Charlotte Russe Announces First Quarter Results.Business Editors SAN DIEGO--(BUSINESS WIRE)--Jan. 23, 2003 Charlotte Russe charlotte russe n. A cold dessert of Bavarian cream set in a mold lined with ladyfingers. [French : charlotte, charlotte + russe, Russian.] Noun 1. Holding, Inc. (Nasdaq/NM:CHIC): - 19% First Quarter Sales Growth Despite Same Store Sales Decline of 3.6% - 17 New Store Openings During the First Quarter, 75 Planned for Fiscal 2003 - Net Income of $7.4 Million with Diluted EPS Improving to 32 Cents Charlotte Russe Holding, Inc. (Nasdaq/NM: CHIC), a rapidly growing specialty retailer of fashionable, value-priced apparel and accessories for young women, today reported financial results for the first quarter of fiscal 2003 ended December December: see month. 28, 2002. 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. Bernard Ber·nard , Claude 1813-1878. French physiologist noted for his study of the digestive and nervous systems. Zeichner remarked: "In October October: see month. , when we gave guidance for the first quarter, we sensed that this year's Holiday season would be very promotional and would be impacted by weak mall traffic. We guided investors to look for flat comparable store sales the first quarter, and we are reporting a negative 3.6% performance for the quarter ended December 28th. This result should be viewed in light of the weak performance of the fashion apparel sector during the past three months. And, perhaps more importantly, the contribution from new stores enabled us to match last year's 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. and to report 32 cents of diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . "We have historically maintained strong store-level inventory controls to drive our business. Knowing that we were going against last year's depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d inventory levels of down 11% at comparable stores, we aggressively planned our inventories coming into January 2003. At the quarter-end, inventory levels at comparable stores were up 28% over prior year levels. This strategy proved successful as we were well positioned 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>. the improved mall traffic following Christmas and leading up to New Year's Day New Year's Day, among ancient peoples the first day of the year frequently corresponded to the vernal or autumnal equinox, or to the summer or winter solstice. In the Middle Ages it was celebrated among Christians usually on Mar. 25. and thereafter. In fact, comparable store sales for the first three weeks of January have been running at the positive low-teen levels. "As you would expect, January is typically viewed as a clearance month, and during this period we moved a significant amount of inventory, albeit at clearance-level margins. Going into the fourth week of January, inventories at comparable stores were up about 10% over the same week last year, and we feel very confident about the fashion content and quality of our current inventories. We are transitioning from clearance goods to our new spring assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. , and our new floor sets should be ready by the second week of February. "There is no reason to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the outlook for mall traffic and consumer confidence for the near term," said Zeichner. "In addition, the calendar shift of a later Easter will transfer sales from our second quarter (ending on March 29th) into our third quarter (ending on June 28th). We feel that these two quarters should be viewed together; therefore, we are providing investors, on an exception basis, with financial guidance reaching out for the next two fiscal quarters. Assuming no significant change in the overall retailing environment, we would guide investors to expect low single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. comparable store sales increases during the second and third quarters of fiscal 2003 with diluted earnings per share of 13 to 15 cents for the second quarter, compared to 15 cents last year, and diluted earnings per share of 28 to 30 cents for the third quarter, compared to 24 cents last year. "While it is important to evaluate the near-term results and earnings guidance, we should be careful not to overlook the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth opportunities for our business. We plan to open 75 new stores during fiscal 2003, a 30% increase in store count, funded entirely with internally generated cashflow. We have a strong balance sheet with $33 million of cash as of December 2002 and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . With average cashflow from new stores continuing to produce cash returns on investment of over 80% in their first year of operation, reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of our cashflow back into the business represents an appropriate business strategy," the Chief Executive concluded. Financial Results: Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter increased 19% to $133.3 million from $111.9 million for the first quarter last year. Comparable store sales decreased 3.6% during the quarter, compared to a decrease of 12.1% for the first quarter of fiscal 2002. Operating income for the first quarter of $12.3 million was consistent with the same quarter last year. Net income increased to $7.4 million, a 1% increase over the same quarter last year. Diluted earnings per share for the quarter were $0.32 as compared to $0.31 for the same quarter of the prior year, an increase of 3%. The average number of shares outstanding during the recent quarter of 23.5 million on a 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. basis was consistent with the first quarter last year. Charlotte Russe Holding, Inc. is a rapidly growing mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women between the ages of 15 and 35. The company, under its three distinct store concepts, operated a total of 268 stores in 34 states and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , as of December 28, 2002 which included 17 new stores opened during the first quarter of fiscal 2003. In total, the company expects to open 75 new Charlotte Russe and Rampage stores during fiscal 2003 which ends in September 2003. The "Charlotte Russe" stores offer fashionable, affordable apparel and accessories that have been tested and accepted by the marketplace, thus appealing to women who prefer established fashion trends. The "Rampage" stores feature emerging fashion trends and appeal to women with a flair for making fashion statements and who want to create a cutting-edge look. The "Charlotte's Room" stores, a test concept still under evaluation, currently provides a diverse offering of gifts, accessories and some apparel items for girls and younger women ranging in ages from 11 to 17. Interested listeners are invited to participate in today's Charlotte Russe conference call at 11:00 a.m. Eastern Time which will be broadcast over the internet at http://www.charlotte-russe.com. To listen to the live call, please go to the web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the Company's web site shortly after the call, or by calling (877)519-4471, PIN: 3566901. 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: Except for the historical information contained herein, this press release contains 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. that are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to general and regional economic conditions, industry trends, consumer demands and preferences, competition from other retailers and uncertainties generally associated with women's apparel and accessory accessory, in criminal law, a person who, though not present at the commission of a crime, becomes a participator in the crime either before or after the fact of commission. retailing. A complete description of these factors, as well as others that could affect the Company's business, is set forth in the Annual Report on 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. , filed with the Securities and Exchange Commission on December 13, 2002, and any amendments thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. . -- Financial statements follow --
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in 000's, except per share data)
(unaudited)
First Quarter Ended
-------------------------------
Dec. 28, 2002 Dec. 29, 2001
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Net sales $ 133,329 $ 111,938
Cost of goods sold 96,737 79,645
------------- -------------
Gross profit 36,592 32,293
Selling, general & administrative
expenses 24,333 20,018
------------- -------------
Operating income 12,259 12,275
Interest income, net 9 1
Other charges (62) (78)
------------- -------------
Income before income taxes 12,206 12,198
Income taxes 4,761 4,818
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Net Income $ 7,445 $ 7,380
============= =============
Basic earnings per share $ 0.35 $ 0.35
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Diluted earnings per share $ 0.32 $ 0.31
============= =============
Basic weighted average shares
outstanding 21,215 20,827
Diluted weighted average shares
outstanding 23,513 23,501
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(amounts in 000's)
(unaudited)
Dec. 28, 2002 Dec. 29, 2001
------------- -------------
ASSETS
------
Cash and cash equivalents $ 32,908 $ 20,560
Inventories 25,178 16,122
Other current assets 4,361 2,923
Deferred tax assets 4,300 3,800
------------- -------------
Total current assets 66,747 43,405
Fixed assets, net 96,059 81,438
Goodwill, net 28,790 28,790
Other assets 1,324 1,459
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Total assets $ 192,920 $ 155,092
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LIABILITIES
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Accounts payable trade $ 19,881 $ 13,862
Accounts payable other 3,860 1,749
Accrued payroll and related expense 4,360 3,822
Income and sales taxes payable 7,465 7,835
Other current liabilities 10,568 9,554
------------- -------------
Total current liabilities 46,134 36,822
Deferred rent 8,887 6,240
Other liabilities 224 284
Deferred tax liabilities 1,600 2,000
------------- -------------
Total liabilities 56,845 45,346
Total stockholders' equity 136,075 109,746
------------- -------------
Total liabilities and stockholders'
equity $ 192,920 $ 155,092
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