FACTORY 2-U STORES, INC. Announces Operating Results for Its Fiscal 2002 First Quarter.Business Editors SAN DIEGO--(BUSINESS WIRE)--May 15, 2002 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 4, 2002. Sales for the thirteen weeks ended May 4, 2002 totaled $117.0 million compared to $125.8 million for the thirteen-week period ended May 5, 2001, a decrease of 7.1%. Comparable store sales for the thirteen-week period ended May 4, 2002 decreased 11.8% versus a decrease of 6.3% for the same period last year. The Company reported a net loss of $3.1 million, or $0.24 per share in the first quarter, compared to a net loss of $1.4 million, or $0.11 per share for the same period last year. For the thirteen weeks ended May 4, 2002, the Company opened 5 new stores and closed 28 stores. Mike Searles, President and Chief Executive Officer commented, "Though disappointed in our operating results, we were pleased to see gross margin improve by 200 basis points, 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 and distribution costs distribution costs distribute npl → Vertriebskosten pl . Our selling and administrative expenses grew as a percent of sales as a result of higher occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal , increased spending associated with a wider distribution of advertising circulars, costs related to our previously communicated 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. consulting project and lower sales volume. We have closed 24 of the 28 under-performing stores, and expect occupancy costs to improve in future quarters." Mr. Searles concluded, "We continue to pursue our marketing and merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. initiatives to improve customer traffic and build market awareness for the Factory 2-U brand. We expect a gradual improvement in sales trends and operating results, with a high expectation for accelerating improvement in the second half of the year. For the second quarter, we expect comparable store sales to be negative mid single-digit, operating results to be breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations and to open 5 new stores." 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 2002 and operating results expectations for the second 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 May on May 20, 2002 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 June 24, 2002. We will release our May sales results on June 5, 2002 after the market closes, or approximately 4:00 P.M. Eastern Standard Time. FACTORY 2-U STORES, INC. operates 256 "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 33 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). , 3 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, , 61 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, 5 stores in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. , 3 stores
in Missouri Missouri, state, United StatesMissouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , 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). , 2 stores in
Oklahoma, 14 stores in Oregon, 2 stores in Tennessee, 35 stores in
Texas, and 16 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 4, May 5,
2002 2001
----------------------------
Net sales $ 116,951 $ 125,824
Cost of sales 75,793 84,065
----------------------------
Gross profit 41,158 41,759
Selling and administrative expenses 45,698 42,647
Pre-opening and closing expenses 437 854
Amortization of intangibles -- 423
----------------------------
Operating loss (4,977) (2,165)
Interest expense, net 258 331
----------------------------
Loss before income taxes (5,235) (2,496)
Income tax benefit (2,094) (1,048)
----------------------------
Net loss $ (3,141) $ (1,448)
============================
Loss per share:
Basic $ (0.24) $ (0.11)
Diluted $ (0.24) $ (0.11)
Weighted average common shares outstanding:
Basic 12,903 12,769
Diluted 12,903 12,769
FACTORY 2-U STORES, INC.
BALANCE SHEETS
(in thousands)
(Unaudited) (Unaudited)
May 4, May 5, February 2,
2002 2001 2002
--------------------------------------
ASSETS
Current assets:
Cash $ 8,360 $ 5,676 $ 17,390
Merchandise inventory 64,369 67,282 54,860
Accounts receivable, net 1,014 2,235 2,013
Prepaid expenses 6,832 6,474 6,357
Deferred income taxes 3,553 2,503 3,553
--------------------------------------
Total current assets 84,128 84,170 84,173
Leasehold improvements and
equipment, net 34,771 41,465 37,042
Deferred income taxes 7,182 4,992 7,182
Other assets 1,006 1,146 1,011
Excess of cost over net assets
acquired, net 26,301 27,503 26,301
--------------------------------------
Total assets $153,388 $159,276 $155,709
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt and capital leases $ 2,004 $ 2,141 $ 2,019
Accounts payable 37,230 46,181 36,271
Taxes payable 690 2,057 3,332
Accrued expenses and
other liabilities 29,729 13,043 27,918
--------------------------------------
Total current liabilities 69,653 63,422 69,540
Revolving credit facility -- 3,200 --
Long-term debt 8,638 9,501 8,376
Other long-term obligations 3,578 1,099 3,578
Deferred rent 3,263 3,582 3,649
--------------------------------------
Total liabilities 85,132 80,804 85,143
Stockholders' equity 68,256 78,472 70,566
--------------------------------------
Total liabilities and
stockholders' equity $153,388 $159,276 $155,709
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