FACTORY 2-U STORES, INC. Announces Operating Results for Its Fiscal 2003 First Quarter.Business Editors SAN DIEGO--(BUSINESS WIRE)--May 14, 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 financial results for the first quarter ended May 3, 2003. Sales for the thirteen weeks ended May 3, 2003 totaled $104.3 million compared to $117.0 million for the thirteen-week period ended May 4, 2002, a decrease of 10.8%. Comparable store sales for the thirteen-week period ended May 3, 2003 decreased 7.4% versus a decrease of 11.8% for the same period last year. The Company reported a net loss of $2.7 million, or $0.19 per share for the first quarter, compared to a net loss of $3.1 million, or $0.24 per share for the same period last year. The current quarter's operating results included pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta reductions of approximately $1.2 million to valuation reserves established at the end of Fiscal 2002 for slow and aged inventory and certain stock subscription notes receivable secured by our common stock. These adjustments reflect a better than expected realization of liquidating slow and aged inventory during the first quarter and an increase in the market value of our common stock which served as security for certain stock subscription notes receivable which became due on April 29, 2003. Excluding these items, our net loss for the quarter ended May 3, 2003 would have been $3.5 million, or $0.24 per share. For the thirteen weeks ended May 3, 2003, the Company opened 1 new store and closed 3 stores, 1 of which was closed on a temporary basis for landlord repairs. Bill Fields, Chairman and Chief Executive Officer, commented, "Operating results were lower than originally anticipated for the quarter due to our low inventory levels for most of the 13 week period and a very soft retail environment for retailers in general, particularly in apparel. Despite lower sales and a lower initial mark-up mark-up Noun an amount added to the cost of something to provide the seller with a profit Verb mark up to increase the cost of something by an amount or percentage in order to make a profit on goods, our 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. improved to 36.1% as a result of lower markdown Markdown The difference between the highest current bid price among broker-dealers in the market and the lower price that a dealer charges a customer. Notes: The broker offers a lower price to try stimulate trading in hopes that they will make the money back on the extra volume this year. Our spending for selling, general and administrative expenses declined approximately $4.0 million due to fewer stores in operation, lower average store sales and corporate overhead expense reductions initiated in the fourth quarter of last year." Mr. Fields concluded, "We ended the quarter in a much stronger inventory position than we began, added approximately $22.0 million in cash during the quarter to improve our liquidity and have improved in-store execution. Though we have taken positive steps towards improving our business and operating results, we face an uncertain retail environment. In the second quarter, we intend to increase our advertising efforts to be comparable with those levels of a year ago, to maintain a strong competitive position and look for a continued improvement in operating results. We expect comparable store sales performance to range from a negative 2% to a positive 2% and a net loss per share ranging from $0.19 to $0.25 for the second quarter ending August 2, 2003." 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 first quarter operating results for fiscal 2003 and operating results expectations for the second quarter today at 5:00 P.M. Eastern Time. To participate in the call, dial 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 Kehoe or Keogh is the name of a clan that existed in southern Ireland. Many of their descendants then emigrated to America and have spread though out that country making Kehoe/Keogh a fairly common last name. , White & Co., Inc. at 562/437-0655. We will provide a mid-month sales update for May on May 19, 2003 at 5:00 P.M. Eastern Time. Those interested can access this update message at 888/201-9603. This message will remain available until June June: see month. 23, 2003. We will release our May sales results on June 4, 2003 after the market closes, or approximately 4:00 P.M. Eastern Time. FACTORY 2-U STORES, INC. operates 242 "Factory 2-U" off-price off-price adj. 1. Of, relating to, or being a retail store that sells merchandise at prices lower than usual. 2. For sale at prices lower than usual: off-price assortments of women's clothing. 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 31 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. , 64 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 Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). , 8 stores in Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). , 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, 15 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
----------- ----------
May 3, May 4,
2003 2002
----------- ----------
Net sales $104,347 $116,951
Cost of sales 66,712 75,793
----------- ---------
Gross profit 37,635 41,158
Selling and administrative expenses 41,255 45,698
Pre-opening and closing expenses 138 437
----------- ---------
Operating loss (3,758) (4,977)
Interest expense, net 634 258
----------- ---------
Loss before income taxes (4,392) (5,235)
Income tax benefit (1,671) (2,094)
----------- ---------
Net loss $(2,721) $(3,141)
=========== =========
Loss per share:
Basic $(0.19) $(0.24)
Diluted $(0.19) $(0.24)
Weighted average common shares outstanding:
Basic 14,620 12,903
Diluted 14,620 12,903
FACTORY 2-U STORES, INC.
BALANCE SHEETS
(in thousands)
(Unaudited) (Unaudited)
May 3, May 4, February 1,
2003 2002 2003
----------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $5,414 $8,360 $3,465
Merchandise inventory 66,012 64,369 32,171
Accounts receivable, net 623 1,014 884
Income taxes receivable - - 8,200
Prepaid expenses 6,258 6,832 5,436
Deferred income taxes 9,753 3,553 9,732
----------- ----------- ---------
Total current assets 88,060 84,128 59,888
Leasehold improvements and
equipment, net 26,594 34,771 28,602
Deferred income taxes 10,750 7,182 10,750
Other assets 936 1,006 963
Excess of cost over net assets
acquired, net 26,301 26,301 26,301
----------- ----------- ---------
Total assets $152,641 $153,388 $126,504
=========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-
term debt $3,021 $2,004 $3,000
Junior secured term loan 7,500 - -
Accounts payable 43,844 37,230 27,961
Taxes payable 992 690 5,840
Accrued expenses and other
liabilities 27,693 29,729 27,831
----------- ----------- ---------
Total current liabilities 83,050 69,653 64,632
Revolving credit facility 11,535 - 6,300
Long-term debt 6,754 8,638 6,445
Accrued restructuring charges 1,747 3,578 1,747
Deferred rent 2,822 3,263 3,061
----------- ----------- ---------
Total liabilities 105,908 85,132 82,185
Stockholders' equity 46,733 68,256 44,319
----------- ----------- ---------
Total liabilities and
stockholders' equity $152,641 $153,388 $126,504
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