Wilsons Leather Announces Second Quarter Operating Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Aug. 20, 2002 Wilsons The Leather Experts Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : WLSN) today announced results for the second quarter, ended August 3, 2002. The results for the quarter were consistent with the Company's guidance from its July July: see month. 22 press release, which did not take into account the cumulative effect of a required accounting change as discussed below. 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 thirteen-week period ended August 3, 2002 decreased 5.1% to $89.4 million, compared to the year-ago quarter's result of $94.2 million. This decrease was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to continued negative comparisons for the Company's travel stores. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: comparable store sales, which include the travel stores, were down 6.5% during the quarter. Consolidated year-ago comparable store sales, which did not include the travel stores, decreased 7.6% for the second quarter. Comparable store sales for the Wilsons Leather Wilsons Leather is a major leather retailer, selling products such as jackets, belts,shoes, handbags, and gloves. The company began as Berman's Leather in 1899. In 1988 Berman's Leather combined with Wilson's House of Suede and Leather and became Wilsons Leather. stores rose 1.9% for the most recent quarter and the travel stores declined 21.9%. The Company reported a second quarter net loss, before the cumulative effect of an accounting change, of $27.0 million, or $1.33 per fully 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, versus a net loss of $22.8 million, or $1.32 per fully diluted share, in the year-ago second quarter. Included in the results for the second quarter is an after tax charge of $0.06 per fully diluted share related to relocating the Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. office to Minneapolis Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. . While the retail environment during the quarter was under some pressure, the Company was very pleased with the performance of its core Wilsons Leather stores, which saw increases in customer traffic. Additionally, the Company believes that with a proper merchandise mix, trends in its Bentley's Luggage LUGGAGE. Such things as are carried by a traveller, generally for his personal accommodation; baggage. In England this word is generally used in the same sense that baggage is used in the United States. See Baggage. and El Portal El Portal may refer to different places in the United States:
Wilsons Leather performed its initial goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. test as required under Statement of Financial Accounting Standards, "SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System " No. 142 during the second quarter of 2002. Substantially, all of Wilsons Leather's goodwill relates to the travel stores and its acquisitions of Bentley's Luggage and El Portal. As part of the process of evaluating this goodwill for impairment, a recent study by an independent third party determined that the book value of the acquired companies exceeded their fair value. Wilsons Leather determined that the Bentley's Luggage and El Portal goodwill was fully impaired See assistive technology. . Impairment is attributed to a number of factors, primarily acquisition price and operating performance. In aggregate, Wilsons Leather recorded a $24.6 million (net of a $1.7 million tax benefit) charge for the cumulative effect of adopting SFAS No. 142. Net loss after the cumulative effect of this accounting change was $51.6 million or $2.55 per fully diluted share for the second quarter. Net sales for the six months ended August 3, 2002 decreased 1.4% to $208.6 million compared to $211.6 million for the comparable period of 2001. Consolidated comparable store sales for the six months ended August 3, 2002 decreased 8.6% versus a comparable store sales decrease of 1.8% in the prior year which did not include the travel stores. Comparable store sales in the Wilsons Leather stores for the six-month period decreased 4.5%. The net loss for the current six-month period, excluding the cumulative effect of an accounting change, was $41.7 million, or $2.11 per fully diluted share, versus a net loss of $26.5 million, or $1.55 per fully diluted share in the comparable period from last year. Included in the results for the current six-month period is an after tax charge of $0.06 per fully diluted share related to relocating the Las Vegas office to Minneapolis. The increase in loss was also due to a combination of lower sales and gross margins in the travel stores as well as higher expense levels related to 2001 store openings. Net loss after the cumulative effect of this accounting change was $66.3 million or $3.36 per fully diluted share for the year to date. Joel Joel, book of the Bible Joel, prophetic book of the Bible. It is a collection of the oracles of an otherwise unknown prophet, dated variously from the 9th to the 3d cent. B.C., though a date in c.400 B.C. is likely. Waller Wal·ler , Edmund 1606-1687. English poet known for his harmonious love lyrics, including "Go, Lovely Rose" (1645). Noun 1. Waller - United States jazz musician (1904-1943) Fats Waller, Thomas Wright Waller , Chairman and Chief Executive Officer, commented, "We are very pleased with the performance of our Wilsons Leather stores, which are generating positive comparable store sales for the most recent quarter and solid merchandise margins in a tough environment for specialty retail. While we continue to have challenges ahead of us in our travel stores, our 25-store re-merchandising test program is recently underway. We are focusing on identifying an appropriate product mix and pricing strategy that will improve our comparable store sales trend and margin performance in our travel stores in time for the holiday season." Mr. Waller continued, "The rate of sales in our Wilsons Leather stores has led us to believe that our 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. for fall is on-target. We've we've Contraction of we have. we've have seen particular strength in our contemporary labels, M. Julian Julian or Julian the Apostate Latin Julianus Apostata orig. Flavius Claudius Julianus (born AD 331/332, Constantinople—died June 26/27, 363, Ctesiphon, Mesopotamia) Roman emperor (361–363), noted scholar and military leader. (R)and Maxima(R). Our women's early fall performance has clear key-item trends on which we can capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. ." Also today, the Company reiterated guidance for the remainder of the fiscal year, ending on February February: see month. 1, 2003. It continues to expect to report sales and earnings in the range of $775 million to $785 million and $0.51 to $0.56 per share, respectively, before the cumulative effect of an accounting change related to goodwill. These forecasts are in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with the Company's guidance of July 22, which did not take into account the cumulative effect of the accounting change related to goodwill impairment. Full year loss per fully diluted share after the cumulative effect of the accounting change is expected to be $0.71 to $0.66. Joel Waller, Chairman and Chief Executive Officer concluded, "We are committed to rebuilding our profitability and returning to our record of strong financial performance. The ongoing strength of the Wilsons Leather stores, a measured, thoughtful approach to remerchandising the travel stores, and strong, integrated MIS (1) (Management Information System) An information system that integrates data from all the departments it serves and provides operations and management with the information they require. systems should enable us to do so. After removing and rebuilding nearly 100% of the travel stores management, we now have a skilled team throughout our organization." About Wilsons Leather Wilsons Leather is the leading specialty retailer of leather outerwear, apparel and accessories and the leading specialty retailer of travel products and accessories in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . As of August 3, 2002, Wilsons Leather operated 756 stores located in 46 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , 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. , and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of including 489 mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores, 101 outlet stores An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. and 27 airport stores under the Wilsons Leather concept and 139 premium travel products and accessories stores in 25 states and Puerto Rico under the El Portal, Bentley's Luggage and 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). Luggage Outlet outlet /out·let/ (-let) a means or route of exit or egress. pelvic outlet the inferior opening of the pelvis. names. The Company, which regularly supplements its permanent mall stores with temporary holiday stores during its peak selling season from October October: see month. through January January: see month. , operated approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 281 holiday stores in 2001. Except for historical information, matters discussed in this press release, including full-year and quarterly guidance and anticipated adjustments in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS 142, 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 may be materially different. Factors that could cause actual results to differ include: economic downturns; changes in customer shopping patterns; unseasonable un·sea·son·a·ble adj. 1. Not suitable to or appropriate for the season. 2. Not characteristic of the time of year: unseasonable weather. 3. Poorly timed; inopportune. weather; failure of results of operations to meet expectations of research analysts; risks associated with future growth; risks associated with our debt service; change in consumer preferences and fashion trends away from leather; seasonality of the business; risks associated with foreign sourcing and international business; disruptions in product supplies to our travel stores; decreased availability and increased cost of leather; competition in our markets; loss of key members of our management team; reliance on third parties for maintaining our management information systems; concentration of the company's common stock; volatility of the company's common stock; war, acts of terrorism or the threat of either; and interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. in the operation of corporate offices and distribution centers. The information included in this press release is operative OPERATIVE. A workman; one employed to perform labor for another. 2. This word is used in the bankrupt law of 19th August, 1841, s. 5, which directs that any person who shall have performed any labor as an operative in the service of any bankrupt shall be as of this date only. Wilsons Leather does not undertake any obligation to update its forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. In order to ensure that all investors continue to have equal access to the same information, Wilsons Leather will refrain from updating projections made in this press release unless it does so through means that are designed to provide broad distribution of the information to the public.
Wilsons The Leather Experts Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
August 3, February 2, August 4,
Assets 2002 2002 (1) 2001 (2)
------ ----------- ----------- -----------
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $ 63 $ 43,329 $ -
Accounts receivable, net 5,841 10,255 15,339
Inventories 154,076 128,555 183,687
Prepaid expenses and other
current assets 13,849 4,450 12,881
Refundable income taxes 10,489 - -
----------- ----------- -----------
Total current assets 184,318 186,589 211,907
Property and equipment, net 101,297 109,827 107,583
Other assets, net 3,521 28,808 41,348
Deferred income taxes 11,249 3,548 117
----------- ----------- -----------
Total assets $ 300,385 $ 328,772 $ 360,955
=========== =========== ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 32,414 $ 38,685 $ 20,112
Notes payable 45,620 - 91,563
Accrued expenses 24,907 33,572 31,616
Income taxes payable - 11,824 2,723
Deferred income taxes 2,694 1,974 2,776
----------- ----------- -----------
Total current liabilities 105,635 86,055 148,790
Long-term debt 50,895 55,590 55,590
Other long-term liabilities 14,442 4,360 3,346
Total shareholders' equity 129,413 182,767 153,229
----------- ----------- -----------
Total liabilities and
shareholders' equity $ 300,385 $ 328,772 $ 360,955
=========== =========== ===========
(1) - Derived from audited consolidated financial statements.
(2) - Certain amounts included in the consolidated financial
statements have been reclassified in prior years to conform
with the fiscal 2002 financial statement presentation. These
amounts had no effect on previously reported shareholders'
equity or net income.
Wilsons The Leather Experts Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
----------------------
August 3, August 4,
2002 2001
----------------------
Net sales $ 89,382 $ 94,165
Cost of goods sold, buying and occupancy
costs 83,446 84,039
--------- ---------
Gross margin 5,936 10,126
Selling, general and administrative
expenses 43,742 40,556
Depreciation and amortization 4,882 5,460
--------- ---------
Loss from operations (42,688) (35,890)
Interest expense, net 2,374 2,103
--------- ---------
Loss before income taxes (45,062) (37,993)
Income tax benefit (18,025) (15,197)
--------- ---------
Loss before cumulative effect of
change in accounting principle (27,037) (22,796)
Cumulative effect of change
in accounting principle, net of tax (24,567) -
--------- ---------
Net loss $ (51,604) $ (22,796)
========= =========
Net loss per common share - basic and
diluted
Loss before cumulative effect of
change in accounting principle $ (1.33) $ (1.32)
Cumulative effect of change in
accounting principle, net of tax (1.22) -
--------- ---------
Net loss per common share - basic and
diluted $ (2.55) $ (1.32)
========= =========
Weighted average common shares
outstanding 20,267 17,210
========= =========
Wilsons The Leather Experts Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Year to Date Period Ended
-------------------------
August 3, August 4,
2002 2001
--------- ---------
Net sales $ 208,643 $ 211,642
Cost of goods sold, buying and occupancy
costs 178,100 165,866
--------- ---------
Gross margin 30,543 45,776
Selling, general and administrative
expenses 86,141 77,240
Depreciation and amortization 9,848 9,794
--------- ---------
Loss from operations (65,446) (41,258)
Interest expense, net 4,078 2,865
--------- ---------
Loss before income taxes (69,524) (44,123)
Income tax benefit (27,809) (17,649)
--------- ---------
Loss before cumulative effect of
change in accounting principle (41,715) (26,474)
Cumulative effect of change in accounting
principle, net of tax (24,567) -
--------- ---------
Net Loss $ (66,282) $ (26,474)
========= =========
Net loss per common share - basic and
diluted
Loss before cumulative effect of change in
accounting principle (2.11) $ (1.55)
Cumulative effect of change in accounting
principle, net of tax (1.25) -
--------- ---------
Net loss per common share - basic and
diluted $ (3.36) $ (1.55)
========= =========
Weighted average common shares
outstanding 19,742 17,092
========= =========
Wilsons The Leather Experts Inc. and Subsidiaries
Selected Financial Data
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Year to Date
Ended 8/03/02 Period Ended 8/03/02
Wilsons Travel Consolidated Wilsons Travel Consolidated
---------------------------- -----------------------------
Net sales $63,196 $26,186 $89,382 $158,253 $50,390 $208,643
Loss before
cumulative effect
of change in
accounting
principle ($19,962) ($7,075)($27,037) ($29,696)($12,019) ($41,715)
Cumulative effect of
change in accounting
principle, net of
tax $0 ($24,567)($24,567) $0 ($24,567) ($24,567)
--------------------------- ----------------------------
Net loss ($19,962)($31,642)($51,604) ($29,696)($36,586) ($66,282)
=========================== ============================
Net loss per common share - basic and diluted
Loss before cumulative
effect of change in
accounting
principle ($0.99) ($0.34) ($1.33) ($1.51) ($0.60) ($2.11)
Cumulative effect of
change in accounting
principle, net of
tax $0.00 ($1.22) ($1.22) $0.00 ($1.25) ($1.25)
------------------------- --------------------------
Net loss ($0.99) ($1.56) ($2.55) ($1.51) ($1.85) ($3.36)
========================= ==========================
Three Months Year to Date
Ended 8/04/01 Period Ended 8/04/01
Wilsons Travel Consolidated Wilsons Travel Consolidated
---------------------------- ------------------------------
Net sales $58,895 $35,270 $94,165 $156,107 $55,535 $211,642
Net loss ($19,649) ($3,147) ($22,796) ($22,590) ($3,884) ($26,474)
============================ =============================
Net loss per common
share - basic and diluted
Net loss ($1.14) ($0.18) ($1.32) ($1.32) ($0.23) ($1.55)
============================ =============================
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