Loehmann’s, Inc. Announces Second Quarter and Six Month Results
BRONX, N.Y.–(BUSINESS WIRE)–August 21, 1997–Loehmann’s, Inc. (Nasdaq:LOEH) today announced financial results for the second fiscal quarter and six months ended August 2, 1997.
The pro forma net loss for the quarter was $2.8 million, or $0.29 per share, compared to pro forma net income of $1.0 million, or $0.10 per share, for the comparable period in the prior year. Sales rose 5.1% to $95.3 million compared to $90.7 million in the second quarter of 1996. Comparable store sales decreased 11.9% from the comparable period in the prior year.
The pro forma net loss for the six month period was $2.5 million, or $0.27 per share, versus pro forma net income of $3.5 million, or $0.37 per share, for the first six months of 1996. Pro forma net loss for the six months ended August 2, 1997 includes $1.0 million of pre-opening expense for new stores opened during the period which had a $0.06 per share impact on pro forma net income, versus pre-opening expenses of $0.4 million, or $0.02 per share for the comparable period of fiscal 1996. Sales for the six months were $207.9 million compared to $194.8 million for the prior period. Comparable store sales decreased 8.8% for the six months ended August 2, 1997.
Pro forma net income and pro forma operating income for 1996 is calculated assuming the Company’s Initial Public Offering of common stock and issuance of 11 7/8% Notes due 2003, completed on May 10, 1996, had been completed on the first day of fiscal 1996. Additionally, pro forma net income (loss) for both 1997 and 1996 assumes a 39% effective tax rate.
Commenting on the results, Robert N. Friedman, Chairman and Chief Executive Officer, stated, “We have taken the necessary markdowns which substantially reduced our spring and summer inventory but had an adverse effect on gross margins. As a result, we will begin the third quarter in a clean inventory position — down 5% from prior year levels on a comp store basis.
“Importantly,” Mr. Friedman continued, “we are well- positioned for the kickoff of the fall season, as we are currently rolling out fall merchandise to our stores. In building our fall inventory we focused aggressively on key categories, including bridge and designer apparel, shoes, petites and women’s sizes.
“We are also enthusiastic about the launch of our men’s apparel division, which will be introduced in 19 stores during October and November. In addition, we will be expanding our gift assortment in approximately 45 stores, and we remain focused on the opportunistic expansion of other merchandise categories that have performed well. As we continue to implement these merchandising strategies, we are confident that we are taking the proper steps to drive store traffic and enhance Loehmann’s appeal to a broader customer base.
“This month we opened stores in Westbury, New York and West Covina, California, which completes our store expansion program of seven new stores in 1997,” concluded Mr. Friedman.
On a reported basis for the second quarter of fiscal 1997, the Company generated a net loss of $4.6 million, or $0.51 per share, compared to a net loss of $11.6 million, or $1.33 per share, for the prior year. The reported results for 1996 include an extraordinary loss of $12.2 million, or $1.41 per share, related to the early retirement of debt and the early redemption of preferred stock. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter decreased to $1.2 million this year versus $7.3 million in the prior year, representing 1.3% and 8.1% of sales, respectively.
On a reported basis for the first six months of fiscal 1997, the Company generated a net loss of $4.2 million, or $0.47 per share, compared to net loss of $9.7 million, or $1.40 per share, for the comparable period of fiscal 1996. The extraordinary loss of $12.2 million, or $1.76 per share, is included in earnings for the six months of fiscal 1996. EBITDA for the first twenty-six weeks decreased to $7.5 million this year, versus $17.1 million in the prior year, representing 3.6% and 8.8% of sales, respectively.
Loehmann’s Inc. is a leading specialty retailer of well known designer and brand name women’s fashion apparel, accessories and shoes at prices that are typically 30% to 65% below department store prices. Loehmann’s operates 78 stores in major metropolitan markets located in 23 states. -0-
This release contains forward-looking information within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain risks, uncertainties, and other factors which may cause actual results to differ materially from such forward-looking information. Such factors include, among other things, levels of sales and store traffic, general economic and business conditions, competition, development and operating costs, advertising and promotional efforts, brand awareness, and the existence or absence of adverse publicity. For more detail, see the prospectus dated October 15, 1996 that is part of the Company’s registration statement on Form S-1 (File No. 333-12881) filed with the Securities and Exchange Commission (a copy of which may also be obtained from the Company at (718-409-2000) and you are urged to consider such factors. -0-
LOEHMANN’S, INC.
STATEMENT OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
Thirteen Week Twenty-Six Week
Periods Ended Periods Ended
Aug. 2, Aug. 3, Aug. 2, Aug.3,
1997 1996 1997 1996
Sales $ 95,292 $ 90,652 $207,887 $194,772
Gross Margin 25,621 28,100 60,727 61,834
Selling, General and
Administrative Expenses 24,393 20,802 53,261 44,687
EBITDA 1,228 7,298 7,466 17,147
Depreciation and Amortization 2,668 2,899 5,532 6,046
Operating (Loss) Income (1,440) 4,399 1,934 11,101
Interest Expense, net 3,140 3,759 6,112 7,990
(Loss) Income Before Taxes (4,580) 640 (4,178) 3,111
Provision for Income Taxes (1) 7 10 29 60
Net (Loss) Income Before
Extraordinary Item (4,587) 630 (4,207) 3,051
Extraordinary Item – Loss for
Early Retirement of Debt — 7,101 — 7,101
Net Loss (4,587) (6,471) (4,207) (4,050)
Stock Dividends on and
Accretion of Preferred Stock — 5,082 — 5,668
Net Loss Applicable to
Common Stock ($4,587) ($11,553) ($4,207) ($9,718)
Net Loss per Share ($0.51) ($1.33) ($0.47) ($1.40)
Weighted Average Shares
Outstanding 8,934 8,669 8,934 6,934
(1) Represents state local and alternative minimum taxes.
Pro-forma Results
Supplemental information assuming stock and debt offering, debt
extinguishment and redemption of preferred stock had occurred at the
beginning of the respective periods:
Net (Loss) Income (2) ($2,794) $994 ($2,549) $3,515
(Loss) Earnings per Share ($0.29) $0.10 ($0.27) $0.37
Weighted Average Shares
Outstanding 9,500 9,500 9,500 9,500
(2) Reflects tax expense at an effective rate of 39%.
Reconciliation of Reported Net Earnings to Pro-forma Net Earnings:
Net (Loss) as Reported ($4,587) ($11,553) ($4,207) ($9,718)
Extraordinary items 7,101 7,101
Charge for Store Closing and
Impairment of Assets
Change in Depreciation and
Amortization 151
Change in Interest Expense 989 2,528
Income Tax Effect 1,793 (625) 1,658 (2,215)
Preferred Stock Dividends and
Accretion — 5,082 — 5,668
Pro-forma Net (Loss) Income ($2,794) $994 ($2,549) $3,515
LOEHMANN’S, INC.
BALANCE SHEET
(Unaudited)
(In thousands)
Actual
August 2, August 3,
1997 1996
Assets
Cash $ 1,268 $ 1,884
Inventory 64,159 46,560
Prepaid Expenses and Other Current Assets 7,436 2,617
Total Current 72,863 51,061
Property, Plant and Equipment, net 68,701 59,142
Other Assets 43,643 45,464
Total Assets $185,207 $155,667
Liabilities and Equity
Accounts Payable $ 23,486 $ 18,512
Accrued Expenses 17,380 19,498
Current Portion – Long-term Debt 70 66
Total Current Liabilities 40,936 38,076
Revolving Line of Credit 25,157 2,791
Senior Secured Notes 95,000 95,000
Long-term Debt 2,630 2,686
Other 389 393
Total Liabilities 164,112 138,946
Shareholder’s Equity 21,095 16,721
Total Liabilities & Shareholder’s Equity $185,207 $155,667
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