Wilsons The Leather Experts Inc. Announces Third Quarter 2004 Operating Results.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. -- 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 reported third quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating results. Comparable store sales for the thirteen-week period increased 7.2% versus a 9.0% decrease in the third quarter of 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 at 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 for the third quarter ended October October: see month. 30, 2004, decreased 10.2% to $87.9 million compared to $97.9 million for the same period last year. Wilsons Leather reported a net loss for the quarter of $8.5 million, or $0.22 per basic and 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, compared to a net loss of $11.6 million, or $0.57 per basic and diluted share, in the third quarter of 2003. Included in the results for the current third quarter is an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. loss of $2.7 million, or $0.07 per basic and diluted share, related to lease termination costs, severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , and other restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . The net loss for the third quarter, when adjusted to remove the $2.7 million in restructuring charges, was $5.8 million, or $0.15 per basic and diluted share. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the quarter was $7.1 million, and when adjusted to remove the $2.7 million in charges related to restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , was $4.4 million, and compares to an operating loss of $16.5 million in the third quarter of 2003, a 73.4% improvement. Year-to-date net sales decreased 4.7% to $241.0 million compared to $252.9 million for the same period last year. Sales for the current fiscal year include $20.8 million in liquidation sales liquidation sale liquid (US) n → Verkauf m wegen Geschäftsaufgabe resulting from the transfer of inventory to an independent liquidator Liquidator Person appointed by an unsecured creditor in the United Kingdom to oversee the sale of an insolvent firm's assets and the repayment of its debts. in conjunction with the previously announced closing of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 111 stores that was completed in April 2004. Comparable store sales for the year increased 4.7% versus a comparable store sales decrease of 4.9% in the same prior-year period. Comparable store sales for the year to date do not include sales from the stores that were liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. . The year-to-date net loss is $65.7 million, or $2.29 per basic and diluted share, compared to a net loss of $46.0 million, or $2.24 per basic and diluted share, in 2003. Included in the results for 2004 is an after-tax loss of $25.1 million, or $0.88 per basic and diluted share, related to the transfer of inventory to an independent liquidator in conjunction with the closing of approximately 111 stores, accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. , fixed asset writeoffs, lease termination costs related to store closings, severance, and other restructuring charges. The year-to-date net loss, when adjusted to remove the $25.1 million in charges related to restructuring, was $40.6 million, or $1.41 per basic and diluted share. The year-to-date operating loss was $59.6 million, and when adjusted to remove the $25.1 million in charges related to restructuring, was $34.5 million, and compares to an operating loss of $69.0 million in the year-ago period, a 49.9% improvement. A reconciliation of the operating loss, net loss and basic and diluted loss per share with and without the charges related to restructuring appears in an accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. table. Operating loss, net loss and basic and diluted loss per share excluding these restructuring charges are measures of performance that are not defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") and should be viewed in addition to, and not in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. , the operating loss, net loss and basic and diluted loss per share as reported on a GAAP basis. 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 pleased with our results during the third quarter. Sales in both our mall-based and 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. were strong during the quarter and we are encouraged by the performance of our new fall merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain . Our margin rates for both the quarter and year are ahead of last year and give us confidence that the structural changes we have made in the business are taking hold. Our balance sheet continues to strengthen. We did not access our revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to until the first week of September September: see month. and our borrowing level at the end of the quarter was significantly below last year. We remain focused on ensuring success during the ever important holiday selling season." Wilsons Leather today updated guidance for the fiscal year ending January January: see month. 29, 2005. The Company anticipates full year net sales in the range of $425.0 to $435.0 million, an increase from previous estimates of $410.0 to $430.0 million. This anticipated range excludes the $20.8 million in liquidation sales. The increase in sales reflects our year-to-date comparable store sales performance. For the full year, basic and diluted loss per share is now expected to be between $0.80 and $0.90; previous estimates were between $0.82 and $0.99. Included in the basic and diluted loss per share are restructuring charges of approximately $26.3 million, or $0.84 per basic and diluted share related to restructuring, versus our previous estimate of $0.80. About Wilsons Leather Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel 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 October 30, 2004, Wilsons Leather operated 453 stores located in 45 states and 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). , including 328 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, 109 outlet stores and 16 airport stores. The Company regularly supplements its permanent mall stores with seasonal stores during its peak selling season from October through January. Except for historical information, matters discussed in this press 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 may be materially different. Such statements are based on information available to management as of the time of such statements, and relate to, among other things, our results of operations, expected restructuring charges and expected demand for our products. Factors that could cause actual results to differ include: changes in customer shopping patterns; competition in our markets; economic downturns; failure of results of operations to meet expectations of research analysts; change in consumer preferences and fashion trends away from leather; reductions in our comparable store sales over the past three years; risks associated with our debt service; our inability to grow the business as planned; decreased availability and increased cost of leather; risks associated with foreign sourcing and international business; risks associated with estimates made in our critical accounting policies; seasonality of the business; loss of key members of our management team; reliance on third parties for maintaining our management information systems; concentration of our common stock; volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of our 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 designed to provide broad distribution of the information to the public.
WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 30, January 31, November 1,
ASSETS 2004 2004 (1) 2003
----------- ----------- -----------
(Unaudited) (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $- $42,403 $-
Accounts receivable, net 4,463 6,122 6,296
Inventories 124,760 89,298 174,520
Prepaid expenses and other
current assets 7,725 3,719 9,128
Assets of discontinued operations - - 40
----------- ----------- -----------
TOTAL CURRENT ASSETS 136,948 141,542 189,984
Property and equipment, net 40,556 60,047 67,578
Goodwill and other assets, net 2,393 2,538 3,000
Deferred income taxes - - 19,865
----------- ----------- -----------
TOTAL ASSETS $179,897 $204,127 $280,427
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $35,144 $10,198 $47,354
Notes payable 21,557 490 61,633
Current portion of long-term debt - 30,635 30,635
Accrued expenses 20,948 26,670 24,343
Liabilities of discontinued
operations 296 406 814
Income taxes payable 3,585 3,214 1,529
Deferred income taxes 8,203 6,477 2,245
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 89,733 78,090 168,553
Long-term debt 25,000 25,064 25,075
Other long-term liabilities 12,312 13,893 14,073
Deferred income taxes - 1,726 -
TOTAL SHAREHOLDERS' EQUITY 52,852 85,354 72,726
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $179,897 $204,127 $280,427
=========== =========== ===========
-----------------------------------
1. Derived from audited consolidated financial statements.
Note: The Company's inventories are determined by the retail method on
the last-in, first-out ("LIFO") basis. The difference in inventories
between the LIFO method and the first-in, first-out method was not
material as of October 30, 2004, January 31, 2004 or November 1, 2003.
WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
For the three months
ended
-----------------------
October 30, November 1,
2004 2003
----------- -----------
NET SALES $87,923 $97,880
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS 62,846 75,003
----------- -----------
Gross margin 25,077 22,877
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 28,851 35,124
DEPRECIATION AND AMORTIZATION 3,334 4,226
----------- -----------
Operating loss (7,108) (16,473)
INTEREST EXPENSE, net 1,385 2,889
----------- -----------
Loss before income taxes (8,493) (19,362)
INCOME TAX BENEFIT - (7,744)
----------- -----------
Net loss $(8,493) $(11,618)
=========== ===========
BASIC AND DILUTED LOSS PER SHARE:
Basic and diluted loss per share $(0.22) $(0.57)
=========== ===========
Weighted average shares outstanding - basic
and diluted 38,843 20,551
=========== ===========
WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
For the year-to-date
period ended
-----------------------
October 30, November 1,
2004 2003
----------- -----------
NET SALES $241,004 $252,931
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS 187,667 208,990
----------- -----------
Gross margin 53,337 43,941
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 90,606 100,369
DEPRECIATION AND AMORTIZATION 22,378 12,532
----------- -----------
Operating loss (59,647) (68,960)
INTEREST EXPENSE, net 6,082 7,631
----------- -----------
Loss before income taxes (65,729) (76,591)
INCOME TAX BENEFIT - (30,636)
----------- -----------
Net loss $(65,729) $(45,955)
=========== ===========
BASIC AND DILUTED LOSS PER SHARE:
Basic and diluted loss per share $(2.29) $(2.24)
=========== ===========
Weighted average shares outstanding - basic
and diluted 28,743 20,488
=========== ===========
WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of the GAAP operating loss, net loss and basic and
diluted loss per share to the adjusted operating loss, net loss and
basic and diluted loss per share:
For the three months ended
October 30, 2004
----------------------------------
Basic and
Operating diluted
loss Net loss loss per share
----------------------------------
As reported $(7,108) $(8,493) $(0.22)
Restructuring and other charges (1) 2,731 2,731 0.07
--------- --------- --------------
Adjusted $(4,377) $(5,762) $(0.15)
========= ========= ==============
(1) Includes $2.7 million related to lease termination costs,
severance, and other restructuring charges.
For the year-to-date period ended
October 30, 2004
----------------------------------
Basic and
Operating diluted
loss Net loss loss per share
----------------------------------
As reported $(59,647) $(65,729) $(2.29)
Restructuring and other charges (1) 25,128 25,128 0.88
--------- --------- --------------
Adjusted $(34,519) $(40,601) $(1.41)
========= ========= ==============
(1) Includes $25.1 million related to the transfer of inventory to an
independent liquidator in conjunction with the closing of
approximately 111 stores, lease termination costs, accelerated
depreciation, asset write-offs related to store closings,
severance, and other restructuring charges.
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