussed
separately below).
First Quarter Ended May 4, 1996
Net sales for the first quarter ended May 4, 1996 increased approximately 13% to
$76,294,000 from $67,722,000 for the same quarter ended April 29, 1995.
Comparable store sales for the three months (adjusted for the calendar shift to
compare the 13 weeks ended May 4, 1996 to the 13 weeks ended May 6, 1995)
decreased 1%. The Company considers stores that are 18 months or older as
comparable for this purpose, and there were 582 such stores at May 4, 1996.
Management believes that the unusually cold and wet weather experienced midway
through the quarter offset otherwise favorable sales trends. Chain-wide average
store sales increased 6% in the first quarter of fiscal 1996 compared to the
same period last year, primarily due to the performance of stores located in
milder climate zones, particularly Puerto Rico. Sales trends since May 4, 1996
continue to show some improvement, however, there is no assurance that this
trend will continue.
During the first quarter of fiscal 1996, 10 new stores were opened, two stores
were relocated and 15 underperforming stores were closed. At May 4, 1996, the
Company operated 683 stores in 28 states and Puerto Rico compared to 662 stores
in operation at the end of the first quarter last year. In fiscal 1996, the
Company anticipates opening approximately 30 stores (including an estimated 10
relocations) and closing approximately 60 stores.
The Company's sales and operating results are seasonal, as is typical in the
women's retail apparel industry. Based on the former fiscal calendar (January -
December), the Company's sales historically were lowest during the first quarter
(January - March) and third quarter (July - September) and highest during the
second quarter (April - June) and fourth quarter (October - December). Reduced
sales volumes in first and third quarters coincided with the transition of
seasonal merchandise. Therefore, increased levels of markdowns occurred during
those transitional periods, and operating expenses, when expressed as a
percentage of sales, were typically higher. As discussed above, the Company
changed its fiscal year end to conform the fiscal calendar to the seasonal
patterns it experiences. As a result, the Company's historical quarterly results
changed. On a restated basis, fiscal 1995 and fiscal 1994 produced higher sales
and
<PAGE>
operating results in the first quarter (February - April) and second quarter
(May - July) compared to the third quarter (August - October) and fourth quarter
(November - January). The fourth quarter 1995 and 1994 sales and operating
results reflected disappointing holiday sales which resulted in increased
markdowns. Management believes that if sales improve during the 1996 Christmas
holiday season compared to the prior two years, fourth quarter markdown levels
and operating results may improve.
Gross margin increased to 37.7% of net sales in the first quarter of 1996 as
compared to 36.5% of net sales for the comparable quarter ended April 29, 1995.
Gross margin results reflect the change (effective in January 1996) in
accounting for merchandise inventories to include the cost of certain
distribution and buying costs. First quarter fiscal 1995 distribution and buying
costs, which were previously classified as selling, general and administrative
expenses, were reclassified as a component of cost of goods sold to conform to
the current year presentation. The improvement in gross margin when expressed as
a percentage of net sales compared to the same quarter last year was primarily
attributable to efficiencies in the Company's distribution center and a decrease
in the level of merchandise markdowns as a result of more tightly controlling
inventory levels and flow. The unusually cold and wet weather experienced in the
first quarter may result in increased markdowns of spring merchandise during the
second quarter, depending on the relative strength of second quarter sales.
Selling, general and administrative expenses expressed as a percentage of net
sales were 24.1% in both the first quarter of fiscal 1996 and fiscal 1995.
Efficiencies gained in stores and store operations expenses were offset by
additional expenses at the corporate office. The increase in corporate office
expenses was primarily attributable to the accrual of severance costs for the
former President and Chief Operating Officer and to marketing and advertising
costs. Stores and store operations expenses in dollars increased 1% per average
store in the first quarter compared to last year. The Company's total selling,
general and administrative expenses in dollars per average store increased 6%
compared to the first quarter of last year, largely due to the increase in
corporate office expenses previously discussed.
Store rent and related expenses decreased as a percentage of net sales to 8.6%
during the first quarter of 1996 compared to 8.9% for the same period in 1995.
Rent expense in dollars per average store increased 2% over the first quarter of
last year due to the impact of entering into leases in larger, more costly urban
and metropolitan markets with higher base rent structures and the closing of
older, underperforming stores which had lower average rent costs. The Company
believes that the trend of increasing average store rent expense could continue.
Depreciation and amortization expense increased to 1.6 % of net sales in the
first quarter of 1996 as compared to 1.5% for the same period last year.
Interest expense increased to 0.7% of sales in the first quarter of fiscal 1996
compared to 0.4% in the first quarter of fiscal 1995. The increase in interest
expense is due to the increased level of borrowing activity.
The Company's effective tax benefit rate for restated fiscal 1995 was 42.5%. The
Company's estimated annual effective tax rate for fiscal 1996 is approximately
39.6%. Management expects the effective tax rate to decrease in fiscal 1996
because the items creating the fiscal 1995 increase (the tax benefit arising
from the carryback of the Targeted Jobs Tax Credits and recognition of the tax
benefit relating to the future benefit of the prior year Puerto Rico net
operating loss) will not be repeated.
Five-Week Transition Period Ended February 3, 1996
Net sales for the one-month period ended February 3, 1996 (a five-week period)
were $15,022,000
<PAGE>
compared to $12,173,000 for the one-month period ended January 28, 1995 (a
four-week period). On an average store basis, net sales decreased 9%. Comparable
store sales (adjusted for the calendar shift to compare the five-week period
ended February 3, 1996 to the five-week period ended February 4, 1995) decreased
22%. Management believes the decline in sales reflects the continued softness in
the women's apparel market experienced throughout fiscal 1995 and the impact of
adverse weather conditions incurred nationwide in January 1996.
During January 1996, there were no new stores opened, one store was relocated
and 13 stores were closed.
Gross margin was 3.2% in January 1996 compared to (5.7%) in January 1995.
January 1995 distribution and buying costs were reclassified as a component of
cost of goods sold from selling, general and administrative expenses to conform
to the current year presentation. The improvement in gross margin was
principally due to the change in accounting for merchandise inventories
discussed below and efficiencies in the Company's distribution center.
Selling, general and administrative expenses increased to 46.3% of net sales in
January 1996 compared to 41.4% in January 1995. This increase in selling,
general and administrative expenses is largely due to the decrease in average
store sales. Selling, general and administrative expenses on an average store
basis increased 1%, primarily due to an increase in stores and store operations
expenses.
Store rent and related expenses decreased to 13.5% of net sales in January 1996
compared to 14.7% of net sales in January 1995. The decrease in store rent and
related expenses as a percentage of net sales is due to recording rent expense
on a monthly basis in 1996 rather than a weekly basis as in the preceding year.
Accordingly, rent expense in January 1996, a five week operating period,
included one calendar month of rent expense. Thus, rent expense as a percentage
of net sales for the first operating period in 1996 was lower than in the
preceding year.
Depreciation and amortization expense as a percentage of net sales increased to
2.7% in January 1996 compared to 2.4% in January 1995. This increase in
depreciation and amortization expense is due to the decrease in average store
sales and due to the expansion of the Company's distribution center in fiscal
1995.
Interest expense increased to 1.2% of net sales in January 1996 compared to 0.3%
in January 1995 due to the increased level of borrowings under the Company's
credit facilities. Borrowing levels increased primarily to fund approximately
$9.3 million in capital expenditures for the period February 1995 through
January 1996.
The Company's effective tax rate for January 1995 was 39.0%. The Company's
estimated annual effective tax rate for January 1996 is approximately 38.0%.
The cumulative effect of changes in accounting principles includes the impact of
the adoption of SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," beginning in January 1996. This
statement essentially requires that when the Company commits to closing specific
stores and for other stores which may be impaired, the fixed assets for such
stores must be written down to fair market value. The adoption of SFAS 121
resulted in a decrease in net fixed assets for stores to be closed of
approximately $1,630,000 and a charge of approximately $1,397,000 (net of
income taxes) which is included in the cumulative effect of changes in
accounting principles in the Statement of Operations for the Transition Period.
<PAGE>
The cumulative effect of changes in accounting principles also includes the
effect of the Company's election to change certain methods of accounting for
merchandise inventories beginning in January 1996. The Company changed from the
lower of average first-in, first-out (FIFO) cost or market method of accounting
to the lower of cost (computed using the FIFO retail method) or market. The
Company believes that the FIFO retail method provides improved information for
the operation of its business in a manner consistent with the method used widely
in the retail industry. The Company is also capitalizing into inventory certain
merchandise acquisition and distribution costs to provide a better matching of
revenues and expenses, particularly in interim periods. The effect of the change
to the FIFO retail method was to reduce merchandise inventories by approximately
$1,207,000, and the effect of capitalizing into inventory certain merchandise
acquisition and distribution costs was to increase merchandise inventories by
approximately $1,698,000. The resulting net increase in merchandise inventories
of approximately $491,000 and a benefit of approximately $307,000 (net of income
taxes) is included in the cumulative effect of changes in accounting principles
in the Statement of Operations for the Transition Period.
Liquidity and Capital Resources
First Quarter Ended May 4, 1996
During the first quarter of fiscal 1996 and 1995, the Company used net cash of
$3,619,000 and $7,880,000, respectively, in operating activities. The largest
components of this net use of cash include an increase in merchandise
inventories and a decrease in accounts payable for both periods.
Total inventories at the end of the first quarter of fiscal 1996 and 1995 were
$44,407,000 and $43,140,000, respectively. Total inventories at December 30,
1995 were $28,961,000. The level of merchandise inventories is subject to
fluctuations because of the Company's opportunistic buying strategy and
prevailing business conditions. The above amounts represent total inventory,
whether located at the stores, in the distribution center or in-transit. The
average inventory in each of the Company's stores was approximately $45,000 at
the end of the first quarter of both fiscal 1996 and fiscal 1995. Inventories
in- transit from domestic and foreign suppliers were approximately $11,000 and
$2,000 per store at the end of the first quarter of fiscal 1996 and fiscal 1995,
respectively. The increase in in-transit inventories per store was offset by a
decrease in average pack-away inventories per store. The average inventory in
the Company's stores was approximately $25,000 at December 30, 1995, when the
Company's inventory is typically at its lowest level.
The total of accounts payable and amounts outstanding under the credit
facilities at the end of the first quarter of fiscal 1996 and 1995,
respectively, was $42,234,000 and $36,030,000. The increase in the accounts
payable and amounts outstanding under the credit facilities is due to increased
borrowings to fund a larger portion of the operational and capital needs of the
business. In comparison, total accounts payable and amounts outstanding under
the credit facilities at December 30, 1995 were $18,210,000. The total of
accounts payable and amounts outstanding under the credit facilities is subject
to fluctuations because of the Company's seasonal operations, opportunistic
buying strategy and prevailing business conditions.
During the first quarter of fiscal 1996, net cash of $431,000 was used in
investing activities to purchase property and equipment. This consisted
principally of costs incurred for the 10 new stores and 2 relocated stores
opened during the quarter. In fiscal 1996, the Company plans to spend
approximately $2.5 million on capital expenditures in part to open approximately
20 new stores and relocate approximately 10 stores.
During the first quarter of fiscal 1995, $3,613,000 was used to purchase
property and equipment,
<PAGE>
principally leasehold improvements and equipment for the 36 new stores and 6
relocated stores opened during the quarter and for the expansion of the
distribution center.
In March 1996, the Company replaced its existing credit facilities with an
agreement with a new lender which provides for a revolving loan facility of up
to $37,500,000 (including a letter of credit sub-facility of up to $25,000,000)
and a $7,500,000 term loan facility. The credit facilities expire in March 1998
and may be extended at the lender's option for an additional year. Borrowings
under the credit agreement are collateralized by all assets owned by the Company
during the term of the agreement and bear interest, at the Company's option
(subject to certain limitations in the agreement), at the prime rate plus 0.5%
or the Adjusted Eurodollar Rate, as defined in the agreement, plus 2.5%. Maximum
borrowings under the revolving credit facility and utilization of the letter of
credit facility are based on a borrowing base formula determined with respect to
eligible inventory (as defined in the agreement). Availability under the
revolving credit facility will fluctuate in accordance with the Company's
seasonal variations in inventory levels. The lending formula may be revised from
time to time by the lender in response to changes in the composition of the
Company's inventory or other business conditions. The term loan is payable in 57
consecutive equal monthly installments plus interest commencing July 1996. If
the new credit facility were not renewed in March 1998, the outstanding balance
under the term loan would be due and payable at that time. Certain fees may be
payable by the Company for early termination of the credit agreement.
The new credit agreement contains certain covenants which, among other things,
restrict the ability of the Company to incur indebtedness, or encumber or
dispose of assets, and prohibits the Company from repurchasing its Common Stock
or paying dividends. Additionally, the Company must maintain a minimum adjusted
net worth (as defined in the agreement) of $34,000,000 and maintain minimum
working capital, exclusive of amounts outstanding under the credit facilities,
of $5,000,000. The Company was in compliance with these covenants at May 4, 1996
and thorugh the date of this document.
The maximum amounts outstanding under the credit facilities during the first
quarter of fiscal 1996 and fiscal 1995 were approximately $25,821,000 and
$20,689,000, respectively. The average amounts outstanding under the credit
facilities were $22,130,000 during the first quarter of fiscal 1996 and
$16,916,000 during the first quarter of fiscal 1995. The weighted average
interest rates were 7.9% and 8.4% for the first quarter of fiscal 1996 and
fiscal 1995, respectively.
The Company had outstanding letters of credit totaling approximately $7,965,000
at May 4, 1996 compared to $6,365,000 at April 29, 1995. Letters of credit are
used primarily to purchase merchandise from foreign suppliers. Purchases paid by
letters of credit fluctuate subject to the Company's opportunistic buying
strategy. All such purchases are paid in United States dollars; thus the Company
is not subject to foreign currency risks.
Management believes that the Company's liquidity requirements in the foreseeable
future will be met principally through cash provided by operations and its
credit facilities. If deemed by management to be in the best interest of the
Company, additional long-term debt, capital leases or other permanent financing
may be explored.
Five-Week Transition Period Ended February 3, 1996
During the five week transition period ended February 3, 1996, net cash of
$10,536,000 was used in operating activities, primarily due to the operating
loss for the period, the increases in merchandise inventories, miscellaneous
receivables, prepaid expenses (payment of February's store rents), and prepaid
<PAGE>
income taxes which were partially offset by an increase in accounts payable and
sundry liabilities.
Net cash of $4,864,000 was used in operating activities during the four-week
period ended January 28, 1995. This use of cash was primarily due to the
operating loss for the period, the increase in merchandise inventories and
prepaid income taxes which were partially offset by an increase in accounts
payable and sundry liabilities.
During the five-week transition period ended February 3, 1996, net cash of
$80,000 was used in investing activities to purchase property and equipment
compared to $1,664,000 for the four-week period ended January 28, 1995. Amounts
paid in January 1995 were principally for the expansion of the Company's
distribution center.
Borrowings under the Company's credit facilities of $10,403,000 and $8,064,000
were used to fund the cash requirements incurred in January 1996 and January
1995, respectively.
Private Securities Litigation Reform Act of 1995
The statements contained in this Item 6 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) that are not historical facts may
be forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. The Company cautions readers of this
Quarterly Report on Form 10-Q that a number of important factors could cause the
Company's actual results in 1996 and beyond to differ materially from those
expressed in any such forward-looking statements. These factors include, without
limitation, the general economic and business conditions affecting women's
apparel retailers, competition from other existing or new women's apparel
retailers, the Company's ability to meet debt service obligations and other
liquidity needs, the seasonality of the Company's sales, the availability of
both domestic and foreign sources of merchandise inventories at substantially
discounted prices, Acts of God, and unusual seasonal weather patterns.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The following summarizes the votes at the Annual Meeting of the Company's
shareholders held on May 20, 1996:
<TABLE>
<S> <C> <C> <C> <C> <C>
Broker
Matter For Against Abstentions Nonvotes
1. Election of Directors
Henry D. Jacobs, Jr. 9,557,333 -- 22,920 754,778
Raymond S. Waters 9,557,333 -- 22,920 754,778
David F. Bellet 9,557,333 -- 22,920 754,778
Charles D. Moseley, Jr. 9,557,333 -- 22,920 754,778
James M. Shoemaker, Jr. 9,556,783 -- 23,470 754,778
Malcolm L. Sherman 9,557,333 -- 22,920 754,778
Cynthia C. Turk 9,556,783 -- 23,470 754,778
Laurie M. Shahon 9,556,783 -- 23,470 754,778
2. Amendment to the Director
Stock Option Plan to increase
annual grants from 1,500
shares per Director
to 5,000 shares per Director
and to change the Annual Grant
Date to April 30 of each year
(or the immediately preceding
business day) from March 31
of each year 9,455,411 94,289 30,553 754,778
Item 5. Other Information
On April 2, 1996, the Company announced that Ethan S. Shapiro, then President and Chief
Operating Officer, was no longer an officer, director or employee of the Company. Mr.
Shapiro's responsibilities were assumed by the Company's Chairman and Chief Executive
Officer, Henry D. Jacobs, Jr.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits including those incorporated by reference:
4(d) Loan and Security Agreement by and between Congress
Financial Corporation (Southern) as Lender and the
Registrant and One Price Clothing of Puerto Rico,
Inc., as Borrowers dated March 25, 1996:
Incorporated by reference to exhibit 4(d) in the
Annual Report on Form 10-K for the year ended
December 30, 1995, (File No. 0-15385) ("the 1995
Form 10-K")
10 Summary of Officer Bonus Plan effective for the 1996 fiscal year
10(a) Amendment Number One to One Price Clothing Stores, Inc. Director Stock
Option Plan dated March 14, 1996
11 Statement re: Computation of Per Share Earnings
15 Acknowledgement of Deloitte & Touche LLP, Independent Accountants
18 Independent Accountants' Letter Re: Changes in Accounting Principles
27 Financial Data Schedule (electronic filing only)
(b) On March 27, 1996, the Company filed a report on Form 8-K
dated March 14, 1996 to report the Company's change in
fiscal year end from the Saturday nearest December 31 to the
Saturday nearest January 31.
On April 3, 1996, the Company filed a report on Form 8-K
dated April 2, 1996 to report the matter discussed in Item 5
above.
</TABLE>
<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.
ONE PRICE CLOTHING STORES, INC. (Registrant)
<TABLE>
<S> <C>
Date: June 7, 1996 /s/ Henry D. Jacobs, Jr.
-------------------------
Henry D. Jacobs, Jr.
Chairman, President and Chief Executive Officer
(principal executive officer)
Date: June 7, 1996 /s/ Stephen A. Feldman
-----------------------
Stephen A. Feldman
Executive Vice President
& Chief Financial Officer
(principal accounting officer)
</TABLE>
<PAGE>
EXHIBIT 10 -- SUMMARY OF OFFICER BONUS PLAN
Pursuant to the Company's officer bonus plan, participating officers will be
eligible for bonuses based upon individual departmental and corporate objectives
and earnings of One Price Clothing Stores, Inc. (the "Company"). The weight of
each of these factors will be determined each year by the Company. The maximum
potential amount of the bonus of each participating officer will be based upon a
percentage of the officer's annual base salary (the "Bonus Percentage"). The
Bonus Percentages for each participating officer will be determined each year by
the Company. An additional Bonus Percentage shall be awarded if the Company's
stock price reaches a predetermined level as of the Company's fiscal year end.
This officer bonus plan is subject to approval by the Compensation Committee of
the Board of Directors. Directors who are not also officers are not eligible to
participate in this plan.
<PAGE>
EXHIBIT 10(a) -- AMENDMENT NUMBER ONE TO ONE PRICE CLOTHING STORES, INC.
DIRECTOR STOCK OPTION PLAN DATED MARCH 14, 1996
AMENDMENT NUMBER ONE TO
ONE PRICE CLOTHING STORES, INC.
DIRECTOR STOCK OPTION PLAN
This Amendment to the One Price Clothing Stores, Inc. ("Company")
Director Stock Option Plan ("Plan"), is adopted as of this 14th day of March
1996.
WHEREAS, the Board of Directors of the Company adopted the Plan as
of February 9, 1995 and the Plan was subsequently approved by the shareholders
of the Company and became effective as of April 19, 1995; and
WHEREAS, the Plan provided for the automatic issuance of options
for 1,500 shares of Common Stock to non-employee directors on March 31, 1996 and
each subsequent March 31 (or the immediately preceding business day); and
WHEREAS, the Company has changed its fiscal year end from the
Saturday nearest December 31, each year to the Saturday nearest January 31 of
each year; and
WHEREAS, the Board of Directors of the Company at its meeting held
March 14, 1996 unanimously approved an increase in the number of shares to be
automatically granted annually pursuant to the Plan to each director form 1,500
to 5,000 shares of Common Stock, such increase to be effective March 31, 1996,
subject to stockholder approval, and modified the Grant Date from March 31 of
each calendar year (or the immediately preceding business day) to April 30 of
each calendar year (or the immediately preceding business day) commencing in
1997;
NOW, THEREFORE, the Plan is hereby modified as follows:
The second paragraph of Section 4. OPTIONS FOR DIRECTORS WHO
ARE NOT EMPLOYEES is hereby replaced with the following
paragraph:
On each Grant Date (as hereinafter defined), each Eligible
Director shall automatically receive from the Company an
option for 5,000 shares of Common Stock, with an exercise
price per share equal to the average of the high and low
sales price per share of the Common Stock on such Grant Date
(as reported on NASDAQ). For purposes of the Plan, the Grant
Date shall be March 29 of 1996 and April 30 of each calendar
year commencing with the 1997 calendar year (or, if April 30
is not a business day, the immediately preceding business
day).
The first sentence of the third paragraph of said Section 4
shall be replaced with the following:
<PAGE>
Each Option shall be immediately exercisable commencing on
the date of its grant and at any time and form time to time
thereafter (subject to Section 6 and hereof) until and
including the date which is the business day immediately
preceding the tenth anniversary of the Grant Date; provided,
however, each Option to be granted March 29, 1996 shall
provide that 1,500 of the 5,000 shares granted shall be
immediately exercisable and the remaining 3,500 shares
granted shall be subject to approval of stockholders at the
annual meeting to be held May 20, 1996 and, upon such
stockholder approval, such 3,500 shares shall become
immediately exercisable. In the event stockholders do not
approve the increase in the number of shares to be granted
annually from 1,500 to 5,000 shares, the Plan shall continue
as effective April 19, 1995 with only the Grant Date to be
changed from March 31 to April 30 of each calendar year
commencing in 1997.
In all other respects, the Plan is hereby ratified and continued in
accordance with its terms and conditions.
<PAGE>
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF PER SHARE AMOUNTS
<TABLE>
<S> <C> <C> <C> <C>
Period Ended
May 4, April 29, February 3, January 28,
1996 1995 1996 1995
(13 weeks) (13 weeks) (5 weeks) (4 weeks)
---------- ---------- ---------- ---------
PRIMARY INCOME (LOSS) PER SHARE
Weighted average number of common
shares outstanding 10,335,031 10,309,299 10,335,031 10,305,738
Net effect of dilutive stock options -- based
on the treasury stock method using the
average market price 8,915 69,913 -- --
----------- ----------- ------------ -------------
TOTAL 10,343,946 10,379,212 10,335,031 10,305,738
=========== =========== ============ =============
Income (loss) before cumulative effect of
changes in accounting principles $ 1,237,000 $ 667,000 $ (5,634,000) $ (4,789,000)
Cumulative effect on prior years of changes
in accounting principles, net of income
tax benefit of $706,000 -- -- (1,090,000) --
----------- ------------- ------------ -------------
Net income (loss) $ 1,237,000 $ 667,000 $ (6,724,000) $ (4,789,000)
=========== ============ ============ ==============
Income (loss) per common share before
cumulative effect of changes in
accounting principles $ 0.12 $ 0.06 $ (0.55) $ (0.46)
Cumulative effect on prior years of changes
in accounting principles per common
share, net of income tax benefit -- -- (0.10) --
----------- ------------ ------------ --------------
Net income (loss) per common share $ 0.12 $ 0.06 $ (0.65) $ (0.46)
=========== ============ ============ ==============
FULLY DILUTED INCOME (LOSS) PER SHARE
Weighted average number of common
shares outstanding 10,335,031 10,309,299 10,335,031 10,305,738
Net effect of dilutive stock options -- based
on the treasury stock method using the
greater of ending or average market price 27,177 69,792 -- --
----------- ----------- ----------- -------------
TOTAL 10,362,208 10,379,091 10,335,031 10,305,738
=========== =========== ============= =============
Income (loss) before cumulative effect of
changes in accounting principles $ 1,237,000 $ 667,000 $ (5,634,000) $ (4,789,000)
Cumulative effect on prior years of changes
in accounting principles, net of income
tax benefit of $706,000 -- -- (1,090,000) --
----------- ---------- ------------ -------------
Net income (loss) $ 1,237,000 $ 667,000 $ (6,724,000) $ (4,789,000)
=========== =========== ============= =============
Income (loss) per common share before
cumulative effect of changes in
accounting principles $ 0.12 $ 0.06 $ (0.55) $ (0.46)
Cumulative effect on prior years of changes
in accounting principles per common
share, net of income tax benefit -- -- (0.10) --
---------- ----------- ------------- --------------
Net income (loss) per common share $ 0.12 $ 0.06 $ (0.65) $ (0.46)
=========== =========== ============= ===============
<PAGE>
</TABLE>
EXHIBIT 15 -- ACKNOWLEDGEMENT OF DELOITTE & TOUCHE LLP, INDEPENDENT
ACCOUNTANTS
One Price Clothing Stores, Inc.:
Duncan, South Carolina
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim condensed
consolidated financial information of One Price Clothing Stores, Inc. and
subsidiary for the one-month periods ended February 3, 1996 and January 28, 1995
and for the three-month periods ended May 4, 1996 and April 29, 1995, as
indicated in our report dated May 20, 1996; because we did not perform an audit,
we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended May 4, 1996, is incorporated
by reference in Registration Statements No. 33-20529, 33- 31623, 33-48091, and
33-61803 on Form S-8 pertaining to the 1987 Stock Option Plan, the 1988 Stock
Option Plan, the 1991 Stock Option Plan, and the Director Stock Option Plan,
respectively, of One Price Clothing Stores, Inc.
We also are aware that the above mentioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
June 7, 1996
<PAGE>
EXHIBIT 18 -- INDEPENDENT ACCOUNTANTS' LETTER RE: CHANGES IN ACCOUNTING
PRINCIPLES
One Price Clothing Stores, Inc.
Duncan, South Carolina
At your request, we have read the description included in your Quarterly Report
on Form 10-Q to the Securities and Exchange Commission for the quarter ended May
4, 1996, of the facts relating to the changes in accounting methods to adopt the
first-in, first-out retail method of accounting for inventory costs and to
capitalize into inventory certain merchandise acquisition and distribution
costs. We believe, on the basis of the facts so set forth and other information
furnished to us by appropriate officials of the Company, that the accounting
changes described in your Form 10-Q are to alternative accounting principles
that are preferable under the circumstances.
We have not audited any consolidated financial statements of One Price Clothing
Stores, Inc. and its consolidated subsidiary as of any date or for any period
subsequent to December 30, 1995. Therefore, we are unable to express, and do not
express, an opinion on the facts set forth in the above mentioned Form 10-Q, on
the related information furnished to us by officials of the Company, or on the
financial position, results of operation, or cash flows of One Price Clothing
Stores, Inc. and its consolidated subsidiary as of any date or for any period
subsequent to December 30, 1995.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
June 7, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 1-MO 3-MOS
<FISCAL-YEAR-END> FEB-03-1996<F1> FEB-01-1997
<PERIOD-END> FEB-03-1996 MAY-04-1996
<CASH> 404 1149
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 39773 44407
<CURRENT-ASSETS> 52517 57734
<PP&E> 57130 57148
<DEPRECIATION> 17849 18804
<TOTAL-ASSETS> 94180 99102
<CURRENT-LIABILITIES> 40669 44160
<BONDS> 0 0
<COMMON> 103 103
0 0
0 0
<OTHER-SE> 45054 46291
<TOTAL-LIABILITY-AND-EQUITY> 94180 99102
<SALES> 15022 76294
<TOTAL-REVENUES> 15022 76294
<CGS> 14545 47567
<TOTAL-COSTS> 14545 47567
<OTHER-EXPENSES> 2441 7737
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 173 561
<INCOME-PRETAX> (9091) 2048
<INCOME-TAX> (3457) 811
<INCOME-CONTINUING> (5634) 1237
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> (1090) 0
<NET-INCOME> (6724) 1237
<EPS-PRIMARY> (0.65) 0.12
<EPS-DILUTED> (0.65) 0.12
<FN>
<F1>The one month column represents the five week transition period ended
February 3, 1996.
</FN>
</TABLE>
