Track 'n Trail (NASDAQ: TKTL), a premier destination specialty retailer of branded casual, outdoor and adventure footwear, today reported net sales for the quarter ended July 1, 2000 of $23.1 million versus $28.3 million reported for the same period in 1999. Comparable store sales for the second quarter declined 4.5%. Net loss for the second quarter was $191,000, or ($0.03) per diluted share, as compared to a net income of $45,000 or $0.01 per diluted share, for the comparable quarter in 1999. Diluted shares outstanding during the second quarter of 2000 were 7,157,000 compared to 7,091,000 in 1999.

The company also reported net sales for the first six months of fiscal 2000 of $46.5 million versus $51.6 million for the corresponding period in fiscal 1999. Comparable store sales for the first six months of fiscal 2000 declined 1.3%. Net loss per diluted share for the six-month period ended July 1, 2000 was $584,000, or ($0.08) per diluted share, compared to a net loss of $1.5 million, or ($0.23) per diluted share, for the six months ended June 26, 1999. The number of diluted shares outstanding for the six months ended July 1, 2000 and June 26, 1999 was 7,117,000 and 6,865,000, respectively.

David L. Suechting Jr, commented: "While we are disappointed with our results for the quarter, the shortfall was almost entirely due to the difficult sandal market that has plagued the overall industry. We are encouraged as we head into the back to school season, our inventories are in line as we transition into fall and we have received positive results from our initial fall deliveries, especially in the skate sneaker and boot categories. Additionally, our progress with the Retail Group continues and we anticipate that we will open the first, newly remodeled Track `n Trail store during the fourth quarter."

Mr Suechting concluded, "We are optimistic about the second half of fiscal 2000 and look forward to capitalizing on the opportunities that lie ahead. We remain committed to a strategy that will return the company to long-term growth and increase shareholder value."

Track 'n Trail is one of the largest full-service specialty retailers in the United States, focusing on a broad range of branded casual, outdoor and adventure footwear. As of July 1, 2000, the company operated 112 Track 'n Trail stores and 44 Overland Trading stores in 33 states. The Track `n Trail and Overland stores offer a wide range of rugged walking and fashion casual shoes, sandals and boots, featuring brands such as Timberland, Dr Martens, Birkenstock, Teva, Vans, Airwalk, Clarks, Ecco and Rockport.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information presented, the matters discussed in this release are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially, including the ability to adjust to changing fashion patterns, the ability to gain significant operating margins and heightened inventory turns as a result of the company's reorganization, and the seasonality of the Company's business. These and other factors related to the Company's business are described under "Risk Factors" in the Company's Annual Report on Form 10-K.

TRACK 'n TRAIL AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
     
 
July 1, 2000
December 25, 1999
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$ 1,147
$ 3,069
Accounts receivable
799
1,898
Income taxes receivable
129
1,710
Inventories
31,064
34,099
Prepaid expenses
241
662
Prepaid income taxes
417
---
Deferred income taxes
2,831
2,831
 
Total current assets
36,628
44,269
 
Fixed assets, net
9,005
9,513
Goodwill, net
2,675
2,757
Deferred income taxes
3,646
3,646
Other assets
296
---
 
Total assets
$ 52,250
$ 60,185
 
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt
$ 4
$ 15,534
Accounts payable
8,090
13,772
Reserve for store closings and restructuring costs
3,318
4,782
Accrued payroll
772
1,008
Sales tax payable
426
945
Accrued expenses and other liabilities
1,073
1,106
 
Total current liabilities
13,683
37,147
 
Deferred rent
1,559
1,483
Long-term debt, net of current portion
16,026
5
 
Total liabilities
31,268
38,635
 
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized; no shares issued or outstanding
---
---
Common stock, $0.01 par value; 20,000,000 shares authorized; 7,156,759 and 6,959,476 shares issued and outstanding at July 1, 2000 and December 25, 1999, respectively
72
70
Additional paid-in capital
25,976
25,962
Retained deficit
(5,066)
(4,482)
 
Total stockholders' equity
20,982
21,550
 
Total liabilities and stockholders' equity
$ 52,250
$ 60,185

 

TRACK 'n TRAIL AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
         
 
Period ended
 
July 1, 2000
June 26, 1999
July 1, 2000
June 26, 1999
 
(13 Weeks)
(13 Weeks)
(27 Weeks)
(26 Weeks)
         
Net sales
$ 23,094
$ 28,272
$ 46,464
$ 51,596

Cost of sales

12,355
14,529
23,822
27,150
 
Gross profit
10,739
13,743
22,642
24,446
 

Operating expenses:

Selling and marketing
9,069
11,009
18,960
21,870
Administrative and distribution
1,916
2,299
4,247
4,704
Restructuring and impairment
(340)
---
(340)
---
 
Total operating expenses
10,645
13,308
22,867
26,574
 
Operating income (loss)
94
435
(225)
(2,128)
 
Other (income) expense:
Interest expense
413
310
756
558
Other, net
(1)
47
(8)
51
 
Income (loss) before income taxes
(318)
78
(973)
(2,737)
Income tax provision (benefit)
(127)
33
(389)
(1,191)
 
Net income (loss)
$ (191)
$ 45
$ (584)
$ (1,546)
 
Earnings (loss) per share:
Basic
$ (0.03)
$ 0.01
$ (0.08)
$ (0.23)
Diluted
$ (0.03)
$ 0.01
$ (0.08)
$ (0.23)