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EX-99.2 - EX-99.2 - CLAIRES STORES INC | g26089exv99w2.htm |
8-K - FORM 8-K - CLAIRES STORES INC | g26089e8vk.htm |
Exhibit 99.1
NEWS BULLETIN
RE: CLAIRES STORES, INC.
RE: CLAIRES STORES, INC.
2400 WEST CENTRAL ROAD, HOFFMAN ESTATES, ILLINOIS 60192
CLAIRES STORES, INC. ANNOUNCES SELECTED PRELIMINARY, UNAUDITED FISCAL 2010
FOURTH QUARTER AND FULL YEAR RESULTS
FOURTH QUARTER AND FULL YEAR RESULTS
CHICAGO, Illinois, February 11, 2011. Claires Stores, Inc., one of the worlds leading
specialty retailers of fashionable accessories and jewelry at affordable prices for young women,
teens, tweens and girls ages 3 to 27, today announced selected preliminary, unaudited financial
results for the 2010 fourth quarter and the fiscal year, which ended January 29, 2011.
The financial results discussed in this press release regarding selected fiscal 2010 fourth quarter
results are unaudited and should be considered preliminary and subject to change. The Company does
not currently expect to update this information prior to the release of its fourth quarter and
fiscal 2010 financial results. The Company expects to hold its regular quarterly conference call
after those results are released. The Company plans to file its 2010 Annual Report on Form 10-K on
or before the due date of April 29, 2011.
Fourth Quarter Results
The Company expects to report net sales of $422 million for the 2010 fourth quarter, an increase of
$11 million, or 2.7%, compared to the 2009 fourth quarter. The increase was attributable to an
increase in same store sales and new store sales, partially offset by foreign currency translation
effect of our foreign locations sales, closed stores and decreases in shipments to franchisees.
Net sales would have increased 4.5% excluding the impact from foreign currency rate changes.
Consolidated same store sales increased 3.2% in the 2010 fourth quarter. In North America, same
store sales increased 4.7% in the 2010 fourth quarter. In Europe, same store sales increased 0.6%
in the 2010 fourth quarter. We compute same store sales on a local currency basis, which
eliminates any impact from changes in foreign exchange rates.
Adjusted EBITDA in the 2010 fourth quarter is expected to be between $96 million and $98 million,
compared to $93.4 million in the 2009 fourth quarter. The Company defines Adjusted EBITDA as
earnings before interest, income taxes, gain from early debt extinguishment, depreciation and
amortization, excluding the impact of transaction-related costs incurred in connection with its May
2007 acquisition and other non-recurring or non-cash expenses, and normalizing occupancy costs for
certain rent-related adjustments. We expect to report operating income for the 2010 fourth quarter
in the range of $73 million to $75 million. A reconciliation of operating income to Adjusted
EBITDA is attached.
Fiscal 2010 Results
The Company expects to report net sales of $1,426 million for fiscal 2010, an increase of $84
million, or 6.3%, compared to Fiscal 2009. Consolidated same store sales increased 6.5% in Fiscal
2010. In North America, same store sales increased 7.8% in Fiscal 2010 while Europe same store
sales increased 4.3%.
Adjusted EBITDA in fiscal 2010 is expected to be between $263 million and $265 million, compared to
$233.9 million in fiscal 2009. We expect to report operating income for fiscal 2010 in the range
of $176 million to $178 million. A reconciliation of operating income to Adjusted EBITDA is
attached. In addition, during fiscal 2010, the Company paid $80 million to retire $14 million of
Senior Notes, $57 million of Senior Toggle Notes and $23 million of Senior Subordinated Notes.
Other Data (dollars in thousands)
January 29, 2011 | ||||
Total debt: |
||||
Note payable to banks due 2012 (a) |
$ | 57,703 | ||
Senior secured revolving credit facility due 2013 |
194,000 | |||
Senior secured term loan facility due 2014 |
1,399,250 | |||
Senior notes due 2015 |
236,000 | |||
Senior toggle notes due 2015 |
360,431 | |||
Senior subordinated notes due 2017 |
259,612 | |||
Obligations under capital leases |
17,290 | |||
Total debt |
$ | 2,524,286 | ||
Cash and cash equivalents |
$ | 255,902 | ||
Restricted cash |
23,864 | |||
Total cash |
$ | 279,766 | ||
Inventory |
$ | 136,148 | ||
Working capital |
$ | 193,718 | ||
Capital expenditures (b) |
$ | 50,671 | ||
Cash interest paid |
$ | 108,923 |
Fiscal 2010 | ||||
Change in average transaction value: |
||||
Consolidated |
6.7 | % | ||
North America |
5.8 | % | ||
Europe |
7.8 | % | ||
Change in average number of transactions per store: |
||||
Consolidated |
0.9 | % | ||
North America |
2.9 | % | ||
Europe |
(2.4 | )% | ||
Average selling price |
$ | 5.91 | ||
Average transaction value |
$ | 14.38 | ||
Accessories penetration |
54.5 | % | ||
Gross profit percentage (based on midpoint of range) |
52.0 | % |
(a) | During the fourth quarter of Fiscal 2010, the Company executed a Euro denominated loan that is due January 2012. | |
(b) | In Fiscal 2011, we currently expect to incur approximately $75.0 million of capital expenditures to open new stores, remodel existing stores and to improve technology systems. |
Adjusted EBITDA
EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP, are not
intended to represent cash flow from operations under U.S. GAAP and should not be used as an
alternative to net income (loss) as an indicator of operating performance or to cash flow from
operating, investing or financing activities as a measure of liquidity. Management compensates for
the limitations of using EBITDA and Adjusted EBITDA by using it only to supplement our U.S. GAAP
results to provide a more complete understanding of the factors and trends affecting our business.
Each of EBITDA and Adjusted EBITDA has its limitations as an analytical tool, and you should not
consider them in isolation or as a substitute for analysis of our results as reported under U.S.
GAAP.
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Management uses Adjusted EBITDA as an important tool to assess our operating performance.
Management considers Adjusted EBITDA to be a useful measure in highlighting trends in our business
and in analyzing the profitability of similar enterprises. Management believes that Adjusted
EBITDA is effective, when used in conjunction with net income (loss), in evaluating asset
performance, and differentiating efficient operators in the industry. Furthermore, management
believes that Adjusted EBITDA provides useful information to potential investors and analysts
because it provides insight into managements evaluation of our results of operations. Our
calculation of Adjusted EBITDA may not be consistent with EBITDA for the purpose of the covenants
in the agreements governing our indebtedness.
While EBITDA and Adjusted EBITDA are frequently used as a measure of operations and the ability to
meet indebtedness service requirements, they are not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the method of calculation.
Management believes that these measures provide useful information to investors.
Company Overview
Claires Stores, Inc. is one of the worlds leading specialty retailers of fashionable accessories
and jewelry at affordable prices for young women, teens, tweens and girls ages 3 to 27. The
Company operates through its two store concepts: Claires® and Icing®, while
the latter operates only in North America, Claires operates worldwide. As of January 29, 2011,
Claires Stores, Inc. operated 2,981 stores in North America and Europe. The Company also
franchised or licensed 395 stores in Japan, the Middle East, Turkey, Russia, South Africa, Greece,
Guatemala, Malta and Ukraine. More information regarding Claires Stores is available on the
Companys corporate website at http://www.clairestores.com.
Preliminary Nature of Results
We have not yet finalized our financial results for our 2010 fourth quarter or fiscal year ended
January 29, 2011. The preliminary estimated financial results described herein are unaudited and
subject to revision pending the completion of the accounting and financial reporting processes
necessary to complete our financial closing procedures and financial statements for our 2010 fourth
quarter and fiscal year ended January 29, 2011. The foregoing preliminary estimates of our
financial results were prepared by management. Management believes that such preliminary estimates
have been prepared on a reasonable basis, and such preliminary estimates are based upon a number of
assumptions, estimates and business decisions that are inherently subject to significant business
fluctuations, economic conditions and competitive uncertainties and contingencies, many of which
are beyond our control, and represent, to the best of managements knowledge, our expected results.
However, because this information is preliminary and highly subjective, it should not be relied on
as indicative of our future actual results. We do not intend to update or otherwise revise the
preliminary estimates to reflect future events.
Forward-looking Statements:
This press release contains forward-looking statements which represent the Companys expectations
or beliefs with respect to future events. Statements that are not historical are considered
forward-looking statements. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those anticipated. Those
factors include, without limitation: changes in consumer preferences and consumer spending;
competition; our level of indebtedness; general economic conditions; general political and social
conditions such as war, political unrest and terrorism; natural disasters or severe weather events;
currency fluctuations and exchange rate adjustments; uncertainties generally associated with the
specialty retailing business; disruptions in our supply of inventory; inability to increase same
store sales; inability to renew, replace or enter into new store leases on favorable terms;
significant increases in our merchandise markdowns; inability to grow our store base in Europe or
expand our international franchising operations; inability to design and implement new information
systems; delays in anticipated store openings or renovations; uncertainty that definitive financial
results may differ from preliminary financial results due to, among other things, final U.S. GAAP
adjustments; results from any future asset impairment analysis; changes in applicable laws, rules
and regulations, including changes in federal, state or local regulations governing the sale of our
merchandise, particularly regulations relating to the content in our merchandise, general
employment laws, including laws relating to overtime pay and employee benefits, health care laws,
tax laws and import laws; product recalls; loss of key members of management; increases in the cost
of labor; labor disputes; unwillingness of vendors and service providers to supply goods or
services pursuant to historical customary credit arrangements; increases in the cost of borrowings;
unavailability of additional debt or equity capital; and the impact of our substantial indebtedness
on our operating income and our ability to grow. These and other applicable risks, cautionary
statements and factors that could cause actual results to differ from the Companys forward-looking
statements are included in the Companys filings with the SEC,
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specifically as described in the Companys Annual Report on Form 10-K for the fiscal year ended
January 30, 2010 filed with the SEC on April 13, 2010. The Company undertakes no obligation to
update or revise any forward-looking statements to reflect subsequent events or circumstances. The
historical results contained in this press release are not necessarily indicative of the future
performance of the Company.
Additional Information:
Note: Other Claires Stores, Inc. press releases, a corporate profile and the most recent Form
10-K and Form 10-Q reports are available on Claires business website at:
http://www.clairestores.com.
Contact Information:
J. Per Brodin, Executive Vice President and Chief Financial Officer
Phone: (954) 433-3900, Fax: (954) 442-3999 or E-mail, investor.relations@claires.com
Phone: (954) 433-3900, Fax: (954) 442-3999 or E-mail, investor.relations@claires.com
CLAIRES STORES, INC. AND SUBSIDIARIES
ADJUSTED EBITDA
(UNAUDITED)
(In Millions)
(UNAUDITED)
(In Millions)
Three Months | Three Months | Twelve Months | Twelve Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
January 29, 2011 | January 30, 2010 | January 29, 2011 | January 30, 2010 | |||||||||||||
Operating income (a) |
$ | 73 75 | $ | 70.7 | $ | 176 178 | $ | 145.2 | ||||||||
Depreciation and amortization |
17 | 17.3 | 65 | 71.5 | ||||||||||||
Reported EBITDA |
90 92 | 88.0 | 241 243 | 216.7 | ||||||||||||
stock compensation, book
to cash rent, intangible
amortization (b) |
3 | 2.9 | 10 | 10.4 | ||||||||||||
management fee,
consulting, joint venture
investment (c) |
1 | 2.2 | 6 | 5.2 | ||||||||||||
other (d) |
2 | 0.3 | 6 | 1.6 | ||||||||||||
Adjusted EBITDA |
$ | 96 98 | $ | 93.4 | $ | 263 265 | $ | 233.9 | ||||||||
a) | Operating income excludes the effect of any impairment charges. | |
b) | Includes: non-cash stock compensation expense, net non-cash rent expense, amortization of rent free periods, the inclusion of cash landlord allowances, and the net accretion of favorable (unfavorable) lease obligations and non-cash amortization of lease rights. | |
c) | Includes: the management fee paid to Apollo Management and Tri-Artisan Capital Partners, non-recurring consulting expenses and non-cash equity loss from our former 50:50 joint venture (effective September 2, 2010, the Company had no ownership in this joint venture). | |
d) | Includes: non-cash losses on property and equipment primarily associated with the sale of our North American distribution center/office building, remodels, relocations and closures; the gain on sale of lease rights upon exiting certain European locations; costs, including third party charges and compensation, incurred in conjunction with the relocation of new employees; non-cash foreign exchange gains/losses resulting from intercompany transactions and revaluations of U.S. dollar denominated cash accounts of our foreign entities; and severance and transaction related costs, Pan European Transformation costs and Cost Savings Initiative costs. |
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