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 April 29, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1308
------
STRAWBRIDGE & CLOTHIER
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1131660
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
801 Market Street
Philadelphia, PA 19107-3199
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 629-6000
- ------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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 Series A Common Stock, par value $1 per share,
of the registrant outstanding at May 30, 1995 is 7,293,442.
The number of shares of Series B Common Stock, par value $1 per share,
of the registrant outstanding at May 30, 1995 is 3,168,383.
<PAGE>
Form 10-Q
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
---------------------------------------
INDEX
-----
Page
PART I. FINANCIAL INFORMATION Number
- ------------------------------ ------
Item 1. Financial Statements (unaudited)
Condensed consolidated statements of operations--
three months and trailing years ended April 29, 1995
and April 30, 1994 3
Condensed consolidated balance sheets--April 29, 1995
and January 28, 1995 4
Condensed consolidated statements of cash flows--three
months ended April 29, 1995 and April 30, 1994 5
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
- ----------
<PAGE>
Form 10-Q
Page 3
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS TRAILING YEAR
ENDED ENDED
--------------------- --------------------
April 29, April 30, April 29, April 30,
1995 1994 1995 1994
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $198,625 $208,303 $993,846 $995,767
Other income, net of
other deductions 692 587 3,370 2,411
-------- -------- -------- --------
199,317 208,890 997,216 998,178
Deduct:
Cost of sales, including
occupancy and buying
costs 153,160 158,070 740,341 739,234
Selling and administrative
expenses, net of finance
charges 41,147 38,590 174,586 172,230
Depreciation 7,348 7,454 29,481 29,117
Interest 4,205 4,537 19,219 20,316
Provision for doubtful accounts 2,859 1,735 11,405 5,452
-------- -------- -------- --------
208,719 210,386 975,032 966,349
Earnings (loss) before
income taxes (9,402) (1,496) 22,184 31,829
Income taxes (benefit) (3,338) (508) 7,228 10,835
-------- -------- -------- --------
NET EARNINGS (LOSS) $ (6,064) $ (988) $ 14,956 $ 20,994
======== ======== ======== ========
NET EARNINGS (LOSS)
PER SHARE $(0.58) $(0.10) $1.43 $2.03
======== ======== ======== ========
Cash dividends per share:
Series A Common Stock $0.275 $0.275 $1.10 $1.10
======== ======== ======== ========
Series B Common Stock $0.25 $0.25 $1.00 $1.00
======== ======== ======== ========
Average shares outstanding 10,517 10,386 10,458 10,350
======== ======== ======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Form 10-Q
Page 4
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
April 29, January 28,
1995 1995
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 2,271 $ 1,575
Accounts receivable, less allowance
(4/29/95 -- $5,574; 1/28/95 -- $5,544) 136,703 161,943
Merchandise inventories 179,383 143,790
Deferred income taxes 3,975 3,975
Prepaid expenses and other 13,491 11,219
-------- --------
TOTAL CURRENT ASSETS 335,823 322,502
PROPERTY, FIXTURES AND EQUIPMENT 641,056 623,266
Less allowance for depreciation (322,452) (315,105)
-------- --------
318,604 308,161
OTHER ASSETS 9,157 9,129
-------- --------
$663,584 $639,792
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes payable $ 46,500 $ 6,500
Accounts payable 74,203 59,500
Accrued expenses 21,103 24,665
Taxes on income (813) 15,357
Dividends payable 0 2,798
Long-term debt and capital lease
obligations due within one year 8,763 8,426
-------- --------
TOTAL CURRENT LIABILITIES 149,756 117,246
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS -- due after one year 201,288 202,290
ACCRUED RETIREMENT COSTS 51,854 51,105
OTHER LIABILITIES 7,203 6,799
SERIES PREFERRED STOCK 0 0
SHAREHOLDERS' EQUITY
Common stock 10,461 10,461
Other shareholders' equity 243,022 251,891
-------- --------
TOTAL SHAREHOLDERS' EQUITY 253,483 262,352
-------- --------
$663,584 $639,792
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Form 10-Q
Page 5
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
April 29, April 30,
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES $(15,102) $(7,125)
NET CASH USED FOR INVESTING ACTIVITIES
Acquisition of property, fixtures and equipment (17,790) (8,890)
Changes in other assets (28) (73)
-------- -------
TOTAL (17,818) (8,963)
-------- -------
NET CASH PROVIDED BY FINANCING
ACTIVITIES
Payment of long-term debt and capital lease
obligations (665) (3,484)
Increase in short-term notes payable 40,000 21,500
Purchase of preferred stock and treasury stock (121) (189)
Cash dividends (5,598) (2,780)
-------- -------
TOTAL 33,616 15,047
-------- -------
CHANGE IN CASH AND EQUIVALENTS 696 (1,041)
Cash and equivalents at beginning of period 1,575 2,860
-------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 2,271 $ 1,819
======== =======
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Form 10-Q
Page 6
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A -- Basis of Presentation
- -------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results of operations for the three months ended April 29,
1995 are not necessarily indicative of the results that may be anticipated
for the full fiscal year. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended January 28, 1995.
Note B -- Per Share Data
- ------------------------
Earnings (loss) per share amounts are based on the weighted average number
of shares of common stock and dilutive common stock equivalents (employee
stock options) outstanding during each period, after recognition of
preferred stock dividends.
<PAGE>
Form 10-Q
Page 7
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net sales changes in comparison to the comparable periods in the preceding
year were decreases of 4.7% and 0.2% for the three months and trailing year
ended April 29, 1995, respectively. Unseasonably cool weather in the latter
part of the quarter, a fourteen day public transit strike, a weakening in
the overall economic climate and continued sluggish business in female
apparel categories combined to produce the disappointing sales results.
Toward the end of the quarter, on April 21, 1995, the Company opened its
first home furnishings store in the Concord Mall and at the beginning of the
second quarter, on May 8, 1995, the Company opened its new Brandywine Clover
store. In August 1995, the Company will open a new Clover store at the
Gallery in Philadelphia.
Costs and expenses as a percentage of sales and the effective tax rates were
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED TRAILING YEAR ENDED
------------------ -------------------
4/29/95 4/30/94 4/29/95 4/30/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost of sales, including occupancy
and buying costs 77.1 75.9 74.5 74.2
Selling and administrative expenses,
net of finance charges 20.7 18.5 17.6 17.3
Depreciation 3.7 3.6 3.0 2.9
Interest 2.1 2.2 1.9 2.0
Provision for doubtful accounts 1.4 .8 1.1 .5
Effective tax rate 35.5 34.0 32.6 34.0
</TABLE>
Cost of sales, including occupancy and buying costs, for the three months
and trailing year ended April 29, 1995, reflect increased markdowns taken to
stimulate sales in the Company's highly competitive trading area. Both
periods also reflect reduced occupancy and buying costs. The increase in
selling and administrative expenses, net of finance charges, as a percentage
of sales for the three months ended April 29, 1995, reflects the decrease in
sales, preopening expenses for the new properties, and a reduction in
finance charge income due to the sale of $50.0 million of customer accounts
receivable at the end of fiscal 1994. Expenses continue to be well
controlled and on budget. Selling and administrative expenses for the
trailing year also reflect a decrease in benefit expense due to changes in
benefit plans and increased finance charge income. New store preopening
expenses totalled $534,000 for the quarter ended April 29, 1995. Interest
expense for the three months ended April 29, 1995, declined due to lower
debt levels. Interest expense for the trailing year also reflects the
refinancing of high-rate long-term debt, partially offset by increased
outstanding floating rate debt and increased short-term borrowing rates.
The provision for doubtful accounts for the three months and trailing year
ended April 29, 1995 increased due to higher write-offs and increases in the
reserve for doubtful accounts, which resulted from more liberal credit
policies instituted in fiscal years 1993 and 1992 to stimulate credit sales
and remain competitive in the credit market. The increase in the effective
tax rate for the three months ended April 29, 1995 resulted from the
expiration of the jobs tax credit. See Management's Discussion and Analysis
of Financial Condition and Results of Operations included in the Company's
annual report on Form 10-K for the year ended January 28, 1995 for
discussion of additional matters affecting the trailing year results.
<PAGE>
Form 10-Q
Page 8
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
Operating activities resulted in a use of $15.1 million of cash for the
three months ended April 29, 1995, compared to $7.1 million in the prior
year. Reduced earnings and increased inventory levels contributed to the
increased use of cash. Inventory levels increased due to the new stores and
the sluggish sales.
Anticipated capital expenditures for fiscal 1995 of $39.6 million include
the opening of the two new Clover stores and the home furnishings store, the
renovation of the Concord department store and the renovation of the Rising
Sun and the Center Square Clover stores and other renovation projects. $17.8
million of that planned amount has been expended during the three months
ended April 29, 1995. The Company continually investigates potential sites
for new stores, and capital expenditure plans may change as opportunities
for new stores develop. Prior year first quarter capital expenditures of
$8.9 million included the renovation of the fourth floor of the Philadelphia
store, the renovation of two Clover stores and other renovation projects.
Cash provided by financing activities resulted from additional short-term
borrowings and was $33.6 million for the three months ended April 29, 1995,
compared to $15.0 million for the prior year period. Cash dividends for the
three months ended April 29, 1995 reflect two payments, due to the Company's
fiscal calendar, while the prior year period reflects one payment.
The ratio of current assets to current liabilities was 2.24 at April 29,
1995, compared to 2.75 at the end of fiscal 1994 and 2.26 at April 30, 1994.
The changes in working capital components such as accounts receivable and
accrued income taxes, as compared to January 28, 1995, reflect normal
seasonal variations, while the increases in inventory and short-term
borrowings were primarily a result of the new stores and sluggish sales.
Long-term debt and capital lease obligations were 44.3% of capitalization at
April 29, 1995, compared to 43.5% at January 28, 1995.
The Company believes its relations with banks and credit sources are good
and that it has considerable flexibility in deciding how to fund future
capital expenditures and maturities of long-term debt.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
None.
<PAGE>
Form 10-Q
Page 9
SIGNATURE
---------
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.
STRAWBRIDGE & CLOTHIER
-------------------------------------------
Registrant
Date: June 9, 1995
------------
/s/ Steven L. Strawbridge
-------------------------------------------
Steven L. Strawbridge
Vice President, Treasurer & Secretary
(principal financial officer)
FIRST
QUARTER
REPORT
1995
STRAWBRIDGE
& CLOTHIER
[LOGO]
<PAGE>
To Our Shareholders:
For the first quarter of the fiscal year 1995,
ended April 29, sales were $198,625,000 compared
to $208,303,000 for the comparable period last
year, a decrease of 4.7%. The Company incurred a
loss for the quarter of $6,064,000 compared to a
loss of $988,000 last year. Loss per share was
$.58 in 1995's first quarter compared to a loss
per share of $.10 in last year's first quarter.
Sales for the quarter were negatively impacted
by a fourteen day public transit strike which
affected many of the Company's stores both in the
city and the suburbs. In addition, unseasonably
cool weather in the latter part of the quarter, a
weakening in the overall economic climate and
continued sluggish business in female apparel
categories, were major contributors to the sales
decreases.
On April 21, 1995, the Company opened its
first Strawbridge & Clothier Home Furnishings
Store in a former office building attached to the
Concord Mall, New Castle County, Delaware.
Immediately following the successful opening of
the new store, work commenced at the Concord Mall
Department store, for a major renovation to be
completed in the fall.
Just over two weeks later, on May 8th, Clover
Brandywine opened, on a site across Route 202 from
the Concord Mall. This is Clover's second store
in the state of Delaware. Also this spring,
renovation work was completed on the Rising Sun
Clover store in the Olney section of Philadelphia
and the Center Square Clover store in Whitpain
Township, Pennsylvania.
Clover's 27th store, located at the Gallery,
at Market Street East in Philadelphia is scheduled
to open on August 7, 1995. This 130,000 sq.ft.
store will occupy the street level and second
floor of the former Stern's Department store.
The Annual Meeting of shareholders was held on
Wednesday, May 24, 1995 in the Pennsylvania
Convention Center. The shareholders elected the
four Directors nominated in the Company's proxy
statement. The appointment of Ernst & Young LLP
as the Company's independent auditors for fiscal
1995 was approved.
s/ FRANCIS R. STRAWBRIDGE III s/ PETER S. STRAWBRIDGE
Chairman of the Board President
<PAGE>
STRAWBRIDGE
& CLOTHIER [LOGO]
==========================================================================
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
==========================================================================
<TABLE>
<CAPTION>
Thirteen Weeks Ended Trailing Year Ended
-------------------- ---------------------
4/29/95 4/30/94 4/29/95 4/30/94
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $198,625 $208,303 $993,846 $995,767
Other income, net of other
deductions 692 587 3,370 2,411
-------- -------- -------- --------
199,317 208,890 997,216 998,178
Cost of sales 153,160 158,070 740,341 739,234
Selling, general and
administrative costs 41,147 38,590 174,586 172,230
Depreciation 7,348 7,454 29,481 29,117
Interest 4,205 4,537 19,219 20,316
Provision for doubtful accounts 2,859 1,735 11,405 5,452
-------- -------- -------- --------
208,719 210,386 975,032 966,349
-------- -------- -------- --------
Earnings (loss) before
income taxes (9,402) (1,496) 22,184 31,829
Provision for income
taxes (benefit) (3,338) (508) 7,228 10,835
-------- -------- -------- --------
NET EARNINGS (LOSS) $ (6,064) $ (988) $ 14,956 $ 20,994
======== ======== ======== ========
NET EARNINGS (LOSS) PER SHARE $(0.58) $(0.10) $1.43 $2.03
Average shares outstanding 10,517 10,386 10,458 10,350
===============================================================================
</TABLE>
NOTE: New store preopening expenses had the effect of reducing earnings
per share by $.03 for the thirteen weeks ended April 29, 1995.
<PAGE>
=============================================
Condensed Consolidated
Balance Sheets (Unaudited)
(in thousands)
=============================================
<TABLE>
<CAPTION>
Assets 4/29/95 4/30/94
------- -------
<S> <C> <C>
Current assets:
Cash and
equivalents $ 2,271 $ 1,819
Accounts receivable,
net 136,703 183,744
Merchandise
inventories 179,383 168,105
Other current assets 17,466 11,546
-------- --------
Total current assets 335,823 365,214
Property, fixtures and
equipment, net 318,604 301,803
Other assets 9,157 6,556
-------- --------
$663,584 $673,573
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Notes payable $ 46,500 $ 65,000
Accounts payable 74,203 69,681
Other 29,053 27,067
-------- --------
Total current
liabilities 149,756 161,748
Long-term debt and
capital lease
obligations 201,288 204,917
Other liabilities 59,057 58,483
Shareholders' equity 253,483 248,425
-------- --------
$663,584 $673,573
======== ========
<PAGE>
DEPARTMENT STORES
Philadelphia Exton
Ardmore Christiana
Cherry Hill Burlington
Springfield Concord
Plymouth Meeting The Court at
Neshaminy King of Prussia
Echelon Willow Grove Park
Concord Home Furnishings
CLOVER STORES
Marlton Warrington
Blackwood Cheltenham
Cinnaminson Whitehall Mall
Morrisville Palmer Park
Center Square Rising Sun Plaza
Baltimore Pike Township Line
Westmont Park City
Andorra Penrose Plaza
Frankford Ave. Whiteland
Cottman Ave. Towne Center
Bucks Mall Shore Mall
Mercerville Kirkwood Plaza
Granite Run Ralph's Corner
Brandywine
Gallery
(Opens Summer 1995)
- ---------------------------------------------------------
TRANSFER AGENT AND RECORD KEEPER
Please direct address changes and
inquiries regarding stock transfer,
registration and record keeping to:
Chemical Mellon Shareholder Services
P.O. Box 444
Pittsburgh, PA 15230
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> APR-29-1995
<CASH> 2,271
<SECURITIES> 0
<RECEIVABLES> 142,277
<ALLOWANCES> 5,574
<INVENTORY> 179,383
<CURRENT-ASSETS> 335,823
<PP&E> 641,056
<DEPRECIATION> 322,452
<TOTAL-ASSETS> 663,584
<CURRENT-LIABILITIES> 149,756
<BONDS> 201,288
<COMMON> 10,461
0
0
<OTHER-SE> 243,022
<TOTAL-LIABILITY-AND-EQUITY> 663,584
<SALES> 198,625
<TOTAL-REVENUES> 199,317
<CGS> 153,160
<TOTAL-COSTS> 153,160
<OTHER-EXPENSES> 48,495
<LOSS-PROVISION> 2,859
<INTEREST-EXPENSE> 4,205
<INCOME-PRETAX> (9,402)
<INCOME-TAX> (3,338)
<INCOME-CONTINUING> (6,064)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,064)
<EPS-PRIMARY> (0.58)
<EPS-DILUTED> (0.58)
</TABLE>
