Candie's, Inc. Reports Fourth Quarter and Year End Results for the Fiscal Year Ended January 31, 2000.Business Editors PURCHASE, NY--(BUSINESS WIRE)--May 1, 2000 Candie's, Inc. (Nasdaq NMS See NetWare Management System. symbol: CAND) ("Candie's") today announced financial results for the fourth quarter and the fiscal year ended January 31, 2000 ("Fiscal 2000"). FISCAL YEAR-END Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. OPERATING RESULTS For Fiscal 2000, net revenues decreased approximately 20.8% to $90.8 million from $114.7 million in the prior year. The decline in net revenues resulted primarily from a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in sales of women's footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). . The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 18.1% compared to 22.9% in the prior year. The decline in gross profit margin was primarily attributable to promotional pricing in order to clear excess inventory. Licensing income rose to $3.0 million compared to $0.4 million in the prior year, largely reflecting a strong response to the Company's fragrance with licensing partner Liz Claiborne This article is about the corporation Liz Claiborne Inc. For the fashion designer who founded the company, see Liz Claiborne (fashion designer). Liz Claiborne Inc. . Due to a reduction in the gross margin, higher expenses from new initiatives, increased amortization and depreciation expense related to acquisitions and fixed asset additions, settlement of the class action litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and special charges, the Company recorded an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $22.9 million compared to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $0.8 million. The Company's operating loss before litigation settlement costs and special charges was $11.9 million in Fiscal 2000. Loss before income taxes was $26.3 million compared to a loss of $0.8 million in the prior year. The loss before income taxes before litigation settlement costs and special charges in Fiscal 2000 was $15.3 million. The net loss including settlement of the class action litigation and special charges was $25.2 million, or $(1.41) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share on 17.8 million shares, compared to a net loss of $0.6 million, or $(0.04) per diluted share on 15.3 million shares in the prior year. FOURTH QUARTER OPERATING RESULTS For the fourth quarter ended January 31, 2000, net revenues declined by approximately 40.5% to $14.3 million from $24.1 million in the fourth quarter of the prior year. The gross profit margin was 10.4% compared to a gross profit margin of 19.5% in the fourth quarter of the prior year. The Company recorded an operating loss of $13.2 million compared to an operating loss of $2.2 million in the fourth quarter of the prior year. The operating loss before litigation settlement costs and special charges in the fourth quarter of Fiscal 2000 was $4.5 million. The net loss was $15.2 million or $(0.84) per diluted share compared to a net loss of $2.0 million, or $(0.11) per diluted share in the fourth quarter of the prior year. In commenting on the results, Neil Cole Neil Cole (born 1 March 1972) is an English television presenter, comedian, radio broadcaster and actor. Early life Cole was born in Bristol in 1972, and attended King Edward Grammar School in Chelmsford. He studied English & French Literature at Bristol University. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "Last year a combination of factors worked together to result in an aberrational Ab`er`ra´tion`al a. 1. Characterized by aberration. year. Currently, we have strong selling footwear styles. These strong sales, coupled with changes to the Company's management team, operating and financial procedures, and product line, give us confidence that we will quickly overshadow o·ver·shad·ow tr.v. o·ver·shad·owed, o·ver·shad·ow·ing, o·ver·shad·ows 1. To cast a shadow over; darken or obscure. 2. To make insignificant by comparison; dominate. last year's disappointing results." Mr. Cole continued, "The Company has begun implementing a strategic plan that includes expanding Candie's footwear, licensing, and consumer direct businesses in order to build Candie's into a lifestyle brand. The plan also involves focusing on gross margin improvement and streamlining our operations in order to reduce costs. Mr. Cole stated further, "As evidenced by our licensing income growth, the Candie's brand continues to gain strength with our target market. Candie's fragrance, licensed to Liz Claiborne, Inc., performed well above our expectations and has improved our brand visibility tremendously. We plan to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this strength by pursuing additional licensing opportunities in related categories while focusing our in-house efforts on footwear. We also plan to open up to five Candie's retail stores this year, which is expected to be a key growth strategy, as it allows our Company to present Candie's as a lifestyle to consumers, to test and react to product in wholesale, and to better control growth. We also see great opportunities in our website, Candies.com, which has a number of exciting features due to our relationships with MTVi Group, RollingStone.com, Alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. .com and our e-commerce venture with Journey's. Traffic to our site has risen significantly. We expect all of our efforts to build Candie's market share. We are also pleased with the performance of Bongo, as the Bongo brand continues to gain market share in mid-tier distribution and is complementary to Candie's. We believe the Company is back on track and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our growth strategies will reward stockholders." Candie's is a leading designer and marketer of young women's footwear, apparel and accessories. The Company distributes its products through better department and specialty stores Noun 1. specialty store - a store that sells only one kind of merchandise shop, store - a mercantile establishment for the retail sale of goods or services; "he bought it at a shop on Cape Cod" nationwide, as well as through seven company-owned stores and specialty stores internationally. Candie's Inc. also owns and markets footwear, accessories and apparel under the Bongo trademark. Candie's also arranges for the manufacture of footwear products for mass market and discount retailers under the private label brand of the retailer or other trademarks owned or licensed by Candie's. Additionally, the Candie's brand is licensed to Liz Claiborne Inc. for the manufacture, sale and distribution of fragrances and cosmetics. Candie's Inc. operates www.candies.com, a leading community for teens on the web. For investor information please visit the corporate web site at www.candiesinc.com. SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and OF 1995. The statements which are not historical facts contained in this press release are forward looking statements that involve a number of known and unknown risks, uncertainties and other factors all of which are difficult or impossible to predict and many of which are beyond the control of the Company, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, uncertainty regarding continued market acceptance of current products and the ability to develop successfully and market new products particularly in light of rapidly changing fashion trends, the impact of supply and manufacturing constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or difficulties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's dependence on foreign manufacturers, uncertainties relating to customer plans and commitments, competition, uncertainties relating to economic conditions in the markets in which the Company operates, the ability to hire and retain key personnel, the ability to obtain capital, the risks of regulatory proceedings and litigation, the risks of trademark protection, the uncertainty of marketing and licensing acquired trademarks, other risks detailed in the Company's Securities and Exchange Commission filings, and uncertainty associated with the impact on the Company in relation to recent events discussed in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for Fiscal 1999 and Fiscal 2000. The words "believe", "expect", "anticipate", "seek" and similar expressions identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement, was made. Table Follows
Candie's, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(000's omitted, except per share data)
Three Months Ended Twelve Months Ended
January 31, January 31,
-------------------- -------------------
2000 1999 2000 1999
------ ------ ------ ------
Net revenues $ 14,313 $ 24,069 $ 90,796 $114,696
Cost of goods sold 12,831 19,385 74,347 88,427
-------- -------- -------- --------
Gross profit 1,482 4,684 16,449 26,269
Licensing income 942 273 2,951 373
-------- -------- -------- --------
2,424 4,957 19,400 26,642
Operating expenses:
Selling, general
and administrative 6,901 7,128 31,260 25,856
Special charges 692 - 3,002 -
Litigation settlement, net 8,000 - 8,000 -
-------- -------- -------- --------
15,593 7,128 42,262 25,856
Operating (loss) income (13,169) (2,171) (22,862) 786
Other expenses:
Interest expense - net 457 219 1,415 1,005
Equity loss in
joint venture 1,549 545 2,002 545
-------- -------- -------- --------
2,006 764 3,417 1,550
-------- -------- -------- --------
(Loss) income before
income taxes (15,175) (2,935) (26,279) (764)
(Benefit) provision
for income taxes (13) (985) (1,103) (123)
-------- -------- -------- --------
Net (loss) income $(15,162) $ (1,950) $(25,176) $ (641)
======== ======== ======== ========
(Loss) earnings per share:
- Basic $ (0.84) $ (0.11) $ (1.41) $ (0.04)
======== ======== ======== ========
- Diluted $ (0.84) $ (0.11) $ (1.41) $ (0.04)
======== ======== ======== ========
Weighted average #
of common shares:
- Basic 17,962 17,222 17,798 15,250
======== ======== ======== ========
- Diluted 17,962 17,222 17,798 15,250
======== ======== ======== ========
Selected Balance Sheet Data: 1/31/99 1/31/00
---------------------------- -------- --------
Current Assets $ 45,216 $ 32,799
Current Liabilities $ 22,330 $ 29,262
Stockholders' Equity $ 51,849 $ 32,948
Working Capital $ 22,886 $ 3,537
Current Ratio 2.02:1 1.12:1
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