================================================================================
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 May 2, 1998
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 No. 0-22102
CYGNE DESIGNS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2843286
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1372 BROADWAY, NEW YORK, NEW YORK 10018
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 354-6474
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 par value, 12,438,038 shares as of June 12, 1998.
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<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
--------------
INDEX TO FORM 10-Q
PART I FINANCIAL INFORMATION PAGE
NO.
----
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at May 2, 1998
and January 31, 1998 ......................................... 3
Condensed Consolidated Statements of Operations for
the three months ended May 2, 1998 and May 3, 1997 ........... 4
Condensed Consolidated Statement of Stockholders'
Equity for the three months ended May 2, 1998 ................ 5
Condensed Consolidated Statements of Cash Flows for
the three months ended May 2, 1998 and May 3, 1997 ........... 6
Notes to Condensed Consolidated Financial Statements ............ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .................................. 13
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
CYGNE DESIGNS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
May January
2, 1998 31, 1998
--------- ---------
(In thousands,
except share amounts)
ASSETS
Current assets:
Cash (includes restricted cash of $2,500
and $1,098 respectively) $ 11,079 $ 10,926
Trade accounts receivable, net 2,125 6,012
Inventory 3,544 4,012
Other receivables and prepaid expenses 2,824 1,979
--------- ---------
Total current assets 19,572 22,929
Fixed assets, net 3,949 3,972
Other assets 787 787
Goodwill, net 1,971 2,062
--------- ---------
Total assets $ 26,279 $ 29,750
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 1,223 $ 1,319
Accounts payable 2,056 3,348
Accrued expenses 5,901 6,636
Income taxes payable 6,048 6,068
--------- ---------
Total current liabilities 15,228 17,371
Stockholders' equity:
Preferred stock, $0.01 par value;
4,000,000 shares authorized: none
issued and outstanding
Common stock, $0.01 par value;
75,000,000 shares authorized:
12,438,038 shares issued and outstanding 124 124
Paid-in capital 120,918 120,918
Accumulated deficit (109,875) (108,547)
Foreign currency translation adjustment (116) (116)
--------- ---------
Total stockholders' equity 11,051 12,379
--------- ---------
Total liabilities and stockholders' equity $ 26,279 $ 29,750
========= =========
See accompanying notes.
-3-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
-----------------------
May May
2, 1998 3, 1997
-------- --------
(In thousands,
except per share amounts)
Net sales $ 6,245 $ 7,637
Cost of goods sold 6,483 8,296
-------- --------
Gross (loss) (238) (659)
Selling, general and administrative
expenses 1,016 3,876
Amortization of intangibles 91 91
-------- --------
(Loss) from operations (1,345) (4,626)
Interest (income) expense, net (50) (95)
-------- --------
(Loss) before income taxes (1,295) (4,531)
Provision for income taxes 33 51
-------- --------
Net (loss) $ (1,328) $ (4,582)
======== ========
Net (loss) per share - basic $ (0.11) $ (0.37)
======== ========
Weighted average number of common
shares outstanding 12,438 12,438
======== ========
Net (loss) per share assuming dilution $ (0.11) $ (0.37)
======== ========
Weighted average number of common shares
and dilutive securities 12,438 12,438
======== ========
See accompanying notes.
-4-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Foreign
--------------------- Currency
Number Paid-in Translation (Accumulated
of Shares Amount Capital Adjustment Deficit) Total
--------- ------ ------- ----------- ------------ -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 31, 1998 ............. 12,438 $124 $120,918 $(116) $(108,547) $ 12,379
Net (loss) for the three
months ended May 2, 1998 .............. -- -- -- -- (1,328) (1,328)
------ ---- -------- ----- --------- --------
Balance at May 2, 1998 .................. 12,438 $124 $120,918 $(116) $(109,875) $ 11,051
====== ==== ======== ===== ========= ========
</TABLE>
See accompanying notes.
-5-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
May May
2, 1998 3, 1997
-------- --------
(In thousands)
OPERATING ACTIVITIES
Net (loss) $ (1,328) $ (4,582)
Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization 123 265
Rent expense not currently payable -- 19
Amortization of intangibles 91 91
Changes in operating assets and liabilities:
Trade accounts receivable 3,887 1,624
Inventory 468 992
Other receivables and prepaid expenses (845) 1,852
Accounts payable (1,292) (2,758)
Accrued expenses (735) (822)
Income taxes payable (20) 51
-------- --------
Net cash provided by (used in) operating
activities 349 (3,268)
INVESTING ACTIVITIES
Purchase of fixed assets (100) (272)
Other assets -- (375)
-------- --------
Net cash used in investing activities (100) (647)
FINANCING ACTIVITIES
Repayments of short-term borrowings, net (96) (461)
-------- --------
Net cash used in financing activities (96) (461)
Effect of exchange rate changes on cash -- (22)
-------- --------
Net increase (decrease) in cash 153 (4,398)
Cash at beginning of period 10,926 22,246
-------- --------
Cash at end of period $ 11,079 $ 17,848
======== ========
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 53 $ --
Interest paid 61 68
See accompanying notes.
-6-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 2, 1998 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Cygne Designs, Inc. ("Cygne") and its subsidiaries (collectively the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 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. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
May 2, 1998 are not necessarily indicative of the results that may be expected
for the fiscal year ended January 30, 1999. 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 31, 1998. The balance sheet at
January 31, 1998 has been derived from the audited financial statements at that
date.
The Company's fiscal year ends on the Saturday nearest to January 31.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". SFAS No. 128 replaced the calculation of primary and
fully diluted income per share with basic and diluted income per share. All
(loss) per share amounts for all periods have been presented and, where
appropriate, restated to conform to SFAS No. 128 requirements. In computing
dilutive loss per share for the three months ended May 2, 1998 and May 3, 1997,
no effect has been given to outstanding options since the exercise of any of
these items would have an antidilutive effect on net loss per share.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", which establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. This new standard requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 requires that a
company (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. In the first quarter of
fiscal 1998 the Company adopted SFAS No. 130, which did not affect results of
operations or financial position.
Effective February 1, 1998, the Company adopted the Financial Accounting
Stardards Board's Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" (Statement
131). Statement 131 superseded FASB Statement No. 14, "Financial Reporting for
Segments of a Business Enterprise". Statement 131 establishes standards for the
way that public business enterprises report information about operating
statements in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. Statement 131
-7-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 2, 1998 (UNAUDITED)
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. The adoption of Statement 131 did not
affect results of operations or financial position, but did affect the
disclosure of segment information. See note 6.
2. INVENTORY
Inventory is stated at the lower of cost (determined on a first-in,
first-out basis) or market.
May 2, January 31,
1998 1998
------ -----------
(In thousands)
Raw materials and Work-in-Process ................ $2,950 $3,593
Finished goods ................................... 594 419
------ ------
$3,544 $4,012
====== ======
3. CREDIT FACILITIES
Since January 31, 1997 the Company has obtained letters of credit from
domestic banks secured by a cash deposit from the Company. At May 2, 1998 and
January 31, 1998 the Company had restricted cash at a bank of $2,500,000 and
$1,098,000, respectively, to secure letters of credit.
In June 1997 an Israeli bank made available to one of the Company's Israeli
subsidiaries a credit facility, which may be terminated by the bank at any time
as to future borrowings, with the following limitations: borrowings against
trade accounts receivable not to exceed $3,000,000; letters of credit not to
exceed $3,000,000; overdraft facility not to exceed $500,000; borrowings against
refundable Israeli VAT taxes not to exceed $450,000; and bank guarantee for
Israeli custom duties not to exceed $500,000. Borrowings under this facility
generally bear interest at 1.5% over the prime rate, except that borrowings
against trade accounts receivable bear interest at 1.25% over the LIBOR rate.
Borrowings under this facility are subject to certain borrowing base
limitations, are due on the earlier of demand or the maturity date specified by
the bank for each borrowing and are secured by a lien on substantially all of
the assets of the Israeli subsidiary. There can be no assurance that the bank
will continue to make this facility available. At May 2, 1998, outstanding loans
under this facility were $1,223,000 and letters of credit aggregating $2,143,000
had been issued.
4. LITIGATION
The Company is involved in various legal proceedings that are incidental to
the conduct of its business, none of which the Company believes could reasonably
be expected to have a material adverse effect on the Company's financial
condition or results of operations. See Note 5 for information regarding tax
audits.
-8-
<PAGE>
CYGNE DESIGNS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 2, 1998 (UNAUDITED)
5. INCOME TAX AUDITS
The U.S. Internal Revenue Service (the "IRS") is conducting an audit of the
U.S. Federal income tax returns filed by GJM (US) Inc. for its taxable years
ending December 31, 1990 through October 7, 1994 (the date GJM (US) Inc. was
acquired by the Company). To date, the IRS has informally proposed a Federal
income tax deficiency against GJM (US) Inc. of approximately $16 million
(including some penalties but not interest). The outcome of the audit of GJM
(US) Inc. cannot be predicted at this time. Although the Company is disputing
the proposed adjustment and believes that it has established appropriate
accounting reserves with respect to this matter, an adverse decision in this
matter could have a material adverse impact on the Company and its financial
condition.
The Company is subject to other ongoing tax audits in several
jurisdictions. Although there can be no assurances, the Company believes any
adjustments that may arise as a result of these other audits will not have a
material adverse effect on the Company's financial position.
6. GEOGRAPHIC SEGMENT INFORMATION
The Company operates primarily in one industry segment which includes the
development, manufacturing and sale of women's apparel.
Net sales to unaffiliated customers and identifiable assets classified by
geographic area, which were determined by where sales originated and where
identifiable assets were held, were as follows:
Total Total Intersegment
U.S. Foreign Eliminations Total
----- ------- ------------ -----
(In thousands)
FOR THE THREE MONTHS ENDED
MAY 2, 1998
Net sales .................... $ 1,575 $ 4,842 $ (172) $ 6,245
Operating (loss) ............. (708) (637) -- (1,345)
Identifiable assets .......... 18,671 11,561 (3,953) 26,279
FOR THE THREE MONTHS ENDED
MAY 3, 1997
Net sales .................... $ 4,374 $ 3,856 $ (593) $ 7,637
Operating (loss) ............. (3,893) (733) -- (4,626)
Identifiable assets .......... 28,175 14,458 (4,066) 38,567
- ----------
(a) Net sales in the U.S. are primarily from imported goods.
(b) The intangible assets recognized in connection with acquisitions are
included in identifiable assets in the U.S.
(c) Total foreign amounts principally represent the Company's Asian operations,
except the operating loss in the first quarter of 1998 relates primarily to
the Company's Central American operations.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Unless otherwise noted, all references to a year are to the fiscal year of
the Company commencing in that calendar year and ending on the Saturday nearest
January 31 of the following year.
Statements in this report concerning the Company's business outlook or
future economic performance; anticipated results of operations, revenues,
expenses or other financial items; private label and brand name products, and
plans and objectives related thereto; and statements concerning assumptions made
or expectations as to any future events, conditions, performance or other
matters, are "forward-looking statements" as that term is defined under the
Federal Securities Laws. Forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, a decline in demand for merchandise
offered by the Company or changes and delays in customer delivery plans and
schedules, significant regulatory changes, including increases in the rate of
import duties or adverse changes in export quotas, dependence on a key customer,
risk of operations and suppliers in foreign countries, competition, general
economic conditions, as well as other risks detailed in the Company's filings
with the Securities and Exchange Commission, including its Annual Report on Form
10-K for the year ended January 31, 1998. The Company assumes no obligation to
update or revise any such forward-looking statements.
GENERAL
During the first quarter of 1998 and of 1997 The Limited, Inc. (consisting
primarily of The Limited Stores and Lerner) accounted for 70% and 71%,
respectively, of Cygne's net sales. Although Cygne has a long established
relationship with The Limited, Inc., its key customer, Cygne does not have
long-term contracts with any of its customers, including The Limited, Inc. The
Company's future success will be dependent upon its ability to attract new
customers and to maintain its relationship with The Limited, Inc. There can be
no assurance that The Limited, Inc. will continue to purchase merchandise from
the Company at the same rate or at all in the future, or that the Company will
be able to attract new customers. In addition, as a result of the Company's
dependence on The Limited, Inc., The Limited, Inc. has the ability to exert
significant control over the Company's business decisions, including prices.
Furthermore, The Limited, Inc. procures directly a substantial portion of its
apparel product requirements through its sourcing subsidiary, and such
subsidiary will continue to be a major competitor of the Company with respect to
the Company's business with The Limited, Inc. In addition, the apparel divisions
of The Limited, Inc. have formed direct sourcing departments. The Company
expects sales to The Limited, Inc. to decrease in 1998 from 1997 sales levels.
In December 1997, a limited partnership controlled by The Limited, Inc.
sold its 734,319 shares of Cygne stock to Mr. Manuel, the Company's Chairman and
Chief Executive Officer. Upon the closing of the transaction, The Limited, Inc.
did not own any shares of Cygne stock.
In June 1997 the Company announced that the license agreements entered into
during the summer of 1996 with the Kenzo Group for the manufacture and
distribution in the United States, Canada and Mexico of the Kenzo Studio and
Kenzo Jeans ready-to-wear apparel lines had been terminated by mutual agreement.
In connection with the termination the Kenzo Group returned the $400,000 in
prepaid minimum royalty payments made on the signing of the license agreements
and paid Cygne for certain raw materials related to the manufacture of Kenzo
products.
-10-
<PAGE>
The Company anticipates that it will have a net loss for fiscal 1998
(ending January 30, 1999). The extent of the net loss will depend, among other
things, on the amount of sales to The Limited, Inc. The Company is continuing to
review its business operations and expects to incur additional costs in the
future associated with the further restructuring or downsizing of its
operations.
The apparel industry is highly competitive and historically has been
subject to substantial cyclical variation, with purchases of apparel and related
goods tending to decline during recessionary periods when disposable income is
low. This could have a material adverse effect on the Company's business. The
Company believes that the weakness in retail sales of women's apparel adversely
affected its operating results. The effect of these factors has been increased
competition and reduced operating margins for both the retailers and their
suppliers. Retailers, including customers of the Company, are increasingly
designing and sourcing private label products themselves rather than utilizing
outside vendors like the Company.
RESULTS OF OPERATIONS
The following table is derived from the Company's Condensed Consolidated
Statements of Operations for the three months ended May 2, 1998 and May 3, 1997
and expresses for the periods certain data as a percentage of net sales.
Three Months Ended
--------------------
May 2, May 3,
1998 1997
----- -----
Net sales ........................................ 100.0% 100.0%
===== =====
Gross (loss) ..................................... (3.8) (8.6)
Selling, general and administrative expenses ..... 16.3 50.8
Amortization of intangibles ...................... 1.5 1.2
----- -----
(Loss) from operations ........................... (21.6) (60.6)
Interest (income) expense, net ................... (0.8) (1.2)
----- -----
(Loss) before income taxes ....................... (20.8) (59.4)
Provision for income taxes ....................... 0.5 0.6
----- -----
Net (loss) ....................................... (21.3) (60.0)
===== =====
Net Sales
Net sales for the first quarter of 1998 decreased by 18.2% to $6.2 million
from $7.6 million for the comparable period in 1997. The $1.4 million decrease
in net sales for the first quarter of 1998 was primarily attributable to a
decrease in sales to divisions of The Limited, Inc. of $1.0 million.
-11-
<PAGE>
Gross (Loss)
The first quarter of 1998 had gross loss of $0.2 million as compared to a
gross loss of $0.6 million in the comparable period of 1997, for a reduction in
gross loss of $0.4 million. The gross loss in the first quarter of 1998 was
primarily attributable to lower-than-anticipated sales volume which resulted in
the under-absorption of manufacturing overhead. The gross loss in the first
quarter of 1997 was primarily attributable to a $0.5 million markdown on fabric
purchased for Kenzo Jeans and Kenzo Studio brand name products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first quarter of 1998
were $1.0 million, a decrease of $2.9 million or 74% from the comparable prior
period in 1997. The decrease was primarily attributable to termination of the
Kenzo Jeans and Kenzo Studio brand name business which had $1.9 million in
start-up expenses in the comparable period in 1997 and a decrease in other
expenses of $1.0 million as a result of the downsizing of the Company.
Interest
Net interest income for the first quarter of 1998 was $50,000 as compared
to net interest income of $95,000 in the comparable period in 1997. The decrease
was primarily attributable to a reduction in the Company's cash balance from the
comparable period in 1997.
Provision for Income Taxes
The provision for income taxes primarily represents provisions for minimum
state and federal income taxes. At January 31, 1998 the Company had net
operating loss carryforwards of approximately $90 million, which may be used to
offset future taxable income.
LIQUIDITY AND CAPITAL RESOURCES
Prior to 1997 the Company had historically financed its operations
primarily through financing from lending institutions, financing from customers
and third party trade credit facilities, cash from operations and the issuance
of debt and equity securities.
Since February 1, 1997, the Company has not had a domestic credit facility.
Since that date, Cygne has obtained letters of credit issued from domestic banks
secured by a cash deposit from the Company. At May 2, 1998 the Company had
restricted cash at a bank of $2.5 million as collateral for letters of credit.
In June 1997 an Israeli bank made available to one of the Company's Israeli
subsidiaries a credit facility, which may be terminated by the bank at any time
as to future borrowings, with the following limitations: borrowings against
trade accounts receivable not to exceed $3,000,000; letters of credit not to
exceed $3,000,000; overdraft facility not to exceed $500,000; borrowings against
refundable Israeli VAT taxes not to exceed $450,000; and bank guarantee for
Israeli custom duties not to exceed $500,000. Borrowings under this facility
generally bear interest at 1.5% over the prime rate, except that borrowings
against trade accounts receivable bear interest at 1.25% over the LIBOR rate.
Borrowings under this facility are subject to certain borrowing base
limitations, are due on the earlier of demand or the maturity date specified by
the bank for each borrowing, and are secured by a lien on substantially all of
the assets of the Israeli subsidiary.
-12-
<PAGE>
There can be no assurance that the bank will continue to make this facility
available. At May 2, 1998, outstanding loans under this facility were $1,223,000
and letters of credit aggregating $2,143,000 had been issued.
Net cash provided by operating activities for the first quarter of 1998 was
$0.4 million compared to net cash used in operating activities of $3.3 million
in the comparable prior period of 1997.
Prior to the sale of the Company's Ann Taylor sourcing business in
September 1996 (the "Ann Taylor Disposition") the Company experienced liquidity
pressures primarily as a result of the negative cash flow caused by the
Company's operating losses. The Company believes that the remaining proceeds
from the Ann Taylor Disposition have alleviated on a near term basis the
liquidity pressures faced by the Company. However, the Company continues to have
losses from operations and no assurances can be given that the Company will not
experience liquidity pressures again in the future. The Company is continuing to
review its business operations and expects to continue to incur additional costs
in the future associated with the restructuring or downsizing of its operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27. Financial Data Schedule (For SEC use only)
b. Reports on Form 8-K
None.
-13-
<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.
CYGNE DESIGNS, INC.
(Registrant)
June 15, 1998 By: /s/ BERNARD M. MANUEL
----------------------------------
Bernard M. Manuel, Chairman of the
Board and Chief Executive Officer
June 15, 1998 By: /s/ ROY E. GREEN
----------------------------------
Roy E. Green, Senior Vice President,
Chief Financial Officer and Treasurer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's Condensed Consolidated Balance Sheets and Condensed Consolidated
Statements of Operations and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 11,079
<SECURITIES> 0
<RECEIVABLES> 2,125
<ALLOWANCES> 0
<INVENTORY> 3,544
<CURRENT-ASSETS> 19,572
<PP&E> 5,288
<DEPRECIATION> 1,339
<TOTAL-ASSETS> 26,279
<CURRENT-LIABILITIES> 15,228
<BONDS> 0
0
0
<COMMON> 124
<OTHER-SE> 10,927
<TOTAL-LIABILITY-AND-EQUITY> 26,279
<SALES> 6,245
<TOTAL-REVENUES> 6,245
<CGS> 6,483
<TOTAL-COSTS> 6,483
<OTHER-EXPENSES> 1,107
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (50)
<INCOME-PRETAX> (1,295)
<INCOME-TAX> 33
<INCOME-CONTINUING> (1,328)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,328)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
