<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 3, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 33-69532
BRYLANE, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 35-1895382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BRYLANE CAPITAL CORP.
(Exact name of co-registrant as specified in its charter)
DELAWARE 95-4439747
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
463 SEVENTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices)
Registrant's telephone number, including area code:
(212) 613-9500
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: Not
Applicable.
================================================================================
<PAGE>
BRYLANE, L.P.
BRYLANE CAPITAL CORP.
FORM 10-Q
For the Quarterly Period Ended
May 3, 1997
<TABLE>
<CAPTION>
INDEX Page
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
a) Report of Independent Accountants 3
b) Consolidated Balance Sheets
February 1, 1997 and May 3, 1997 (unaudited) 4
c) Consolidated Statements of Income (unaudited)
Thirteen weeks ended May 4, 1996 and May 3, 1997 5
d) Consolidated Statements of Cash Flows (unaudited)
Thirteen weeks ended May 4, 1996 and May 3, 1997 6
e) Consolidated Statements of Partnership Equity
February 3, 1996, February 1, 1997 and thirteen weeks 7
ended May 3, 1997 (unaudited)
f) Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 18
Signature 19
</TABLE>
Page 2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Representatives of
Brylane, L.P.
We have reviewed the accompanying consolidated balance sheet of Brylane, L.P. as
of May 3, 1997 and the related consolidated statement of income and cash flows
for the thirteen weeks then ended. 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 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 the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
June 6, 1997
Page 3
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BRYLANE, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
February 1, May 3,
1997 1997
--------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 3,285 $ 34,978
Accounts receivable, deferred billing (net) ............ 22,750 10,722
Accounts receivable, other ............................. 32,107 38,386
Inventories ............................................ 168,821 159,264
Paper inventory ........................................ 9,790 8,846
Catalog costs .......................................... 31,222 26,382
Other .................................................. 6,252 5,493
--------- ---------
TOTAL CURRENT ASSETS 274,227 284,071
Property and equipment, net............................... 75,970 75,858
Organization and deferred financing costs................. 11,114 4,358
Intangibles and other assets.............................. 343,243 340,534
Deferred offering costs................................... 680 --
--------- ---------
TOTAL ASSETS $ 705,234 $ 704,821
========= =========
LIABILITIES AND EQUITY
----------------------
CURRENT LIABILITIES:
Accounts payable ....................................... $ 93,928 $ 106,998
Accrued interest ....................................... 8,612 2,832
Accrued expenses ....................................... 45,356 46,225
Reserve for returns .................................... 18,603 23,660
Current portion of long-term debt ...................... 26,000 14,975
--------- ---------
TOTAL CURRENT LIABILITIES ...................... 192,499 194,690
Long-term debt ........................................... 401,362 301,074
Other long-term liabilities .............................. 6,010 6,846
--------- ---------
TOTAL LIABILITIES 599,871 502,610
Convertible redeemable preferred stock of Brylane Inc..... 1,500 1,500
Partnership equity:
General partner, 2,562,500 units ....................... 25,625 25,625
Limited partners, 12,908,945 units at February 1, 1997
and May 3, 1997 .................................... 159,855 247,180
Reduction for predecessor cost - carryover basis ....... (152,067) (152,067)
Loans to management investors .......................... (2,490) (2,490)
Accumulated earnings ................................... 72,940 82,463
--------- ---------
Total partnership equity .................. 103,863 200,711
--------- ---------
TOTAL LIABILITIES AND EQUITY $ 705,234 $ 704,821
========= =========
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
Page 4
<PAGE>
BRYLANE, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------
May 4, May 3,
1996 1997
---------- ----------
<S> <C> <C>
Net sales .......................................... $150,680 $328,801
Cost of goods sold ........................... 72,662 169,047
-------- --------
Gross margin ....................................... 78,018 159,754
Operating expenses:
Catalog and advertising ...................... 47,518 83,339
Fulfillment .................................. 8,274 28,070
Support services ............................. 10,544 22,010
Intangibles and organization cost amortization 1,409 2,732
-------- --------
Total operating expenses ........................... 67,745 136,151
-------- --------
Operating income ................................... 10,273 23,603
Interest expense, net .............................. 5,556 7,528
-------- --------
Income before income taxes
and extraordinary charge ..................... 4,717 16,075
Provision for income taxes ......................... 29 28
-------- --------
Income before extraordinary charge ................. 4,688 16,047
Extraordinary charge related to early
retirement of debt ........................... -- 6,524
-------- --------
Net income ......................................... $ 4,688 $ 9,523
======== ========
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
Page 5
<PAGE>
BRYLANE, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------
May 4, May 3,
1996 1997
-------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ......................................................... $ 4,688 $ 9,523
Impact of other operating activities on cash flows:
Depreciation ................................................... 1,072 2,526
Non-recurring inventory charge ................................. -- 2,486
Extraordinary charge related to early retirement of debt ....... -- 6,524
Non-cash compensation expense .................................. -- 175
Amortization:
Intangibles and organization costs ........................ 1,409 2,732
Deferred financing costs (included in interest expense) ... 367 420
Discount on notes (included in interest expense) .......... 24 24
Changes in operating assets and liabilities:
Accounts receivable ....................................... 542 5,749
Inventories ............................................... (6,733) 9,557
Catalog costs and paper inventory ......................... 2,457 5,784
Accounts payable and accrued expenses ..................... 11,847 14,276
Accrued interest .......................................... (2,929) (5,780)
Other assets and liabilities .............................. 2,607 5,330
--------- ---------
Net cash provided by operating activities ................................ 15,351 59,326
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures ............................................... (521) (4,047)
--------- ---------
Net cash used in investing activities .................................... (521) (4,047)
--------- ---------
FINANCING ACTIVITIES:
Payments on 1996 and 1997 bank credit facility ..................... (3,374) (293,000)
Proceeds from issuance of 1997 Bank Credit Facility ................ -- 181,663
Proceeds from initial public offering of Brylane Inc ............... -- 96,000
Offering fees and expenses related to Brylane Inc .................. -- (8,046)
Debt issuance fees and expenses .................................... -- (203)
Tax distributions to partners ...................................... (1,246) --
Proceeds from the sale, net of repurchase, of partnership interests,
net of management notes ........................................ 77 --
--------- ---------
Net cash used in financing activities .................................... (4,543) (23,586)
--------- ---------
Cash and cash equivalents, at beginning of year .......................... 7,469 3,285
--------- ---------
Cash and cash equivalents, at end of period .............................. $ 17,756 $ 34,978
========= =========
Supplemental disclosure of cash flow information:
Interest paid ...................................................... $ 8,129 $ 14,070
========= =========
Income taxes paid during each of the periods presented were not material.
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
Page 6
<PAGE>
BRYLANE, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
General Partner Limited Partners
------------------------- --------------------------
Units Amount Units Amount
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Balance, February 3, 1996 .............. 2,562,500 $25,625 10,340,000 $105,204
Net income .......................... -- -- -- --
Sale of units ....................... -- -- 2,573,945 51,441
Repurchase of units ................. -- -- (5,000) (60)
Exchange of stock options ........... -- -- -- 3,270
Tax distributions payable to partners -- -- -- --
--------- ------- ---------- --------
Balance, February 1, 1997 .............. 2,562,500 25,625 12,908,945 159,855
Net income .......................... -- -- -- --
Proceeds from initial public offering -- -- -- 96,000
Initial public offering expenses .... -- -- -- (8,850)
Exchange of stock options ........... -- -- -- 175
--------- ------- ---------- --------
Balance May 3, 1997 (unaudited) ........ 2,562,500 $25,625 12,908,945 $247,180
========= ======= ========== ========
<CAPTION>
Reduction for
Predecessor
Cost - Loans to
Carryover Management Accumulated
Basis Investors Earnings Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, February 3, 1996 ............. $(152,067) $(2,515) $50,940 $ 27,187
Net income .......................... -- -- 26,952 26,952
Sale of units ....................... -- 25 -- 51,466
Repurchase of units ................. -- -- -- (60)
Exchange of stock options ........... -- -- -- 3,270
Tax distributions payable to partners -- -- (4,952) (4,952)
--------- ------- ------- --------
Balance, February 1, 1997 .............. (152,067) (2,490) 72,940 103,863
Net income .......................... -- -- 9,523 9,523
Proceeds from initial public offering -- -- -- 96,000
Initial public offering expenses .... -- -- -- (8,850)
Exchange of stock options ........... -- -- -- 175
--------- ------- ------- --------
Balance May 3, 1997 (unaudited) ........ $(152,067) $(2,490) $82,463 $200,711
========= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
Page 7
<PAGE>
BRYLANE, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS:
Brylane, L.P., a Delaware limited partnership ("Brylane" or the
"Partnership" or the "Company") is a leading catalog retailer of value-priced
apparel, with a focused portfolio of catalogs that includes Lane Bryant,
Roaman's, Jessica London and KingSize serving the special size market, and
Lerner, Chadwick's of Boston, Sue Brett and Bridgewater, serving the women's
regular-size apparel market. Brylane also markets certain of its catalogs under
the "Sears" name to customers of Sears, Roebuck and Co. under an exclusive
licensing arrangement with Sears Shop at Home Services, Inc.
Brylane's merchandising strategy is to provide value-priced, private label
and branded apparel with a consistent quality and fit, to concentrate on apparel
with limited fashion risk, and to offer a broader selection of sizes, styles and
colors than can be found at most retail stores and in other competing catalogs.
Each of Brylane's catalogs offers its customers basic, traditional and classic
apparel.
(2) ORGANIZATION AND BASIS OF FINANCIAL STATEMENT PRESENTATION:
On February 26, 1997, in connection with the initial public offering
of Brylane Inc. ("Initial Public Offering"), Brylane, L.P. became a wholly-owned
subsidiary of Brylane Inc. pursuant to the First Amended and Restated
Incorporation and Exchange Agreement (the "Exchange Agreement"), whereby
certain affiliates of Freeman Spogli & Co. ("FS&Co."), The Limited, Inc. ("The
Limited"), M&P Distributing Co., WearGuard Corporation ("WearGuard"), Leeway &
Co., and NYNEX exchanged their shares of common stock of VP Holding Corporation
or ownership interests in the Partnership, except for the TJX noteholder ("TJX
Noteholder"), for 14,926,778 shares of $.01 par value common stock ("Common
Stock") of Brylane Inc. (the "Exchange Transaction"). Additionally, pursuant to
their respective stock subscription agreements with VP Holding Corporation,
members of management and others exchanged their shares of common stock of VP
Holding Corporation for an aggregate of 544,667 shares of Common Stock of
Brylane Inc. In connection with the Exchange Transaction, Brylane, L.P. retained
all of its assets, operations and liabilities.
On February 26, 1997, Brylane Inc. offered 4,000,000 shares of Common
Stock to the public through its Initial Public Offering. Brylane Inc. is a
registrant pursuant to Section 12 of the Exchange Act and is thereby required to
provide continuous financial reporting to its stockholders. As discussed above,
Brylane Inc. does not maintain any separate assets, operations or liabilities,
except for assets and liabilities related to the income taxes of Brylane Inc.,
as all activities are conducted within Brylane, L.P.
The consolidated financial statements include the accounts of Brylane
and its wholly-owned subsidiaries and partnerships, including Brylane Capital
Corp., B.L. Management Services, Inc., B.L. Catalog Distribution, Inc., B.L.
Management Services Partnership, B.L. Catalog Distribution Partnership, B.N.Y.
Service Corp., K.S. Management Services, Inc., C.O.B. Management Services, Inc.
and Chadwick's Tradename Sub, Inc. These entities are collectively referred to
as Brylane or the Partnership. Accounts between the consolidated entities have
been eliminated. Each of the wholly-owned subsidiaries and partnerships has
guaranteed Brylane's 10% Senior Subordinated Notes due 2003 (the "Notes").
Separate financial statements of these subsidiary guarantors have not been
included as the subsidiaries guarantee the Notes on a full, unconditional, and
joint and several basis. Management believes that the aggregate assets,
liabilities, earnings, and equity of the subsidiary guarantors are currently,
both on an individual and a combined basis, inconsequential to Brylane on a
consolidated basis, and therefore, that information provided in separate
financial statements of the subsidiary guarantors is not deemed material to the
readers of the financial statements.
Page 8
<PAGE>
BRYLANE, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements included in this Form 10-Q
related to Brylane, L.P. and Brylane Capital Corp. differ in several respects
from the consolidated financial statements contained in the Form 10-Q of Brylane
Inc. (Commission File No. 33-86154). In particular, the consolidated balance
sheet of Brylane Inc. at May 3, 1997 includes deferred income taxes of $17.6
million as part of its total assets and income taxes payable of approximately
$4.1 million as part of its current liabilities. In addition, the consolidated
statement of income of Brylane Inc. for the thirteen weeks ended May 3, 1997
includes a provision for income taxes of approximately $6.5 million and an
extraordinary charge related to the early retirement of debt, net of tax, of
approximately $4.1 million, resulting in net income of approximately $5.5
million.
(3) ACQUISITION:
In December 1996, Brylane completed the acquisition of certain assets
of the Chadwick's of Boston catalog division ("Chadwick's") of Chadwick's, Inc.,
a wholly-owned subsidiary of The TJX Companies ("TJX") (the "Chadwick's
Acquisition"). Chadwick's is a catalog business devoted to selling off-price
women's career, casual and social apparel. The Chadwick's Acquisition included
the purchase of inventory, property, plant and equipment, customer lists,
trademarks, goodwill and the assumption of certain liabilities relating to the
business by Brylane. In addition, the parties entered into a services agreement,
as well as an inventory purchase agreement pursuant to which TJX has committed
to purchase certain amounts of Chadwick's excess inventory through January 2000.
Brylane paid to TJX $222.7 million (subject to certain post-closing
adjustments) and issued to TJX a $20.0 million Convertible Redeemable Note due
2006. In order to fund a portion of the cash paid in connection with the
Chadwick's Acquisition and to repay its existing indebtedness under its 1993
bank credit facility, the Partnership entered into the 1996 Bank Credit
Facility. In addition, the Partnership received an aggregate of $51.3 million
in new equity from certain affiliates of FS&Co., Leeway & Co., NYNEX and
WearGuard.
On May 16, 1997, Brylane received a preliminary cash purchase price
adjustment of $28.8 million from TJX. The allocation of the purchase price is
not yet final.
(4) LONG-TERM DEBT:
In connection with the Chadwick's Acquisition, the Partnership entered
into a Credit Agreement dated December 9, 1996 among Brylane, Morgan Guaranty
Trust Company of New York ("Morgan Guaranty"), as administrative agent, Merrill
Lynch Capital Corporation ("Merrill Lynch"), as documentation agent, and the
other lenders party thereto, and guaranteed by each of the Company's
subsidiaries (the "1996 Bank Credit Facility"), which consisted of (i) a $213.0
million five-year term loan, (ii) a $70.0 million six-year and three-month term
loan, and (iii) a $125.0 million five-year revolving credit facility with a
$75.0 million sublimit for letters of credit. The proceeds of the term loans of
the 1996 Bank Credit Facility were used to fund a portion of the cash paid upon
the closing of the Chadwick's Acquisition (including related fees and expenses)
as well as to repay Brylane's then existing indebtedness under its 1993 bank
credit facility. In connection with Brylane Inc.'s Initial Public Offering on
February 26, 1997, and the use of the net proceeds received therefrom and
contributed by Brylane Inc. to the Partnership, the Company repaid $89.3 million
in indebtedness under its 1996 Bank Credit Facility. In addition, the Company
made $12.0 million of prepayments on the 1996 Bank Credit Facility during the
thirteen weeks ended May 3, 1997.
On April 30, 1997, the Partnership entered into a credit agreement
among Brylane, Morgan Guaranty, as administrative agent, Merrill Lynch, as
documentation agent, and the lenders party thereto, and guaranteed by each of
the Company's subsidiaries (the "1997 Bank Credit Facility") which consists of
(i) a $111.7 million four-year nine-month term loan (the "Tranche A Term Loan"),
(ii) a $70.0 million five-year and ten-month term loan (the "Tranche B Term
Loan", and collectively with the Tranche A Term Loan, the "Term Loans"), and
(iii) a $125.0 million four-year nine-month revolving credit facility (the
"Revolving Credit Facility") with a $75.0 million sublimit for letters of
credit. The proceeds of the Term Loans of the 1997 Bank Credit Facility were
used to repay Brylane's existing indebtedness under the 1996 Bank Credit
Facility.
Page 9
<PAGE>
BRYLANE, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Revolving Credit Facility can be used for letters of credit and general
corporate purposes, including working capital needs. The Term Loans require
scheduled quarterly principal payments over their terms. In addition, Brylane is
obligated to make certain mandatory prepayments of the Term Loans and the
Revolving Credit Facility under certain circumstances. Borrowings under the Term
Loans and the Revolving Credit Facility bear interest at one of two rates
selected by the Partnership (i) a margin over the higher of (A) Morgan
Guaranty's prime rate or (B) the federal funds rate plus 0.5% or (ii) a margin
over LIBOR (as defined) for specified interest periods. The margin for each rate
may vary based on the ratio of the Partnership's net debt to operating cash flow
ratio. The Tranche A Term Loan currently bears interest at LIBOR plus 1.125% and
the Tranche B Term Loan initially bears interest at LIBOR plus 1.625%. (Prior to
the refinancing, the term loans under the 1996 Bank Credit Facility bore
interest at LIBOR plus 2.0% and LIBOR plus 2.5%, respectively). The Term Loans
begin amortizing on August 2, 1997, with aggregate scheduled principal payments
of $9.9 million during the remainder of fiscal 1997. As a result of this
transaction, the Company recorded an extraordinary charge for the fees
associated with the 1996 Bank Credit Facility in its consolidated statement of
income for the thirteen weeks ended May 3, 1997.
The Company made $10.0 million of prepayments on the Tranche A Term
Loan of the 1997 Bank Credit Facility during the thirteen weeks ended May 3,
1997. As of May 3, 1997, Brylane had no borrowings under the Revolving Credit
Facility and, after giving effect to the issuance of letters of credit for $39.5
million which the Company intends to pay through funds generated from
operations, had additional capacity under the Revolving Credit Facility of
approximately $85.5 million.
Subsequent to May 3, 1997, the Company prepaid an additional $50.0
million on the Tranche A Term Loan of the 1997 Bank Credit Facility. Amounts
used by the Company to make such prepayments included the $28.8 million
preliminary cash purchase price adjustment received by the Company from TJX on
May 16, 1997 (See Note (3) of the Notes to the Unaudited Consolidated Financial
Statements) and the remainder came from available funds. As a result of these
prepayments, the remaining balance of the Tranche A Term Loan was reduced to
$51.7 million and the scheduled principal payments for the remainder of fiscal
1997 have been reduced to $5.4 million.
(5) RECLASSIFICATIONS:
Certain reclassifications have been made to the consolidated
statements of cash flows for the thirteen weeks ended May 3, 1997 to conform
with the financial statement presentation adopted for the fiscal year ended
February 1, 1997. Such reclassifications had no effect on previously reported
net income.
(6) UNAUDITED INTERIM FINANCIAL STATEMENTS:
The financial statements as of and for the thirteen weeks ended May 4,
1996 and May 3, 1997 are unaudited and are presented pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, the
financial statements should be read in conjunction with the financial statement
disclosures contained in Brylane, L.P.'s Form 10-K for the fiscal year ended
February 1, 1997. In the opinion of management, the accompanying financial
statements reflect all adjustments necessary (which are of a normal recurring
nature, unless separately disclosed) to present fairly the financial position
and results of operations and cash flows for the interim periods presented, but
are not necessarily indicative of the results of operations and cash flows for a
full fiscal year.
Page 10
<PAGE>
BRYLANE, L.P.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
As a result of the Chadwick's Acquisition and the application of
purchase accounting related thereto, the Company's gross margin for the thirteen
weeks ended May 3, 1997 reflects a non-recurring inventory charge of $2.5
million related to the write-up of the Chadwick's inventory. A remaining write-
up of $0.8 million related to the Chadwick's inventory will be charged to cost
of goods sold during the second quarter. In addition, as a result of the
formation of Brylane, L.P. and the related acquisition of the Lane Bryant,
Roaman's and Lerner catalog businesses by certain affiliates of FS&Co. and of
The Limited (the "Brylane Acquisition"), the acquisition by Brylane of the
KingSize catalog division of WearGuard Corporation (the "KingSize Acquisition"),
and the Chadwick's Acquisition and the application of purchase accounting
related thereto, the results of operations for the thirteen weeks ended May 3,
1997 reflect amortization of intangible assets related to the Brylane
Acquisition, the KingSize Acquisition and the Chadwick's Acquisition of $1.1
million, $0.3 million and $1.3 million, respectively.
The Company's results of operations in the future will continue to
reflect the amortization of intangible assets related to the Brylane
Acquisition, the KingSize Acquisition and the Chadwick's Acquisition of $4.2
million per year, $1.4 million per year and $5.3 million per year, respectively,
and step-up depreciation associated with the write-up of certain fixed assets in
connection with the Brylane Acquisition of $0.4 million per year. Subsequent to
May 3, 1997, the Company prepaid $50.0 million on the Tranche A Term Loan of the
1997 Bank Credit Facility (as defined herein). As a result of these
prepayments, the Company's interest expense for the remainder of fiscal 1997
should be reduced.
This Form 10-Q contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Such statements are
subject to a number of risks and uncertainties, including among other things,
competition, risks associated with the Sears Agreement, the impact of increases
in costs of postage, paper and printing, control of the Company by FS&Co. and
The Limited, dependence on suppliers, risks generally associated with
acquisitions, and risks related to unionized employees. Actual results in the
future could differ materially from those described in the forward-looking
statements as a result of such risk factors. The Company undertakes no
obligation to publicly release the result of any revisions of these forward-
looking statements that may be made to reflect any future events or
circumstances.
The following discussion should be read in conjunction with the
financial statements and related notes thereto which appear elsewhere in this
Form 10-Q and in conjunction with the Annual Report on Form 10-K for Brylane,
L.P. as filed with the Securities and Exchange Commission on May 2, 1997 (File
No. 33-69532).
Page 11
<PAGE>
RESULTS OF OPERATIONS
The following tables set forth certain operating data of Brylane, L.P.
for the periods indicated.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
May 4, 1996 May 3, 1997
----------- -----------
(in thousands)
(unaudited)
<S> <C> <C>
Net sales.................................... $150,680 $328,801
Gross profit................................. 78,018 159,754
Operating expenses:
Catalog and advertising.................... 47,518 83,339
Fulfillment ............................... 8,274 28,070
Support services........................... 10,544 22,010
Amortization of acquisitions
intangibles and organization costs....... 1,409 2,732
-------- --------
Operating income............................. 10,273 23,603
Add back: Non-recurring inventory
charge(1)................................ -- 2,486
Add back: Amortization of acquisitions
intangibles and organization costs(2).... 1,409 2,732
Add back: Step-up depreciation(3).......... 92 92
Add back: Non-cash compensation
expense(4)............................... -- 175
-------- --------
Operating income before acquisitions related
and non-recurring adjustments.............. $ 11,774 $ 29,088
======== ========
</TABLE>
The following table sets forth certain operating data of Brylane, L.P.
expressed as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------
May 4, 1996 May 3, 1997
------------ ------------
<S> <C> <C>
Net sales.................................... 100.0% 100.0%
Gross profit................................. 51.8 48.6
Operating expenses:
Catalog and advertising.................... 31.6 25.3
Fulfillment ............................... 5.5 8.6
Support services........................... 7.0 6.7
Amortization of acquisitions
intangibles and organization costs....... 0.9 0.8
----- -----
Operating income............................. 6.8 7.2
Add back: Non-recurring inventory
charge(1)................................ -- 0.7
Add back: Amortization of acquisitions
intangibles and organization costs(2).... 0.9 0.8
Add back: Step-up depreciation(3).......... 0.1 0.0
Add back: Non-cash compensation
expense(4)............................... -- 0.1
----- -----
Operating income before acquisitions related
and non-recurring adjustments.............. 7.8% 8.8%
===== =====
</TABLE>
Notes on page 14
Page 12
<PAGE>
The following table sets forth certain operating data of Brylane, L.P.
on an unaudited proforma basis for the thirteen weeks ended May 4, 1996 to
include net sales, cost of sales and operating expenses for Chadwick's as if the
Chadwick's Acquisition had occurred on February 4, 1996 (the first day of fiscal
1996). The proforma unaudited information is included for comparative purposes
only and is not meant to be indicative of what the consolidated statements of
operations data would have been had the transaction occurred at February 4,
1996.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
Proforma
May 4, 1996 May 3, 1997
----------- -----------
(in thousands)
(unaudited)
<S> <C> <C>
Net sales.................................... $ 282,676 $ 328,801
Gross profit................................. 139,085 159,754
Operating expenses:
Catalog and advertising.................... 75,133 83,339
Fulfillment ............................... 20,378 28,070
Support services........................... 18,792 22,010
Amortization of acquisitions
intangibles and organization costs....... 2,732 2,732
--------- --------
Operating income............................. 22,050 23,603
Add back: Non-recurring inventory
charge(1)................................ -- 2,486
Add back: Amortization of acquisitions
intangibles and organization costs(2).... 2,732 2,732
Add back: Step-up depreciation(3).......... 92 92
Add back: Non-cash compensation
expense(4)............................... -- 175
--------- --------
Operating income before acquisitions related
and non-recurring adjustments.............. $ 24,874 $ 29,088
========= ========
</TABLE>
The following table expresses the above operating data as a percentage of
net sales for the periods indicated.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
Proforma
May 4, 1996 May 3, 1997
----------- -----------
<S> <C> <C>
Net sales.................................... 100.0% 100.0%
Gross profit................................. 49.2 48.6
Operating expenses:
Catalog and advertising.................... 26.6 25.3
Fulfillment ............................... 7.2 8.6
Support services........................... 6.6 6.7
Amortization of acquisitions
intangibles and organization costs....... 1.0 0.8
--- ---
Operating income............................. 7.8 7.2
Add back: Non-recurring inventory
charge(1)................................ -- 0.7
Add back: Amortization of acquisitions
intangibles and organization costs(2).... 1.0 0.8
Add back: Step-up depreciation(3).......... 0.0 0.0
Add back: Non-cash compensation
expense(4)............................... -- 0.1
--- ---
Operating income before acquisitions related
and non-recurring adjustments.............. 8.8% 8.8%
=== ===
</TABLE>
Notes on page 14
Page 13
<PAGE>
(1) The non-recurring inventory charge resulted from increasing inventory by
$4,972,000 for the Chadwick's Acquisition to reflect the fair market value of
the inventory at December 9, 1996, the closing date of the Chadwick's
Acquisition. The non-recurring inventory charge is being amortized into cost of
goods sold over six-months beginning in December 1996.
(2) Represents amortization of goodwill and other intangible assets related to
the Brylane Acquisition of $125,450,000 over a 30-year composite life and of
organizational costs of $300,000 over five years. Subsequent to October 1, 1995,
includes amortization related to the KingSize Acquisition of goodwill of
$50,762,000 over a 40-year life, of customer file of $520,000 over an eight-year
life, and of a noncompetition agreement of $300,000 over a five-year life.
Subsequent to December 9, 1996, includes amortization related to the Chadwick's
Acquisition of goodwill of $179,485,000 over a 40-year life, and of customer
file of $4,020,000 over a five-year life.
(3) Property and equipment were written up by $2,943,000 at the time of the
Brylane Acquisition. This step-up is being depreciated over eight years using
the straight-line method .
(4) Represents non-cash compensation expense related to amendments to the
Brylane, L.P. 1993 Partnership Unit Option Plan.
THIRTEEN WEEKS ENDED MAY 3, 1997 COMPARED TO THIRTEEN WEEKS ENDED MAY 4, 1996
NET SALES.
Net sales as reported for the thirteen weeks ended May 3, 1997
increased to $328.8 million from $150.7 million in the comparable period of
fiscal 1996. The increase in net sales came principally from the inclusion of
the net sales of the recently acquired Chadwick's of Boston catalog and also
from the Company's other catalog titles.
Net sales on a proforma basis including Chadwick's for the thirteen
weeks ended May 4, 1996, increased 16.3% to $328.8 million from $282.7 million.
Such sales gain was due, primarily, to an increase in circulation and an
increase in the average order size across all catalogs as compared to the
comparable period in fiscal 1996.
GROSS PROFIT.
Gross profit for the thirteen weeks ended May 3, 1997 increased to
$159.8 million (48.6% of net sales) from $78.0 million (51.8% of net sales) for
the same period of fiscal 1996. The lower gross profit as a percent of net
sales is due to the inclusion of the Chadwick's catalogs with lower mark-ups on
merchandise sold as compared to the Company's other catalog titles and to a non-
recurring inventory charge of $2.5 million (0.7% of net sales) relating to the
step-up of the value of inventory in connection with the Chadwick's Acquisition.
Gross profit on a proforma basis including Chadwick's for the thirteen
weeks ended May 4, 1996 and eliminating the effects of the non-recurring
inventory charge in the thirteen weeks ended May 3, 1997, increased to $162.2
million (49.3% of net sales) from $139.1 million (49.2% of net sales), primarily
due to strong merchandise sourcing strategies.
CATALOG AND ADVERTISING EXPENSE.
Catalog and advertising expense is comprised of the costs to produce
and distribute catalogs, primarily paper, printing and catalog mailing costs,
and the cost of acquiring names of prospective customers. For the thirteen
weeks ended May 3, 1997, catalog and advertising expense increased to $83.3
million (25.3% of net sales) from $47.5 million (31.6% of net sales) for the
same period of fiscal 1996. The decrease on a percent of net sales basis was
primarily due to the inclusion of the Chadwick's catalog and its associated
catalog and advertising expense and net sales.
Catalog and advertising expense on a proforma basis including
Chadwick's for the thirteen weeks ended May 4, 1996, decreased on a percent of
net sales basis to 25.3% ($83.3 million) in 1997 from 26.6% ($75.1 million) in
1996. This decrease on a percent of net sales basis is primarily due to the
Page 14
<PAGE>
renegotiation of certain printing contracts, reduced paper costs and an increase
in the sales productivity per catalog.
Paper prices, which peaked in the Fall of 1995, declined throughout
1996. Assuming that paper prices remain at their current levels, the Company
believes that it will experience a decrease in year-over-year paper costs in the
second quarter of 1997.
FULFILLMENT EXPENSE.
Fulfillment expense includes distribution center, telemarketing,
credit services and customer service expenses, partially offset by net
merchandise postage revenue. Fulfillment expense as reported in the thirteen
weeks ended May 3, 1997 increased to $28.1 million (8.6% of net sales) from $8.3
million (5.5% of net sales) for the same period in fiscal 1996. The increase on
a percent of net sales basis was primarily due to increased fulfillment costs
associated with the acquisition of Chadwick's.
Fulfillment expense on a proforma basis including Chadwick's for the
thirteen weeks ended May 4, 1996, increased on a percent of net sales basis to
8.6% ($28.1 million) in 1997 from 7.2% ($20.4 million) in 1996. This increase on
a percent of net sales basis was primarily due to increased payroll in the
distribution center, telemarketing and other areas to ensure a high level of
customer service in order to meet increased demand.
SUPPORT SERVICES EXPENSE.
Support services expense includes staffing and other administrative
overhead costs associated with the operation of the business and the license
fees associated with the Company's agreements with Sears Shop At Home. Support
services expense as reported for the thirteen weeks ended May 3, 1997 increased
to $22.0 million (6.7% of net sales) from $10.5 million (7.0% of net sales) for
the same period in fiscal 1996. The decrease on a percent of net sales basis was
primarily due to the inclusion of Chadwick's and its associated overhead costs
and net sales.
Support services expense on a proforma basis including Chadwick's for
the thirteen weeks ended May 4, 1996, increased as a percent of net sales to
6.7% ($22.0 million) in 1997 from 6.6% ($18.8 million) in 1996. This slight
increase in support services expense as a percent of net sales is primarily due
to an increase in staffing to support the growth of the business.
AMORTIZATION EXPENSE.
Acquisition related intangibles and organization cost amortization
expense in the thirteen weeks ended May 3, 1997 included $1.1 million related to
the Brylane Acquisition, $0.3 million related to the KingSize Acquisition and
$1.3 million related to the Chadwick's Acquisition. Acquisition related
intangibles and organization cost amortization expense in the thirteen weeks
ended May 4, 1996 included $1.1 million related to the Brylane Acquisition and
$0.3 million related to the KingSize Acquisition.
OPERATING INCOME.
Operating income before acquisitions-related and non-recurring
adjustments in the thirteen weeks ended May 3, 1997 increased $29.1 million
(8.8% of net sales) from $11.8 million (7.8% of net sales) for the same period
of fiscal 1996. As a percent of net sales, operating income increased primarily
as a result of the decrease in catalog and advertising expense as described
above, partially offset by the increase in fulfillment expense.
Operating income on a proforma basis including Chadwick's for the
thirteen weeks ended May 4, 1996 increased to $29.1 million (8.8% of net sales)
in 1997 from $24.9 million (8.8% of net sales) in 1996.
Page 15
<PAGE>
INTEREST EXPENSE.
Interest expense, net, in the thirteen weeks ended May 3, 1997
increased to $7.5 million (2.3% of net sales) from $5.6 million (3.7% of net
sales) for the same period of fiscal 1996 due to the increased borrowings of
$210 million incurred in connection with the Chadwick's Acquisition, partially
offset by slightly lower interest rates on the term loans of the 1996 Bank
Credit Facility (as defined below).
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically met its working capital needs,
principally building inventory to meet increased sales, and its capital
expenditure requirements primarily through funds generated from operations.
After the Brylane Acquisition, the KingSize Acquisition and the Chadwick's
Acquisition, the Company's liquidity requirements have also included servicing
the debt incurred to finance these acquisitions.
Cash flow provided by operating activities increased to $59.3 million
for the thirteen weeks ended May 3, 1997, from $15.4 million for the thirteen
weeks ended May 4, 1996. This increase was primarily due to an increase in net
income, a decrease in merchandise inventory levels and higher merchandise
payables on inventory owned by the Company at May 3, 1997, and a decrease in
accounts receivable related to the deferred receivables program. The Company's
cash balance was $35.0 million at May 3, 1997 compared to $3.3 million at
February 1, 1997. The increase in the cash balance from February 1, 1997 to May
3, 1997 was achieved while using $23.6 million for financing activities, which
included $22.0 million in debt payments as well as $4.0 million in capital
expenditures, as discussed below.
Capital expenditures were $4.0 million in the thirteen weeks ended May
3, 1997 compared to $0.5 million in the same period in fiscal 1996. The
Company's capital expenditures for the remainder of fiscal 1997 are estimated to
be $8.5 million, including $1.4 million for a new telemarketing order entry
system for Chadwick's, $1.4 million for management information systems, $1.3
million for the Chadwick's fulfillment and return processing centers, and $0.9
million for remodeling the stacker cranes at the Indianapolis fulfillment
center. The remaining $3.5 million of capital expenditures in fiscal 1997 will
be spent on routine maintenance and upgrades for both of Brylane's catalog
fulfillment centers. Brylane plans to fund its capital expenditures for fiscal
1997 using cash generated from operations.
In connection with the Chadwick's Acquisition, the Partnership entered
into a Credit Agreement dated December 9, 1996 among Brylane, Morgan Guaranty
Trust Company of New York ("Morgan Guaranty"), as administrative agent, Merrill
Lynch Capital Corporation ("Merrill Lynch"), as documentation agent, and the
other lenders party thereto, and guaranteed by each of the Company's
subsidiaries (the "1996 Bank Credit Facility"), which consisted of (i) a $213.0
million five-year term loan, (ii) a $70.0 million six-year and three-month term
loan, and (iii) a $125.0 million five-year revolving credit facility with a
$75.0 million sublimit for letters of credit. The proceeds of the term loans of
the 1996 Bank Credit Facility were used to fund a portion of the cash paid upon
the closing of the Chadwick's Acquisition (including related fees and expenses)
as well as to repay Brylane's then existing indebtedness under its 1993 bank
credit facility. In connection with Brylane Inc.'s Initial Public Offering on
February 26, 1997, and the use of the net proceeds received therefrom and
contributed by Brylane Inc. to the Partnership, the Company repaid $89.3 million
in indebtedness under its 1996 Bank Credit Facility. In addition, the Company
made $12.0 million of prepayments on the 1996 Bank Credit Facility during the
thirteen weeks ended May 3, 1997.
On April 30, 1997, the Partnership entered into a credit agreement
among Brylane, Morgan Guaranty, as administrative agent, Merrill Lynch, as
documentation agent, and the lenders party thereto, and guaranteed by each of
the Company's subsidiaries (the "1997 Bank Credit Facility") which consists of
(i) a $111.7 million four-year nine-month term loan (the "Tranche A Term Loan"),
(ii) a $70.0 million five-year and ten-month term loan (the "Tranche B Term
Loan", and collectively with the Tranche A Term Loan, the "Term Loans"), and
(iii) a $125.0 million four-year nine-month revolving credit facility (the
"Revolving Credit Facility") with a $75.0 million sublimit for letters of
credit. The proceeds of the Term Loans of the 1997 Bank Credit Facility were
used to repay Brylane's existing indebtedness under the 1996 Bank Credit
Facility. The Revolving Credit Facility can be used for letters of credit and
general corporate purposes, including working capital needs. The Term Loans
require scheduled quarterly principal payments over their terms. In addition,
Brylane is obligated to make certain mandatory prepayments of the Term Loans and
the Revolving Credit Facility under certain circumstances.
Page 16
<PAGE>
Borrowings under the Term Loans and the Revolving Credit Facility bear interest
at one of two rates selected by the Partnership (i) a margin over the higher of
(A) Morgan Guaranty's prime rate or (B) the federal funds rate plus 0.5% or (ii)
a margin over LIBOR (as defined) for specified interest periods. The margin for
each rate may vary based on the ratio of the Partnership's net debt to operating
cash flow ratio. The Tranche A Term Loan currently bears interest at LIBOR plus
1.125% and the Tranche B Term Loan initially bears interest at LIBOR plus
1.625%. (Prior to the refinancing, the term loans under the 1996 Bank Credit
Facility bore interest at LIBOR plus 2.0% and LIBOR plus 2.5%, respectively).
The Term Loans begin amortizing on August 2, 1997, with aggregate scheduled
principal payments of $9.9 million during the remainder of fiscal 1997.
The Company made $10.0 million of prepayments on the Tranche A Term
Loan of the 1997 Bank Credit Facility during the thirteen weeks ended May 3,
1997. As of May 3, 1997, Brylane had no borrowings under the Revolving Credit
Facility and, after giving effect to the issuance of letters of credit for $39.5
million which the Company intends to pay through funds generated from
operations, had additional capacity under the Revolving Credit Facility of
approximately $85.5 million.
Subsequent to May 3, 1997, the Company prepaid an additional $50.0
million on the Tranche A Term Loan of the 1997 Bank Credit Facility. Amounts
used by the Company to make such prepayments included the $28.8 million
preliminary cash purchase price adjustment received by the Company from TJX on
May 16, 1997 (See Note (3) of the Notes to the Unaudited Consolidated Financial
Statements) and the remainder came from available funds. As a result of these
prepayments, the remaining balance of the Tranche A Term Loan was reduced to
$51.7 million and the scheduled principal payments for the remainder of fiscal
1997 have been reduced to $5.4 million.
In connection with the Brylane Acquisition, the Partnership issued
$125.0 million aggregate principal amount of its senior subordinated notes (the
"Senior Subordinated Notes"). The Senior Subordinated Notes bear interest at 10%
per annum, payable semi-annually, and mature in 2003. The 1997 Bank Credit
Facility, and the Indenture dated as of August 30, 1993 among Brylane and
Brylane Capital Corp., as Issuers, the subsidiaries of Brylane, as Guarantors,
and United States Trust Company of New York, as Trustee (as supplemented, the
"Indenture") pursuant to which the Senior Subordinated Notes were issued contain
covenants (the "Covenants") that, among other things, restrict the Partnership's
ability to incur debt, make distributions, incur liens, make capital
expenditures and make investments or acquisitions. During the first quarter of
fiscal 1997, Brylane did not make any tax distributions to its partners. The
Partnership expects that it will make total tax distributions to its partners
during fiscal 1997 that will approximate the tax payments the Partnership would
be required to make if it were a tax-paying corporation, rather than a
partnership. Brylane, L.P.'s estimated capital expenditures were in compliance
with the Covenants.
In connection with the Chadwick's Acquisition, Brylane, L.P. entered
into an Accounts Receivable Purchase Agreement dated as of December 9, 1996 with
Alliance Data Systems Corporation ("ADS") (as amended on January 27, 1997, the
"Receivables Purchase Agreement") pursuant to which ADS has agreed to purchase
from the Company eligible customer accounts receivable generated through
Chadwick's deferred billing programs. ADS' commitment to purchase receivables is
limited to $100.0 million outstanding at any time. ADS will purchase the
receivables on a limited recourse basis at a discount from face value. The
Company pays transaction costs including a fee of $.03 per purchased account,
and carrying costs equal to, at the Company's election, LIBOR plus 95 basis
points or the lesser of (a) a defined prime rate plus 15 basis points and (b)
the federal funds rate plus 110 basis points. The receivables purchase facility
has a three-year term and is subject to early termination upon occurrence of
certain events, including chargebacks and customer default ratios above
specified levels or an uncured default by the Partnership under its 1997 Bank
Credit Facility.
While no assurances can be given in this regard, based on current and
projected operating results, Brylane believes that cash flow from operations
will provide adequate funds for ongoing operations, debt service on its
indebtedness (including scheduled prepayments under the 1997 Bank Credit
Facility), and planned capital expenditures for the foreseeable future. In
addition, the Company will have availability under the Revolving Credit Facility
to finance seasonal capital needs.
Page 17
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibits.
10.1* Credit Agreement dated as of April 30, 1997 (the "Credit
Agreement") among Brylane, L.P. (the "Partnership"), the Lenders
listed on the signature pages thereof, Morgan Guaranty Trust
Company of New York ("Morgan Guaranty"), as Administrative Agent,
and Merrill Lynch Capital Corporation ("Merrill Lynch"), as
Documentation Agent.
10.2* Form of Tranche A Term Notes dated April 30, 1997 executed by the
Partnership in favor of each of the various Lenders which are
signatories to the Credit Agreement.
10.3* Form of Tranche B Notes dated April 30, 1997 executed by the
Partnership in favor of each of the various Lenders which are
signatories to the Credit Agreement.
10.4* Guarantee Agreement dated as of April 30, 1997 among the Guarantors
(as defined therein), and Morgan Guaranty, as Administrative Agent
for the Lenders and for the Issuing Banks (as defined in the Credit
Agreement).
10.5* Pledge Agreement dated as of April 30, 1997 among the Partnership,
the Subsidiary Pledgors (as defined therein), and Morgan Guaranty,
as Security Agent.
10.6* Security Agreement dated as of April 30, 1997 among the
Partnership, the Subsidiary Grantors (as defined therein), and
Morgan Guaranty, as Security Agent.
10.7* Trademark Collateral Agreement dated as of April 30, 1997 among
Lanco, Inc., Lernco, Inc., Limited Stores, Inc., Lerner Stores,
Inc., Lane Bryant, Inc., M&P Distributing Co. and Morgan Guaranty,
as Security Agent.
27.1 Financial Data Schedule.
------------------------
* Filed on June 17, 1997 as an exhibit to Brylane Inc.'s Quarterly
Report on Form 10-Q (File No. 33-86154) for the quarterly period
ended May 3, 1997 and incorporated by reference herein.
(b) Reports on Form 8-K.
On February 21, 1997, Brylane, L.P. filed an Amended Current Report on
Form 8-K/A (File No. 33-69532) to include the required audited financial
statements and unaudited proforma financial statements relating to the
Chadwick's Acquisition.
Page 18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
Dated: June 17, 1997 BRYLANE, L.P.
BRYLANE CAPITAL CORP.
By: /s/ Robert A. Pulciani
----------------------------
Robert A. Pulciani
Authorized Representative of Brylane, L.P.
and Executive Vice President, Chief
Financial Officer and Secretary of
Brylane, L.P. and Brylane Capital Corp.
(On behalf of the Registrants and as
the principal financial and accounting
officer of each of the Registrants)
Page 19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000912276
<NAME> BRYLANE CAPITAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> MAY-03-1997
<CASH> 34,978
<SECURITIES> 0
<RECEIVABLES> 52,276
<ALLOWANCES> (3,168)
<INVENTORY> 159,264
<CURRENT-ASSETS> 284,071
<PP&E> 138,887
<DEPRECIATION> 63,029
<TOTAL-ASSETS> 704,821
<CURRENT-LIABILITIES> 194,690
<BONDS> 0
0
1,500
<COMMON> 0
<OTHER-SE> 200,711
<TOTAL-LIABILITY-AND-EQUITY> 704,821
<SALES> 328,801
<TOTAL-REVENUES> 328,801
<CGS> 169,047
<TOTAL-COSTS> 169,047
<OTHER-EXPENSES> 133,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,528
<INCOME-PRETAX> 16,075
<INCOME-TAX> 28
<INCOME-CONTINUING> 16,047
<DISCONTINUED> 0
<EXTRAORDINARY> 6,524
<CHANGES> 0
<NET-INCOME> 9,523
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
