Candie's, Inc. Reports Third Quarter and Nine Months Fiscal 2001 Results.Business Editors VALHALLA, N.Y.--(BUSINESS WIRE)--Dec. 14, 2000 Candie's, Inc. (Nasdaq NMS See NetWare Management System. :CAND) ("The Company") today announced financial results for its third quarter and nine months ended October 31, 2000 of its fiscal year ending January 31, 2001 ("Fiscal 2001"). THIRD QUARTER OPERATING RESULTS: For the third quarter of Fiscal 2001, the Company recorded net revenues of $22.5 million, as compared to $22.2 million in the third quarter of the prior year. 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 $1.2 million in the third quarter of Fiscal 2001, compared to an operating loss of $5.0 million in the third quarter of the prior year. Net loss for the third quarter was $1.5 million or $0.08 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 19.3 million shares outstanding, compared to a net loss of $5.7 million, or $0.32 per diluted share on 17.9 million shares outstanding in the third quarter of the prior year. Revenues for the third quarter of Fiscal 2001 increased for the Company's branded 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). , reflecting continued customer acceptance of the Company's brands and products. Retail store sales increased primarily as the result of new locations that were added in the current fiscal year. Deductions for returns and allowances decreased primarily as a result of operating improvements targeting this area. Partially offsetting these revenue increases were decreases in the Company's men's private label division sales, the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of the Company's handbag line that was licensed in May 2000, and a decrease in kids' merchandise sales. 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. for the third quarter of Fiscal 2001 rose to 21.8% compared to 14.9% in the third quarter of the prior year. The improvement in gross profit margin was primarily attributable to improved inventory management and reductions in sales returns and allowances. Licensing income rose to $1.3 million compared to $1.1 million in the third quarter of the prior year, reflecting continued sales growth for Candie's licensed products. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and special charges decreased by $.9 million and $1.1 million, respectively, in the third quarter of Fiscal 2001 compared to the third quarter of the prior year. NINE MONTHS OPERATING RESULTS: For the nine months ended October 31, 2000, the Company recorded net revenues of $73.8 million, as compared to $76.5 million in the comparable period of the prior year. The Company recorded an operating loss of $133,000 in the nine months ended October 31, 2000, compared to an operating loss of $9.7 million in the comparable period of the prior year. Net loss for the nine months was $828,000 or $0.04 per diluted share on 19.2 million shares outstanding, compared to a net loss of $10.0 million, or $0.56 per diluted share on 17.7 million shares outstanding in the comparable period of the prior year. The declines in revenue in the areas of kids' footwear and unbranded merchandise during the nine months ended October 31, 2000 were due in part to the Company's decision to focus on higher margin sales over a greater volume of sales. Also contributing to the overall revenue decline was the discontinuance of the Company's handbag line, which was licensed in May 2000. The Company's private label men's division sales decreased as a result of buying cutbacks from two significant customers. Partially offsetting the declines were increases in branded women's footwear sales, reflecting continued consumer acceptance of the Company's brands and products. Retail store sales increased primarily as the result of additional locations added in the current fiscal year. Deductions for returns and allowances decreased primarily as a result of operating improvements targeting this area. The gross profit margin for the first nine months of Fiscal 2001 increased to 22.9% from 19.6% in the comparable period of the prior year. The improvement in gross profit margin was primarily attributable to improved inventory management and reductions in sales returns and allowances. Licensing income rose to $3.6 million, as compared to $2.0 million in the comparable period of the prior year. Operating expenses and special charges decreased by $3.9 million and $2.1 million, respectively, for the nine months as compared to the same period 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, "The Company's focus on the Candie's brand and products has resulted in the improved financial performance in the third quarter and the first nine months of Fiscal 2001. By building image accounts and retail distribution and focusing on product, we have begun to speak directly to our consumer. We have grown distribution through licensing and increased our gross profit margins, while simultaneously reducing operating costs operating costs npl → gastos mpl operacionales . We believe that these trends point to a positive outlook for the Company." The Company also reported that in December 2000, an action for breach of contract and the duty of good faith and fair dealing was commenced in the United States District Court United States District Court In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. for the Southern District of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of against the Company and one of its subsidiaries by the sellers of the entity that owned the Bongo trademark whose stock was purchased by the Company in September 1998. The lawsuit lawsuit: see procedure; tort. seeks unspecified Adj. 1. unspecified - not stated explicitly or in detail; "threatened unspecified reprisals" specified - clearly and explicitly stated; "meals are at specified times" compensatory monetary damages Monetary damages, in civil law, refers to compensation given to an injured party by a liable party. Monetary damages may be restitution, a penalty, or both. and certain equitable equitable adj. 1) just, based on fairness and not legal technicalities. 2) refers to positive remedies (orders to do something, not money damages) employed by the courts to solve disputes or give relief. (See: equity) EQUITABLE. relief. The Company intends to defend itself vigorously and believes it has defenses available to it. 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 eight company-owned stores and specialty stores internationally. Candie's 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 for the manufacture, sale and distribution of fragrances and cosmetics cosmetics, preparations externally applied to change or enhance the beauty of skin, hair, nails, lips, and eyes. The use of body paint for ornamental and religious purposes has been common among primitive peoples from prehistoric times (see body-marking). , handbags, sunglasses sunglasses A tinted pair of glasses used to ↓ light arriving at the eye, which are labeled according to the amount of UV light blocked; nonprescription glasses are classified according to use and amount of UV radiation blocked Sunglasses , watches and apparel. Candie's 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 market successfully 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 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. , 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 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.
Candie's, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(000's omitted, except per share data)
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ -------------------
2000 1999 2000 1999
------ ------ ------- ------
Net revenues $ 22,457 $ 22,175 $ 73,755 $ 76,483
Cost of goods sold 17,561 18,877 56,854 61,516
-------- -------- -------- --------
Gross profit 4,896 3,298 16,901 14,967
Licensing income 1,310 1,151 3,649 2,009
-------- -------- -------- --------
6,206 4,449 20,550 16,976
Operating expenses:
Selling, general
and administrative 7,427 8,281 20,496 24,359
Special charges 1 1,144 187 2,310
-------- -------- -------- --------
7,428 9,425 20,683 26,669
Operating loss (1,222) (4,976) (133) (9,693)
Other expenses:
Interest expense
- net 418 307 1,318 958
Equity (income)
loss in joint
venture (198) 116 (684) 453
-------- -------- -------- --------
220 423 634 1,411
-------- -------- -------- --------
Loss before income
taxes (1,442) (5,399) (767) (11,104)
Provision (Benefit)
for income taxes 26 346 61 (1,090)
-------- -------- -------- --------
Net Loss $ (1,468) $ (5,745) $ (828) $(10,014)
======== ======== ======== ========
Loss per share:
- Basic $ (0.08) $ (0.32) $ (0.04) $ (0.56)
======== ======== ======== ========
- Diluted $ (0.08) $ (0.32) $ (0.04) $ (0.56)
======== ======== ======== ========
Weighted average #
of common shares:
- Basic 19,269 17,896 19,237 17,742
======== ======== ======== ========
- Diluted 19,269 17,896 19,237 17,742
======== ======== ======== ========
Selected Balance
Sheet Data: 10/31/00 1/31/00
---------------------- -------- --------
Current Assets $ 27,554 $ 32,799
Current Liabilities $ 22,537 $ 29,262
Stockholders' Equity $ 32,265 $ 32,948
Working Capital $ 5,017 $ 3,537
Current Ratio 1.22:1 1.12:1
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