FACTORY 2-U STORES, INC. Announces Fiscal 2003 Second Quarter Operating Results.Business Editors SAN DIEGO--(BUSINESS WIRE)--Aug. 13, 2003 FACTORY 2-U Factory 2-U is a chain of department stores that are located mostly in the Western United States selling clothing, domestics, and merchandise, founded in 1962, originally private owned. They have 6000 employees with more than 10 stores. STORES, INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . (Nasdaq:FTUS FTUS Full-Time Unit Support ) today announced operating results for the second quarter ended August 2, 2003. 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 second quarter were $123.7 million as compared to $128.1 million for the same period last year, a decrease of 3.5%. Comparable store sales for the second quarter increased 0.1% versus a decrease of 8.7% for the same period last year. Comparable customer transaction counts increased 8.9%, the market basket market basket n. 1. A grocery cart. 2. A group of products or services in a specific market, especially when considered in terms of its fluctuating cost in determining a consumer price index: size increased 12.2% and the average unit retail decreased 21.0% for the second quarter this year. The Company reported a net loss of $5.4 million, or $0.35 per share, compared to a net loss of $5.8 million, or $0.45 per share for the same period last year. Included in last year's results was a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $2.1 million, or $0.10 per share related to the legal settlement agreement which alleged that the Company violated vi·o·late tr.v. vi·o·lat·ed, vi·o·lat·ing, vi·o·lates 1. To break or disregard (a law or promise, for example). 2. To assault (a person) sexually. 3. the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Labor Code and Internal Wage Commission Orders, by classifying store managers and assistant managers as exempt salaried employees and thereby failing to pay them overtime. Excluding this pre-tax charge of $2.1 million, our net loss for the second quarter of last year was $4.6 million, or $0.35 per share. Net sales for the six months ended August 2, 2003 were $228.0 million compared to $245.0 million for the same period last year, a decrease of 7.0%. Comparable store sales decreased 3.5% versus a decrease of 10.2% for the same period last year. Comparable customer transaction counts increased 5.9%, the market basket size increased 12.6% and the average unit retail decreased 22.0% for the six-month period this year. The Company reported a net loss of $8.1 million, or $0.54 per share compared to a net loss of $9.0 million, or $0.69 per share for the same period last year, before special items. Excluding the previously announced pre-tax reduction of approximately $1.2 million to valuation reserves established at the end of our fiscal 2002 for slow and aged inventory and certain stock subscriptions notes receivable secured by our common stock and the pre-tax $2.1 million legal settlement for the same period last year, our loss would have been $8.9 million, or $0.60 per share, compared to a net loss of $7.7 million, or $0.60 per share for the same period last year. Bill Fields, Chief Executive Officer, said, "Our second quarter results were below the low end of our expectations as a result of lower than expected sales in July, promotional efforts during the quarter and costs associated with the start-up Start-up The earliest stage of a new business venture. of our new distribution center in San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. , CA." Mr. Fields concluded, "We spent the majority of the first half of this fiscal year focusing on strengthening our price position in the marketplace, increasing transaction counts and improving store operations. We made a significant investment during this period and expect operating results to improve in the second half of this fiscal year. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the `Back to School' season and entered this period in an excellent inventory position. As mentioned in our July sales release, we expect comparable store sales for the third quarter to be in the range of positive 3% to 4%, gross margins to improve and earnings of approximately $0.01 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." The Company will host a real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. web-cast presentation and live conference call to discuss our second quarter operating results and expectations for the third quarter, today at 5:00 P.M. Eastern Standard Time. To participate in the call, dial 1-800-843-7949 five minutes before the call or access the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.factory2-u.com. All shareholders and other interested parties are encouraged to participate. A replay of the call will remain available for 48 hours by telephone or on the Internet for two weeks. You may also obtain a transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the call by contacting Kehoe, White & Co., Inc. at 1-562-437-0655. We will provide a mid-month sales update for August on August 18, 2003 at 5:00 P.M. Eastern Standard Time. Those interested can access this update message at 1-888-201-9603. This message will remain available until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 22, 2003. We will release our August sales results on September 3, 2003 after the market closes, or approximately 4:00 P.M. Eastern Standard Time. FACTORY 2-U STORES, INC. operates 243 "Factory 2-U" off-price retail stores which sell branded casual apparel for the family, as well as selected domestics and household merchandise at prices which generally are significantly lower than the prices offered by its discount competitors. The Company operates 32 stores in Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , 2 stores in Arkansas Arkansas, river, United States Arkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. , 65 stores in southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , 63 stores in northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern , 1 store in Idaho, 8 stores in Nevada, 9 stores in New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). , 1 store in Oklahoma, 14 stores in Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. , 34 stores in Texas, and 14 stores in Washington. Except for the historical information contained herein, the matters discussed in this news release are 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 involve risks and uncertainties, and actual results could differ materially from the Company's present expectations. Among the important factors that could cause actual results to differ materially from those indicated in the forward-looking statements are: customer demand and trends in the off-price apparel industry, the effect of economic conditions, the impact of competitive openings and pricing, supply 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, and other risks detailed in the Company's Securities and Exchange Commission filings.
FACTORY 2-U STORES, INC.
Statements of Operations
(in thousands, except per share data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
------------------- -------------------
August 2, August 3, August 2, August 3,
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $123,659 $128,088 $228,006 $245,039
Cost of sales 85,090 87,059 151,802 162,852
--------- --------- --------- ---------
Gross profit 38,569 41,029 76,204 82,187
Selling and administrative
expenses 46,248 50,181 87,503 95,879
Pre-opening and closing
expenses 83 266 221 703
--------- --------- --------- ---------
Operating loss (7,762) (9,418) (11,520) (14,395)
Interest expense, net 935 310 1,569 568
--------- --------- --------- ---------
Loss before income taxes (8,697) (9,728) (13,089) (14,963)
Income tax benefit (3,307) (3,891) (4,978) (5,985)
--------- --------- --------- ---------
Net loss $(5,390) $(5,837) $(8,111) $(8,978)
========= ========= ========= =========
Loss per share:
Basic $(0.35) $(0.45) $(0.54) $(0.69)
Diluted $(0.35) $(0.45) $(0.54) $(0.69)
Weighted average common shares
outstanding:
Basic 15,197 12,957 14,909 12,930
Diluted 15,197 12,957 14,909 12,930
FACTORY 2-U STORES, INC.
BALANCE SHEETS
(in thousands)
(Unaudited)
-------------------
August 2, August 3, February 1,
2003 2002 2003
--------- --------- ---------
ASSETS
Current assets:
Cash and cash equivalents $6,384 $7,446 $3,465
Merchandise inventory 65,692 76,824 32,171
Accounts receivable, net 350 2,476 884
Income taxes receivable - 5,913 8,200
Prepaid expenses 6,862 6,909 5,436
Deferred income taxes 9,753 3,553 9,732
--------- --------- ---------
Total current assets 89,041 103,121 59,888
Leasehold improvements and equipment, net 25,388 36,957 28,602
Deferred income taxes 15,813 7,182 10,750
Other assets 815 959 963
Goodwill 26,301 26,301 26,301
--------- --------- ---------
Total assets $157,358 $174,520 $126,504
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debts $3,030 $2,001 $3,000
Junior secured term loans 7,500 - -
Accounts payable 47,767 52,714 27,961
Taxes payable 2,840 3,150 5,840
Accrued expenses and other liabilities 25,223 32,875 27,831
--------- --------- ---------
Total current liabilities 86,360 90,740 64,632
Revolving credit facility 17,949 5,386 6,300
Long-term debts 7,023 8,906 6,445
Accrued restructuring charges 1,747 3,578 1,747
Deferred rent 2,931 3,295 3,061
--------- --------- ---------
Total liabilities 116,010 111,905 82,185
Stockholders' equity 41,348 62,615 44,319
--------- --------- ---------
Total liabilities and stockholders'
equity $157,358 $174,520 $126,504
========= ========= =========
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