USA: Charlotte Russe Announces Strong Results
Chairman and CEO Bernard Zeichner remarked: "I continue to be pleased with our performance so far and the fact that, as we head into our final quarter, we expect to achieve our business plan goals for the year. The third quarter results highlight the consistency of our steady sales increases, strong contributions from new stores as they have ramped up quickly, and continued leveraging of our general and administrative expenses as these costs are spread across a growing number of stores. During the quarter we had 123 stores in operation, a 45% increase over this time last year. With 9 to 11 new store openings slated for the fourth quarter, we expect to finish the year with a total of 36 to 38 new stores, including the three Charlotte's Room stores."
In evaluating Charlotte Russe's comparable stores sales results, Zeichner commented: "The company's guidance always has been to achieve same store sales growth in the 2% range with most of our revenue growth coming from new store openings that approach mature levels in their first year of operation. While same store sales for the quarter of 0.6% was relatively good considering the tough retail environment that existed during the quarter, it was an impressive result in light of the comparison to last year's exceptionally strong 11.3% same store sales increase. The year-to-date same store sales increase of 3.4% is very consistent with our overall business plan."
Zeichner continued: "New stores have opened on schedule and have been well received in each of their respective markets. This is ongoing evidence that our store concepts are "highly portable". During the quarter we added stores in Nashville, Pittsburgh, Washington DC, and opened our first Rampage store in Puerto Rico. We remain confident that our new stores will continue to deliver about a 90% cashflow return on investment during their first full year of operations."
With respect to new stores, Zeichner added: "Inventory requirements for the 45% increase in stores led to much higher inventory balances at the end of the third quarter. Also, the extremely high comparable store sales at the end of last year's third quarter drove inventories down to low levels in June 1999. The June 2000 inventory balances reflect an increase of about 13% at comparable stores and an increase in replenishment stock at the Company's distribution center in anticipation of the back-to-school selling season. In light of all these factors that are impacting our business, we are comfortable with our current inventory position and look forward to a strong back-to-school business."
Record Financial Results:
Net sales for the 13-week third quarter of fiscal 2000 were $58.7 million, an increase of 31% from $44.7 million for the third quarter last year. Comparable store sales increased 0.6% during the quarter, compared to an increase of 11.3% reported for the third quarter of fiscal 1999.
Net sales for the first 39 weeks of fiscal 2000 were $168.9 million, an increase of 34% from $126.4 million for the same period last year. Comparable store sales increased 3.4% during the 39-week period, compared to an increase of 6.9% reported for the same period last year.
Operating income for the third quarter of fiscal 2000 increased 28% to $7.4 million from $5.8 million for the same quarter last year. Net income increased 79% as income rose to $4.4 million from $2.4 million for the same quarter last year. Diluted earnings per share for the quarter was $0.19 as compared to $0.11 for the same quarter of the prior year, an increase of 73%. Excluding the extraordinary loss on the early retirement of debt during the third quarter of fiscal 1999, net income increased 48% and diluted earnings per share increased 36%.
Operating income for the first 39 weeks of fiscal 2000 increased 36% to $20.3 million from $15.0 million for the same period last year. Net income increased 68% as income rose to $11.5 million from $6.9 million for the same period last year. Diluted earnings per share for the 39-week period was $0.51 as compared to $0.32 for the same period of the prior year, an increase of 59%. Excluding the extraordinary loss on the early retirement of debt, net income increased 61% and diluted earnings per share increased 49%.
Charlotte Russe Holding Inc is a rapidly growing mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women between the ages of 15 and 35. The company, under its three distinct store concepts, operated a total of 123 stores in 19 states and Puerto Rico at the end of the third quarter of fiscal 2000. The company expects to open a total of approximately 36 to 38 new stores during fiscal 2000 which ends in September 2000, including three "Charlotte's Room" stores which are in their early stages of development and evaluation.
The "Charlotte Russe" stores offer fashionable, affordable apparel and accessories that have been tested and accepted by the marketplace, thus appealing to women who prefer established fashion trends. The "Rampage" stores feature emerging fashion trends and appeal to women with a flair for making fashion statements and who are willing to pay somewhat higher prices to create a cutting-edge look.
Safe Harbor Statement Under The Private Securities Litigation Reform Act Of 1995: Except for the historical information contained herein, this press release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to general and regional economic conditions, industry trends, consumer demands and preferences, competition from other retailers and uncertainties generally associated with women's apparel and accessory retailing. A complete description of these factors, as well as others that could affect the Company's business, is set forth in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on December 23, 1999, and any amendments thereto.
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENT OF INCOME
(amounts in 000's, except per share data)
Third Quarter Ended Nine Months Ended
June 24, June 26, June 24, June 26,
2000 1999 2000 1999
Net sales $ 58,695 $ 44,682 $ 168,894 $ 126,378
Cost of goods sold 39,997 30,075 115,268 85,996
Gross profit 18,698 14,607 53,626 40,382
expenses 11,071 8,586 32,679 24,743
intangibles 224 223 672 672
Operating income 7,403 5,798 20,275 14,967
Interest expense, net 23 644 164 2,043
Other charges 68 66 196 204
Income before income
extraordinary item 7,312 5,088 19,915 12,720
Income taxes 2,956 2,137 8,066 5,342
extraordinary item 4,356 2,951 11,849 7,378
from early debt
retirement 0 519 311 519
Net Income $4,356 $2,432 $11,538 $6,859
per share $0.22 $0.13 $0.58 $0.37
per share $0.19 $0.11 $0.51 $0.32
outstanding 20,205 18,305 20,006 18,300
outstanding 22,877 21,321 22,780 21,207
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in 000's)
June 24, June 26,
Cash and cash equivalents $848 $112
Inventories 13,648 7,544
Deferred income taxes 2,550 1,382
Other current assets 1,974 1,350
Total current assets 19,020 10,388
Fixed assets, net 48,006 32,137
Goodwill, net 29,825 30,653
Other assets 1,612 2,041
Total assets $98,463 $75,219
Accounts payable trade $12,780 $9,022
Accounts payable other 3,731 724
Accrued payroll and related expense 1,819 1,624
Income and sales taxes payable 2,465 1,074
Other current liabilities 5,542 5,550
Total current liabilities 26,337 17,994
Notes payable -- 18,250
Deferred rent 3,181 1,681
Deferred tax liabilities 2,000 1,505
Other liabilities 246 495
Total liabilities 31,764 39,925
Total stockholders' equity 66,699 35,294
Total liabilities and stockholders' equity $98,463 $75,219
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