UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1999
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 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 identification No.)
incorporation or organization)
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
September 2, 1999 was 10,467,791.
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INDEX
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - July 31, 1999, January
30, 1999 and August 1, 1998
Condensed consolidated statements of operations - Three-month
and six-month periods ended July 31, 1999 and August 1, 1998
Condensed consolidated statements of cash flows - Six-month
periods ended July 31, 1999 and August 1, 1998
Notes to unaudited condensed consolidated financial statements - July 31, 1999
Independent accountants' report on review of interim financial information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
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
PART I. FINANCIAL INFORMATION
Item I. Financial Statements (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiaries
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July 31, January 30, August 1,
1999 1999 1998
------------------ ------------------ ----------------
(1)
Assets
CURRENT ASSETS
Cash and cash equivalents $ 2,108,000 $ 2,418,000 $ 2,243,000
Merchandise inventories 46,644,000 45,639,000 45,861,000
Deferred income taxes 788,000 768,000 --
Other current assets 5,912,000 6,562,000 7,487,000
------------------ ------------------ ----------------
TOTAL CURRENT ASSETS 55,452,000 55,387,000 55,591,000
------------------ ------------------ ----------------
PROPERTY AND EQUIPMENT, at cost 63,922,000 62,084,000 60,465,000
Less accumulated depreciation 31,020,000 28,638,000 26,611,000
------------------ ------------------ ----------------
32,902,000 33,446,000 33,854,000
------------------ ------------------ ----------------
OTHER ASSETS 4,700,000 3,994,000 3,867,000
------------------ ------------------ ----------------
$ 93,054,000 $ 92,827,000 $ 93,312,000
================== ================== ================
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 20,182,000 $ 24,750,000 $ 23,631,000
Current portion of long-term debt and revolving
credit facility 6,243,000 11,998,000 10,692,000
Sundry liabilities 10,973,000 7,993,000 9,719,000
------------------ ------------------ ----------------
TOTAL CURRENT LIABILITIES 37,398,000 44,741,000 44,042,000
------------------ ------------------ ----------------
LONG-TERM DEBT 7,668,000 7,755,000 7,834,000
------------------ ------------------ ----------------
OTHER NONCURRENT LIABILITIES 3,000,000 2,914,000 2,852,000
------------------ ------------------ ----------------
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
10,466,291, 10,439,531 and 10,435,531, respectively 105,000 104,000 104,000
Additional paid-in capital 11,539,000 11,465,000 11,453,000
Retained earnings 33,344,000 25,848,000 27,027,000
------------------ ------------------ ----------------
44,988,000 37,417,000 38,584,000
------------------ ------------------ ----------------
$ 93,054,000 $ 92,827,000 $ 93,312,000
================== ================== ================
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(1) Derived from audited financial statements.
See notes to unaudited condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
One Price Clothing Stores Inc. and Subsidiaries
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Three-Month Period Ended Six-Month Period Ended
------------------------------ --------------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
-------------- -------------- --------------- ---------------
NET SALES $ 97,905,000 $ 95,786,000 $ 185,018,000 $ 178,299,000
Cost of goods sold 62,461,000 61,276,000 117,124,000 113,168,000
-------------- -------------- --------------- ---------------
GROSS MARGIN 35,444,000 34,510,000 67,894,000 65,131,000
-------------- -------------- --------------- ---------------
Selling, general and administrative expenses 19,747,000 19,671,000 39,032,000 37,666,000
Store rent and related expenses 6,922,000 6,735,000 13,577,000 13,618,000
Depreciation and amortization expense 1,358,000 1,338,000 2,683,000 2,660,000
Interest expense 450,000 539,000 962,000 1,158,000
-------------- -------------- --------------- ---------------
28,477,000 28,283,000 56,254,000 55,102,000
-------------- -------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 6,967,000 6,227,000 11,640,000 10,029,000
Provision for income taxes 2,570,000 2,710,000 4,144,000 4,467,000
-------------- -------------- --------------- ---------------
NET INCOME $ 4,397,000 $ 3,517,000 $ 7,496,000 $ 5,562,000
============== ============== =============== ===============
Net income per common share -- basic $ 0.42 $ 0.34 $ 0.72 $ 0.53
============== ============== =============== ===============
Net income per common share -- diluted $ 0.41 $ 0.33 $ 0.70 $ 0.53
============== ============== =============== ===============
Weighted average number of common shares
outstanding -- basic 10,453,391 10,435,531 10,447,141 10,435,531
============== ============== =============== ===============
Weighted average number of common shares
outstanding -- diluted 10,631,401 10,537,735 10,635,955 10,508,028
============== ============== =============== ===============
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See notes to unaudited condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiaries
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Six-Month Period Ended
----------------------------------------
July 31, August 1,
1999 1998
---------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,496,000 $ 5,562,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,683,000 2,660,000
Provision for supplemental post-retirement benefits 31,000 -
Decrease in other noncurrent assets 29,000 37,000
Increase (decrease) in other noncurrent liabilities 17,000 (51,000)
Deferred income taxes (20,000) -
Loss on disposal of property and equipment 137,000 272,000
Changes in operating assets and liabilities (1,945,000) (5,818,000)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,428,000 2,662,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,086,000) (646,000)
Purchases of other noncurrent assets (546,000) (372,000)
Repayment of related party loan - 13,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,632,000) (1,005,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of revolving credit facility (5,760,000) (978,000)
Repayment of long-term debt (81,000) (76,000)
Debt financing costs incurred (69,000) (40,000)
Payment of capital lease obligations (194,000) (110,000)
Decrease in amount due to related parties (64,000) (37,000)
Proceeds from exercise of common stock options 62,000 -
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (6,106,000) (1,241,000)
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (310,000) 416,000
Cash and cash equivalents at beginning of period 2,418,000 1,827,000
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,108,000 $ 2,243,000
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 841,000 $ 1,163,000
Income taxes paid 101,000 49,000
Noncash financing activity - capital leases 405,000 -
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See notes to unaudited condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
One Price Clothing Stores, Inc. and Subsidiaries
July 31, 1999
NOTE A - BASIS OF PRESENTATION AND CERTAIN ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and
include the accounts of One Price Clothing Stores, Inc. and its subsidiaries,
all of which are wholly-owned (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 reporting, the Company's gross profit is calculated on a current
quarterly basis by its inventory management system. Inventories are stated at
the lower of cost (using the first-in, first-out (FIFO) retail method) or
market.
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
and six-month periods ended July 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending January 29, 2000. 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 January 30, 1999.
The Company's sales and operating results are seasonal. Sales and operating
results have been the highest in the first quarter (February - April) and second
quarter (May - July) and lowest in the third quarter (August - October) and
fourth quarter (November January).
Comprehensive Income
The Company is required to disclose within the basic financial statements items
of comprehensive income, such as foreign currency transactions and unrealized
gains and losses on available-for-sale securities. Because the Company has no
items which qualify as comprehensive income, there was no difference between
comprehensive income and net income for the three-month and six-month periods
ended July 31, 1999 and August 1, 1998.
Segments and Related Information
The Company operates in only one industry segment: Retail sales of apparel and
accessories to the general public.
NOTE B - EARNINGS PER SHARE
Basic earnings per share are computed based upon the weighted average number of
common shares outstanding. Diluted earnings per share are computed based upon
the weighted average number of common and common equivalent shares outstanding.
Common equivalent shares consist solely of shares under option. A reconciliation
of basic and diluted weighted average shares outstanding is presented below:
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Three-Month Period Ended Six-Month Period Ended
---------------------------------- ----------------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
Weighted average number of common
shares outstanding - basic 10,453,391 10,435,531 10,447,141 10,435,531
Net effect of dilutive stock options - based
on the treasury stock method using the
average market price
178,010 102,204 188,814 72,497
---------------- ---------------- ---------------- ----------------
Weighted average number of common
shares outstanding - diluted 10,631,401 10,537,735 10,635,955 10,508,028
=============== =============== =============== ==============
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NOTE C - CREDIT FACILITIES
The Company has a revolving credit facility of up to $37,500,000 (including a
letter of credit sub-facility of up to $25,000,000) with its primary lender
through March 2001. Borrowings under the credit agreement with the primary
lender are collateralized by all assets owned by the Company during the term of
the agreement (other than the land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). Under the agreement, the
borrowings bear interest, at the Company's option (subject to certain
limitations in the agreement), at the Prime Rate plus 0.25% or the Adjusted
Eurodollar Rate, as defined, plus 2.0%. 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 fluctuates in
accordance with the Company's seasonal variations in inventory levels. At July
31, 1999, the Company had approximately $19.4 million of excess availability
under the borrowing base formula. The lending formula may be revised from time
to time in response to changes in the composition of the Company's inventory or
other business conditions.
The Company's revolving credit agreement contains certain covenants which, among
other things, restrict the ability of the Company to incur other indebtedness,
or encumber or dispose of assets and prohibit the Company from repurchasing its
Common Stock or paying dividends. The Company is required to maintain a
$5,000,000 minimum level of working capital and to maintain a minimum adjusted
net worth of $25,000,000 (both as defined in the revolving credit agreement).
The Company was in compliance with these financial covenants at July 31, 1999.
The Company also has an agreement with a commercial bank to provide a separate
letter of credit facility of up to $5,000,000 (as amended). Letters of credit
issued under the agreement are collateralized by inventories purchased using
such letters of credit. The agreement contains working capital and minimum net
worth requirements of the same level as that required by the Company's primary
lender under the revolving credit agreement. In March 1999, the letter of credit
agreement was amended to extend the expiration date of the facility by one year
to the earlier of June 2000 or termination of the Company's revolving credit
facility with its primary lender. The letter of credit agreement, as amended,
contains certain restrictive covenants which are substantially the same as those
within the Company's revolving credit facility discussed above.
The Company also has a twenty-year mortgage agreement with a commercial bank.
The agreement provides for a mortgage loan of $8,125,000 secured by the
Company's real property located at its corporate offices including land,
buildings, fixtures and improvements. The mortgage loan is payable in 240
consecutive equal monthly installments (including interest at the rate of 9.125%
per annum) through July 2017. Certain fees may be payable by the Company if the
mortgage loan is repaid prior to June 2014. The mortgage agreement contains
certain nonfinancial covenants with which the Company was in compliance at July
31, 1999.
NOTE D - EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," which, as amended, is effective for the fiscal year ending
February 2, 2002. This new standard requires recognition of all derivatives,
including certain derivative instruments embedded in other contracts, as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the 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 subsidiaries (the "Company") as of July 31, 1999
and August 1, 1998, and the related condensed consolidated statements of
operations for the three-month and six-month periods then ended and the
condensed consolidated statements of cash flows for the six-month periods then
ended. These financial statements are the responsibility of the Company's
management.
We conducted our reviews 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 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 reviews, 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 the Company as of January 30, 1999,
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 March 17, 1999 (March 31, 1999 as to Note B), we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 30, 1999 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
August 13, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the quarter ended July 31, 1999 increased 2.2% to $97,905,000
compared to $95,786,000 for the quarter ended August 1, 1998. Net sales for the
six-month period ended July 31, 1999 increased 3.8% to $185,018,000 compared to
$178,299,000 for the same time period in 1998. Comparable store sales for the
second quarter of fiscal 1999 increased 3.0% compared to a 10.1% increase for
the same quarter last year. Comparable store sales for the six-month period
ended July 31, 1999 increased 5.5% compared to a 5.2% increase for the same time
period in 1998. We consider stores that have been open 18 months or more to be
comparable, and there were 605 such stores at July 31, 1999. We believe that
these sales results were generated by having improved fashion assortments at our
core price points and better execution of our micro-merchandising strategy,
based upon improved demographic profiling of our stores.
During the second quarter of fiscal 1999, we opened five stores and expanded
four of our top-performing stores. In addition, we relocated three stores and
closed four under-performing stores. At July 31, 1999, we operated 620 stores,
four fewer than at quarter-end last year. The stores are located in 27 states,
the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Gross margin was 36.2% of net sales in the second quarter of fiscal 1999
compared to 36.0% of net sales in the second quarter of fiscal 1998. For the
first six months of fiscal 1999, gross margin was 36.7% of net sales versus
36.5% of net sales for the same time period in fiscal 1998. Increases in gross
margin as a percentage of net sales were realized by improvements in maintained
mark-up which were offset, in part, by slight increases in buying and other
costs.
Selling, general and administrative ("SG&A") expenses were 20.2% of net sales
for the second quarter of fiscal 1999 compared to 20.5% of net sales in the
second quarter of fiscal 1998. SG&A expenses were 21.1% of net sales in both the
first six months of fiscal 1999 and fiscal 1998. In both periods presented for
fiscal 1999, SG&A expenses increased in dollars compared to the same time
periods in fiscal 1998 due primarily to increased payroll expense in the stores.
Payroll expense in the stores increased due to year-over-year increases in the
average hourly wage rate. In addition, average store hours in the first six
months of fiscal 1999 increased to support the higher year-over-year sales. SG&A
expenses as a percentage of net sales were leveraged in both periods due to the
higher year-over-year sales.
Store rent and related expenses per average store increased 6% in the second
quarter of fiscal 1999 and increased 4% in the first six months of fiscal 1999
compared to the same periods last year. The increase in average store rent and
related expenses is primarily due to the Company's store expansion strategy of
opening larger, higher volume stores and thus entering more costly sites with
higher rents while closing older stores with lower average rent costs. Due to
the increase in average store rent, store rent and related expenses were 7.1% of
net sales in the second quarter of fiscal 1999 compared to 7.0% of net sales in
the second quarter of fiscal 1998. However, store rent and related expenses for
the first six months of fiscal 1999 decreased as a percentage of net sales to
7.3% from 7.6% in fiscal 1998 primarily due to the leverage provided by higher
year-over-year sales.
Interest expense decreased to 0.5% of net sales in the second quarter and the
first six months of fiscal 1999 from 0.6% of net sales for the same time periods
in fiscal 1998. These decreases in interest expense were due to lower average
levels of borrowings and to lower average interest rates realized by obtaining
more favorable pricing on the Company's working capital facility.
The Company's effective income tax rate was approximately 35.6% in the first six
months of fiscal 1999. This rate is less than the statutory rate because the
Company was able to achieve levels of profitability in Puerto Rico sufficient to
permit the reduction of a portion of the remaining valuation allowance. The
effective income tax rate for fiscal 1998 was 20.3%, primarily attributable to a
favorable valuation allowance adjustment.
Outlook
Sales thus far in the third quarter of fiscal 1999 are slightly ahead of sales
for the same time period in fiscal 1998 despite operating fewer stores on
average than in 1998. During the remaining portion of fiscal 1999, we intend to
focus our efforts on improving sales in existing stores while maintaining our
margin and cost-containment targets. As part of this strategy, we plan to
continue to monitor the merchandise mix and demographic profiles of our stores.
We also plan to increase the size of certain highly productive stores. During
the remaining portion of fiscal 1999, we plan to open approximately 20 new
stores in existing markets, expand 9 existing stores and close approximately six
under-performing stores.
The Company's sales and operating results are seasonal. Sales and operating
results have been the highest in the first quarter (February - April) and second
quarter (May - July) and lowest in the third quarter (August - October) and
fourth quarter (November - January). We continue to develop strategies that
should increase sales volume in the third and fourth quarters of the fiscal
year.
Average store rent and related expenses are expected to increase in fiscal 1999
due to the location and the increase in average store square footage of stores
planned to open in fiscal 1999 and the closing of older, lower-volume stores. We
will seek to leverage these increases through improved average store sales
volume.
Liquidity and Capital Resources
Increased sales and gross margin resulted in a 35% increase in net income for
the first six months of fiscal 1999 compared to the same time period in fiscal
1998. In the first six months of fiscal 1999 and fiscal 1998, net cash provided
by operating activities was primarily used to reduce the balance of the
revolving credit facility and to open new stores, expand and remodel certain
other top-performing stores and purchase software.
Merchandise inventories at the end of the second quarter of fiscal 1999
increased by 2% both in total and on an average store basis compared to the end
of the second quarter of fiscal 1998. Total merchandise inventories at the end
of the second quarter of fiscal 1999 were also 2% higher on an average store
basis than at January 30, 1999 when inventory levels are typically lower. The
level and source of inventories are subject to fluctuations because of our
opportunistic buying strategy and prevailing business conditions.
As a result of our continued emphasis on purchasing from domestic sources, the
level of outstanding documentary letters of credit decreased to $3.3 million on
July 31, 1999 compared to $6.4 million on August 1, 1998. We currently expect to
continue to pursue opportunistic purchases of merchandise from primarily
domestic sources, but will purchase merchandise from foreign sources when it is
deemed to be in the best interests of the Company.
Total accounts payable and amounts outstanding under the credit facilities,
including long-term portions thereof, decreased 19% at the end of the second
quarter of fiscal 1999 compared to the second quarter of fiscal 1998, primarily
as a result of the year-over-year decrease of the amounts outstanding under the
revolving credit facility made possible by year-over-year improvements in our
results of operations. The level of accounts payable and amounts outstanding
under the credit facilities are subject to fluctuations because of our seasonal
operations, opportunistic buying strategy, rate of capital expenditures and
prevailing business conditions.
Our credit facilities consist of a revolving credit facility to meet short-term
liquidity needs, a mortgage loan collateralized by the Company's corporate
offices and distribution center and letter of credit facilities to accommodate
the Company's needs to purchase merchandise inventories from foreign sources.
Collectively, the credit facilities contain certain financial and non-financial
covenants with which the Company was in compliance at July 31, 1999. A summary
of our credit facilities follows. Please refer to Note C of the unaudited
financial statements contained within this Form 10-Q for a more complete
description of the credit facilities.
We have a $37,500,000 revolving credit facility (including a $25,000,000 letter
of credit sub-facility) with our primary lender through March 2001. Borrowings
under the agreement are collateralized by all assets owned by the Company during
the term of the agreement (other than land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). Maximum borrowings under the
revolving credit facility and utilization of the letter of credit facility are
based upon a borrowing base formula determined with respect to eligible
inventory as defined in the agreement. At July 31, 1999, we had approximately
$19.4 million in excess availability under the borrowing base formula.
We have a twenty-year, $8,125,000 mortgage loan agreement with a commercial bank
payable in 240 consecutive equal monthly installments through July 2017. The
agreement is secured by the Company's real property located at its corporate
offices including land, buildings, fixtures and improvements.
We have a $5,000,000 letter of credit facility with a commercial bank through
the earlier of June 2000 or termination of the revolving credit facility with
the Company's primary lender. Letters of credit issued under the agreement are
collateralized by inventories purchased using such letters of credit.
During fiscal 1999, we expect to spend approximately $6.0 million on capital
expenditures, most of which will be used to open new stores, remodel,
re-fixture, expand and relocate existing stores and invest in information
technology. Our liquidity requirements in the foreseeable future are expected to
be met principally through cash provided by operations and the use of our credit
facilities. If we believe it to be in the best interests of the Company,
additional long-term debt, equity, capital leases or other permanent financing
may be considered.
Market Risk and Risk Management Policies
We are exposed to market risk from changes in interest rates affecting our
credit arrangements, including a variable-rate revolving credit facility and a
fixed-rate mortgage loan agreement, which may adversely affect our results of
operations and cash flows. We seek to minimize our interest rate risk through
our day-to-day operating and financing activities. We do not engage in
speculative or derivative financial or trading activities.
A hypothetical 100 basis point adverse change (increase) in interest rates
relating to our revolving credit facility would have decreased pre-tax income
for the six months ended July 31, 1999 and August 1, 1998 by approximately
$53,000 and $73,000, respectively.
Year 2000 Issues
State of Readiness
The Company began identifying its major systems and software vendors susceptible
to Year 2000 issues during its preparedness evaluation in fiscal 1996. During
fiscal 1997, a formal steering committee was assembled from throughout the
Company to ensure a smooth transition into the Year 2000. The Company has
separated its Year 2000 efforts into five phases ("the Year 2000 Plan"): (i)
awareness and identification of issues relating to the Year 2000; (ii) analysis
of the impact on and risk to the Company's software, hardware and the services
provided by the Company's vendors; (iii) performance of the work necessary to
change or upgrade programs and files including installation of software and/or
hardware; (iv) testing and certification of systems to assure compliance,
including disaster recovery testing; and (v) implementation of systems. Because
the Company uses a variety of internally-developed and third party software,
certain tasks of various phases of the Year 2000 Plan are being performed
simultaneously. The Company successfully completed the upgrade of its major
systems in the first quarter of fiscal 1999. The Company believes that it has
substantially completed all five phases of the Year 2000 Plan, its Year 2000
simulation and its disaster recovery testing, but the Company will continue to
monitor its compliance during the course of 1999.
Like other companies, the Company relies upon third parties for its operations
including, but not limited to, suppliers of merchandise, software, telephone
service, electric power, water and financial services. As part of this program,
the Company has a formal Year 2000 vendor compliance program in place. The
Company has identified and assigned various levels of risk to third party
vendors associated with the Company. The Company has received responses from all
the vendors identified as critical to its operations. Each has indicated that it
expects to be Year 2000 compliant in a timely manner. During the course of 1999,
the Company will continue its vendor compliance efforts focusing on the
remaining, less critical vendors in order of their assigned levels of risk.
Cost
The Company is primarily using internal resources to identify, test, upgrade and
replace its Year 2000-sensitive systems. The Company's major systems, including
its merchandise management system, its point-of-sale system, its inventory and
general ledger system and its payroll system, have been due for upgrades in
order to maintain vendor support. Therefore, the Company would be devoting the
efforts of its internal resources to some or all of these projects through the
normal course of business even if the Year 2000 issues had not existed. The
Company also continues to replace any non-compliant software and hardware as
necessary. During fiscal 1999, the cost of these incidental software and
hardware replacements is expected to be less than $50,000.
Risk and Contingency Planning
Management currently believes that the Company has substantially completed the
implementation of the Year 2000 Plan and will continue to monitor and test its
systems through the remainder of the year, but gives no assurance that
unforeseen difficulties which could alter the completion of the Year 2000 plan
will not occur while performing incidental hardware and software replacements
and Year 2000 simulation and disaster recovery tests. In addition, as part of
the worst case scenario, if the Year 2000 Plan is not successful in a timely
manner, the Company's third party vendors are not Year 2000 compliant in a
timely manner and/or if the Company's supply of merchandise or ability to
distribute its merchandise to its stores is adversely affected, the Year 2000
issues may have a material adverse impact on the results of operations,
financial condition and cash flows of the Company. Also, possible interruptions
in services such as electric power and telephone could occur in certain
geographic areas, thereby temporarily closing some of the Company's stores. In
addition, any general economic disruption caused by Year 2000 issues could
adversely affect customer demand.
The Company believes it has substantially mitigated its Year 2000 risk by having
substantially completed its Year 2000 Plan and disaster recovery tests. The
Company will continue to monitor its compliance during the course of 1999. The
Company intends to mitigate its risk of possible interruptions in service, such
as electric power and telephone, by carrying business interruption insurance in
its corporate offices, distribution center, and in its stores located in Puerto
Rico and the U.S. Virgin Islands. In addition, the Company believes such risk in
the Company's stores located in the continental United States is mitigated by
the diversity of its store locations. The Company plans to continue to
develop its contingency plans during the course of 1999.
Effect of New Accounting Pronouncements
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," which, as amended, is effective for the fiscal year ending
February 2, 2002. This new standard requires recognition of all derivatives,
including certain derivative instruments embedded in other contracts, as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
Private Securities Litigation Reform Act of 1995
All statements contained in this document as to future expectations and
financial results including, but not limited to, statements containing the words
"believes," "anticipates," "expects," and similar expressions, should be
considered 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 fiscal 1999 and beyond to differ
materially from those expressed in such forward-looking statements. These
factors include, but are not limited to, general economic conditions and
consumer demand; consumer preferences; weather patterns; competitive factors;
pricing and promotional activities of competitors; the impact of excess retail
capacity and the availability of desirable store locations on suitable terms;
whether or not the Company's merchandising strategy to offer alternative
categories of merchandise at alternative price points will continue to increase
sales and operating results or increase and attract new customers; whether or
not offering for sale new categories of merchandise including, but not limited
to, menswear, will increase sales and operating results; the availability,
selection and purchasing of attractive merchandise on favorable terms; credit
availability, including adequate levels of credit support provided to certain of
the Company's vendors by factors and insurance companies; import risks,
including potential disruptions and duties, tariffs and quotas on imported
merchandise; regulatory matters, including legislation affecting wage rates;
whether or not the Company and its major suppliers will ready their computer
systems to be "Year 2000 Compliant" in a timely manner; and other factors
described in the Company's filings with the Securities and Exchange Commission
from time to time. The Company does not undertake to publicly update or revise
its forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See required information contained within Item 2 of this Form
10-Q.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company received proxies representing 94.14% of the
10,444,131 shares outstanding and eligible to vote at the Annual Meeting of the
Company's Shareholders held on June 9, 1999. The following summarizes the votes
thereat:
<TABLE>
<S> <C> <C> <C> <C> <C>
Matter For Against Abstentions Non-Votes
1. Election of Directors:
Leonard M. Snyder 9,731,090 0 267,500 0
Larry I. Kelley 9,953,540 0 45,050 0
Warren Flick 9,940,340 0 58,250 0
Laurie M. Shahon 9,951,840 0 46,750 0
Malcolm L. Sherman 9,952,040 0 46,550 0
James M. Shoemaker, Jr. 9,740,340 0 258,250 0
Allan Tofias 9,934,390 0 64,200 0
2. Amendment of the 1991
Stock Option Plan 5,530,268 289,016 19,683 4,159,623
3. Amendment of the Director
Stock Option Plan 5,132,529 685,145 21,293 4,159,623
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
<TABLE>
<S> <C> <C>
10(a)* Amendment Number One to One Price Clothing Stores, Inc. 1991 Stock Option
Plan dated June 9, 1999.
10(b)* Amendment Number Two to One Price Clothing Stores, Inc. Director Stock
Option Plan dated June 9, 1999.
11 Computation of Per Share Earnings
15 Acknowledgement of Deloitte & Touche LLP, independent accountants
27 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K
</TABLE>
The Company was not required to file any report on Form 8-K
for the three-month period ended July 31, 1999.
--------------------------------
*Denotes a management contract or compensatory plan or agreement.
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> <C>
Date: September 10,1999 /s/ Larry I. Kelley
Larry I. Kelley
President and Chief Executive Officer
(principal executive officer)
Date: September 10, 1999 /s/ H. Dane Reynolds
H. Dane Reynolds
Senior Vice President and Chief Financial Officer
(principal financial officer and principal
accounting officer)
</TABLE>
Exhibit 10(a) - Amendment Number One to One Price Clothing Stores, Inc. 1991
Stock Option Plan Dated June 9, 1999
AMENDMENT NUMBER ONE TO
ONE PRICE CLOTHING STORES, INC.
1991 STOCK OPTION PLAN
This Amendment to the One Price Clothing Stores, Inc.("Company") 1991
Stock Option Plan ("Plan"), is adopted to be effective as of June 9, 1999.
WHEREAS, the Board of Directors of the Company adopted the Plan on
July 24, 1991 and the Plan was subsequently approved by the shareholders of the
Company and became effective as of July 24, 1991; and
WHEREAS, the Plan provided for an expiration date of July 23, 2001 and
reserved a total of 400,000 shares for inclusion in the Plan, as subsequently
adjusted for a three for two stock split on March 30, 1994; and,
WHEREAS, upon the recommendation of the Compensation Committee,
following review by an outside consultant, the Board on March 24, 1999,
unanimously approved an extension of the expiration date of the Plan to July 23,
2003, an increase of an additional 500,000 shares in the total number of shares
reserved for inclusion in the Plan, and reservation of up to 50,000 shares of
restricted stock for grant, out of the total shares reserved for grant, all such
changes to be effective as of June 9, 1999, subject to shareholder approval;
and,
WHEREAS, such changes were approved by the affirmative vote of the
shareholders at the Company's Annual Meeting, held on June 9, 1999;
NOW, THEREFORE, the Plan is hereby modified, effective as of June
9, 1999, as follows:
1. Section 21 of the Plan, entitled "DURATION OF THE PLAN" is hereby
amended to delete the date of July 31, 2001 and replace it with the date July
23, 2003.
2. Section 4 of the Plan, entitled "STOCK SUBJECT TO PLAN" is hereby
amended by deleting the second sentence of such section and replacing it with
the following:
In addition to the initial 400,000 shares reserved for
inclusion in the Plan, as subsequently adjusted for the three for two
stock split on March 30, 1994, an additional 500,000 shares are
reserved for grant under the Plan, any or all of which, at the Board's
or Committee's discretion, may be intended to qualify as incentive
stock options under Section 422A of the Internal Revenue Code of 1986,
as amended, (the "Code").
3. A new Section 4. A is hereby added to the Plan to read as follows:
4.A RESTRICTED STOCK
Up to 50,000 shares of the Common Stock authorized to be
issued under this Plan may, at the sole discretion of the
Board or the Committee, be issued as restricted stock, subject
to the provisions of this Section 4.A ("Restricted Stock") and
the other provisions of this Plan to the extent compatible
with this Section 4.A, rather than issued as Options.
No grant of Restricted Stock shall vest until the recipient of
the Restricted Stock (the "Grantee") has been continuously
employed by the Company for a period of three (3) years from
the date of grant of the Restricted Stock, except that all
such grants to a Grantee shall immediately vest in the event
the Grantee dies or becomes permanently or totally disabled
within the meaning of Section 22(e)(3) of the Code or in the
event that the Company dissolves or experiences a
change-in-control, including without limitation, a merger,
consolidation, stock sale or exchange, sale of substantially
all of the Company's assets or similar transaction in which
the Company is not the surviving entity. In the event of the
death of the Grantee or the dissolution or change-in-control
of the Company, all of that Grantee's Restricted Stock will be
deemed to have vested immediately prior to his or her death or
the dissolution or change-in-control.
All unvested Restricted Stock of a Grantee shall be
immediately and automatically forfeited to the Company upon
termination of a Grantee's employment for any reason except as
explicitly otherwise provided herein.
Except to the extent specifically provided by the Committee in
its sole discretion in writing to a Grantee, no Restricted
Stock may be sold, assigned, pledged or otherwise transferred,
voluntarily or involuntarily by the Grantee until the
Restricted Stock vests. Any attempt to transfer any Restricted
Stock in violation of the restrictions placed thereon shall
result in all such shares included in the attempted transfer
being immediately and automatically forfeited to the Company.
All shares of Restricted Stock forfeited to the Company for
any reason shall no longer be charged against the limitations
provided in Sections 4 and 4.A of this Plan and may again
become shares subject to the Plan issuable either under
Options or as Restricted Stock.
Restricted Stock awarded under this Section 4.A shall be
transferred in consideration of the services of the Grantee
without other payment therefor and shall be issued in the
Grantee's name. The Grantee will have all of the rights of
ownership of such shares, including without limitation the
right to vote such shares and receive distributions with
respect to such shares, subject to the terms, conditions,
restrictions and limitations established pursuant to this
Section 4.A. Certificates for Restricted Stock shall be issued
in the Grantee's name and shall be held in escrow by the
Company (along with stock powers executed by the Grantee)
until all conditions that may cause a forfeiture of such
shares have lapsed or such shares are forfeited. A certificate
or certificates representing a grant of Restricted Stock as to
which such conditions have lapsed shall be delivered to the
Grantee upon such lapse as soon as practicable after the
Grantee has satisfied any applicable tax withholding
requirements.
Restricted Stock shall be treated in the same manner as other
outstanding shares of Common Stock in the event of any share
dividend, split, recapitalization, merger, consolidation,
combination, exchange of shares or other similar corporate
change; provided that any conditions and restrictions
applicable to a Restricted Stock grant shall continue to apply
to the Restricted Stock and any other securities or
consideration received in connection with the foregoing except
to the extent that this Section 4.A provides otherwise.
4. In all other respects, the Plan is ratified and continued in
accordance with its terms and conditions.
Exhibit 10(b) - Amendment Number Two To One Price Clothing Stores, Inc.
Director Stock Option Plan dated June 9, 1999
AMENDMENT NUMBER TWO TO
ONE PRICE CLOTHING STORES, INC.
DIRECTOR STOCK OPTION PLAN
This Amendment Number Two to the One Price Clothing Stores,
Inc. ("Company") Director Stock Option Plan (as amended on March 14, 1996, the
"Plan," and before such amendment, the "Original Plan"), is adopted to be
effective as of June 9, 1999.
WHEREAS, the Board of Directors ("Board") of the Company adopted the
Original Plan as of February 9, 1995, and the Original Plan was subsequently
approved by the shareholders of the Company and became effective as of April 19,
1995; and
WHEREAS, the Original Plan was subsequently amended, with such
amendment being adopted as of March 14, 1996 ("Amendment Number One"); and
WHEREAS, upon the recommendation of the Compensation Committee, and
with the advice and review of an outside consultant, the Board on March 24,
1999, unanimously approved amendments to the Plan: (i) increasing the number of
shares to be issued by 125,000; (ii) providing for a pro-rata grant (calculated
monthly) to non-employee directors who are appointed during the year by the
Board to fill a vacancy; (iii) providing that options granted under the Plan
shall vest on the business day preceding the annual meeting following the date
of grant, provided the Director receiving the grant is still a member of the
Board at such time; (iv) commencing with the Annual Meeting of Shareholders on
June 9, 1999, changing the date of grant to the date of the Annual Meeting of
Shareholders; and, (v) providing for up to 75,000 shares of restricted stock out
of, and not in addition to, the total shares reserved under the Plan, for grant
to eligible Directors at the discretion of the Compensation Committee
(ACommittee@), in full or partial replacement of the grant of stock options
under the Plan, all such amendments to be effective as of June 9, 1999, subject
to shareholder approval; and,
WHEREAS, such changes were approved by the affirmative vote of the
shareholders at the Company's Annual Meeting, held on June 9, 1999;
NOW, THEREFORE, the Plan is hereby amended, effective as of June 9,
1999 as provided for below.
1. Section 3 of the Plan, entitled "STOCK SUBJECT TO PLAN", is hereby
amended by deleting the number "105,000" in the second sentence thereof and
replacing it with "230,000." In addition, the following sentence is inserted
after the second sentence of such Section 3:
Up to a total of 75,000 of these shares may be reserved and
used for the grant of "Restricted Stock" as defined in Section
4.A of this Plan rather than being subject to Options.
2. The first paragraph of Section 4 of the Plan, entitled "OPTIONS FOR
DIRECTORS WHO ARE NOT EMPLOYEES," is hereby amended by adding the words "and/or
Restricted Stock" after the words "The Grant of Options."
3. The second paragraph of Section 4 of the Plan is deleted in its
entirety and is hereby replaced with the following:
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); provided, however,
that the Committee, in its sole discretion, may decide to issue in lieu
of each such Option either Restricted Stock or a combination of Options
and Restricted Stock. For purposes of this Plan, commencing with the
Annual Meeting of Shareholders on June 9, 1999, the Grant Date shall be
the date of the Annual Meeting of Shareholders.
4. The third paragraph of Section 4 of the Plan is hereby amended by
deleting the first two sentences thereof and replacing them with the following
sentence:
Beginning with the June 9, 1999 grant, each new Option granted
shall not vest and become exercisable until the business day preceding
the annual meeting of shareholders following the date of grant, and
shall vest and become exercisable only if the Director receiving the
grant is still a member of the Board on such date, and shall continue
to be exercisable until and including the business day immediately
preceding the tenth anniversary of the Grant Date unless earlier
terminated as otherwise provided in this Plan.
5. Section 4 of the Plan is further amended by the addition of the
following new paragraph:
In the event a vacant Board seat is filled with the
appointment by the Board of a non-employee Director during the period
between the Annual Meetings of Shareholders, then such non-employee
Director shall be granted an Option for a pro-rata portion of 5,000
shares of Common Stock, based upon the estimated number of months
remaining until the next Annual Meeting of Shareholders, inclusive of
the month of such appointment, or, in substitution for such Options and
at the Committee's sole discretion, Restricted Stock or a combination
of Options and Restricted Stock.
6. A new Section 4.A is hereby added to the Plan to read as follows:
4.A RESTRICTED STOCK
Up to 75,000 shares of the Common Stock authorized to be
issued under this Plan may be issued as restricted stock subject to the
provisions of this Section 4.A ("Restricted Stock") either in addition
to or in lieu of Options as provided in Section 4 of this Plan.
The Committee, at its sole discretion, may impose conditions,
restrictions and limitations on the vesting and transfer of Restricted
Stock grants; provided, however, that in the event that a Restricted
Stock award is subject to risk of forfeiture based solely on whether
the recipient thereof (the "Grantee") continues to be a member of the
Board, the vesting period for such grant may not be less than the
greater of (i) the period from the date of grant until the business day
preceding the Company's next annual meeting of stockholders or (ii) six
months from the date of grant.
Notwithstanding the foregoing, all Restricted Stock grants to
a Grantee shall immediately vest in the event the Grantee dies or
becomes permanently or totally disabled within the meaning of Section
22(e)(3) of the Code or in the event that the Company dissolves or
experiences a change-in-control, including without limitation, a
merger, consolidation, stock sale or exchange, sale of substantially
all of the Company's assets or similar transaction in which the Company
is not the surviving entity. In the event of the death of the Grantee
or the dissolution or change-in-control of the Company, all of that
Grantee's Restricted Stock will be deemed to have vested immediately
prior to his or her death or the dissolution or change-in-control.
All unvested Restricted Stock of a Grantee shall be
immediately and automatically forfeited to the Company if the Grantee
ceases to be a Director for any reason except as explicitly otherwise
provided herein. Any attempt to transfer any Restricted Stock in
violation of the transfer restrictions placed thereon by the Committee
shall result in all such shares included in the attempted transfer
being immediately and automatically forfeited to the Company.
All shares of Restricted Stock forfeited to the Company for
any reason shall no longer be charged against the limitations provided
in Sections 3 and 4.A of this Plan and may again become shares subject
to the Plan issuable either under Options or as Restricted Stock.
Restricted Stock awarded under this Section 4.A shall be
transferred in consideration of the services of the Grantee without
other payment therefor and shall be issued in the Grantee's name. The
Grantee will have all of the rights of ownership of such shares,
including without limitation the right to vote such shares and receive
distributions with respect to such shares, subject to the terms,
conditions, restrictions and limitations established pursuant to this
Section 4.A. Certificates for Restricted Stock shall be issued in the
Grantee's name and shall be held in escrow by the Company (along with
stock powers executed by the Grantee) until all conditions that may
cause a forfeiture of such shares lapse or such shares are forfeited. A
certificate or certificates representing a grant of Restricted Stock as
to which such conditions have lapsed shall be delivered to the Grantee
upon such lapse as soon as practicable after the Grantee has satisfied
any applicable tax withholding requirements.
Restricted Stock shall be treated in the same manner as other
outstanding shares of Common Stock in the event of any share dividend,
split, recapitalization, merger, consolidation, combination, exchange
of shares or other similar corporate change; provided that any
conditions and restrictions applicable to a Restricted Stock grant
shall continue to apply to the Restricted Stock and any other
securities or consideration received in connection with the foregoing
except to the extent that this Section 4.A provides otherwise.
7. In all other respects, the Plan is ratified and continued in
accordance with its terms and conditions.
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
Exhibit 11 - Computation of Per Share Earnings
<TABLE>
<S> <C> <C> <C> <C>
Three-Month Period Ended Six-Month Period Ended
--------------------------------- ---------------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
--------------- ---------------- --------------- ----------------
BASIC INCOME PER COMMON SHARE
Weighted average number of common
shares outstanding 10,453,391 10,435,531 10,447,141 10,435,531
============== ============== ============== =============
Net income $ 4,397,000 $ 3,517,000 $ 7,496,000 $ 5,562,000
============= ============== ============= =============
Basic net income per common share $ 0.42 $ 0.34 $ 0.72 $ 0.53
============== ============== ============== =============
DILUTED INCOME PER COMMON SHARE
Weighted average number of common
shares outstanding 10,453,391 10,435,531 10,447,141 10,435,531
Net effect of dilutive stock options - based
on the treasury stock method using the
average market price 178,010 102,204 188,814 72,497
--------------- ---------------- --------------- -------------
TOTAL 10,631,401 10,537,735 10,635,955 10,508,028
============== ============== ============= =============
Net income $ 4,397,000 $ 3,517,000 $ 7,496,000 $ 5,562,000
============== ============= ============= ==============
Diluted net income per common share $ 0.41 $ 0.33 $ 0.70 $ 0.53
============= ============ ============ ==============
</TABLE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 15 - ACKNOWLEDGEMENT OF DELOITTE & TOUCHE LLP, INDEPENDENT ACCOUNTANTS
One Price Clothing Stores, Inc. and Subsidiaries
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
subsidiaries for the three-month and six-month periods ended July 31, 1999 and
August 1, 1998, as indicated in our report dated August 13, 1999; 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 July 31, 1999, 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 and 1991 Stock Option Plan, and the Director Stock Option
Plan, respectively, of One Price Clothing Stores, Inc.
We also are aware that the aforementioned 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
September 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> JUL-31-1999
<CASH> 2108
<SECURITIES> 0
<RECEIVABLES> 1454
<ALLOWANCES> 0
<INVENTORY> 46644
<CURRENT-ASSETS> 55452
<PP&E> 63922
<DEPRECIATION> 31020
<TOTAL-ASSETS> 93054
<CURRENT-LIABILITIES> 37398
<BONDS> 0
0
0
<COMMON> 105
<OTHER-SE> 44988
<TOTAL-LIABILITY-AND-EQUITY> 93054
<SALES> 185018
<TOTAL-REVENUES> 185018
<CGS> 117124
<TOTAL-COSTS> 117124
<OTHER-EXPENSES> 16260
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 962
<INCOME-PRETAX> 11640
<INCOME-TAX> 4144
<INCOME-CONTINUING> 7496
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7496
<EPS-BASIC> 0.72
<EPS-DILUTED> 0.70
</TABLE>
