SOURCE: Gordmans Stores, Inc.
December 01, 2010 16:00 ET
Gordmans Stores, Inc. Announces Third Quarter Fiscal 2010 Results
Net Sales Increased 11% to $123.6 Million; Comparable Store Sales up 6.0%; Company Raises Fourth Quarter Fiscal 2010 Outlook
OMAHA, NE--(Marketwire - December 1, 2010) - Gordmans Stores, Inc. (NASDAQ: GMAN), an
Omaha-based apparel and home décor retailer, today announced results for
third quarter (thirteen weeks) and nine month period (thirty-nine weeks)
ended October 30, 2010.
Third Quarter Highlights
-- The Company's initial public offering of common stock was effective
on August 4, 2010.
-- Net sales increased 11.0% to $123.6 million compared to $111.4 million
in the third quarter of 2009.
-- Comparable store sales increased 6.0% over the third quarter of 2009.
-- Gross profit margin increased 70 basis points over the third quarter
of 2009.
-- Adjusted net income, excluding non-recurring charges of $10.6 million,
increased 10.7% to $4.3 million compared to $3.9 million in the
third quarter of 2009.
-- Adjusted diluted earnings per share were $0.22, excluding non-recurring
charges of $10.6 million.
Nine Month Highlights
-- Net sales increased 14.9% to $348.6 million compared to $303.5 million
for the nine months ended October 31, 2009.
-- Comparable store sales increased 9.7% over the same nine month period
last year.
-- Gross profit margin increased 100 basis points for the first nine
months of 2010 compared to the same period of 2009.
-- Adjusted net income, excluding non-recurring charges of $11.8 million,
increased 51.8% to $14.7 million compared to $9.7 million for the
first nine months of 2009.
-- Adjusted diluted earnings per share of $0.87, excluding non-recurring
charges of $11.8 million, compares to $0.61 last year.
-- Diluted earnings per share were $0.42.
Jeff Gordman, President and Chief Executive Officer, stated: "We delivered
operating results in the third quarter that were above our plan, driven
primarily by better than expected comparable stores sales growth and
improved gross profit margin. We are very pleased with the recent progress
we have made on several key initiatives that we believe will continue to
drive sales and earnings growth, including enhancing our merchandise
selection, refining our inventory optimization strategies and expanding our
geographic footprint. We are optimistic about our prospects for the holiday
selling season as well as our ability to scale the business over the long
term."
Third Quarter Financial Results
Net sales for the thirteen weeks ended October 30, 2010, increased 11.0% to
$123.6 million from $111.4 million for the thirteen weeks ended October 31,
2009, which translated into a 6.0% comparable store sales increase. Gross
profit increased by 12.8% to $54.7 million, or 44.2% of net sales, from
$48.5 million, or 43.5% of net sales in the prior year. Selling, general
and administrative costs were $58.4 million and include one-time pre-tax
charges of $10.6 million related to the initial public offering. Excluding
these one-time expenses, non-GAAP adjusted selling, general and
administrative expenses were $47.8 million, or 38.7% of net sales, compared
to $42.0 million or 37.7% of net sales in the prior year. The Company
reported a net loss of $2.5 million, or ($0.13) per diluted share during
the third quarter compared to net income of $3.9 million, or $0.24 per
diluted share, in the prior year. Excluding the one-time, pre-tax charges
of $10.6 million related to the initial public offering, the non-GAAP
adjusted net income grew by 10.7% to $4.3 million, or $0.22 per diluted
share, in the third quarter of 2010.
Nine Month Financial Results
Net sales for the thirty-nine weeks ended October 30, 2010, increased 14.9%
to $348.6 million from $303.5 million for the thirty-nine weeks ended
October 31, 2009, while comparable store sales increased by 9.7%. Gross
profit increased by 17.3% to $157.2 million, or 45.1% of net sales, from
$134.0 million, or 44.1% of net sales in the prior year. Selling, general
and administrative expenses were $145.0 million, including one-time pre-tax
charges of $11.8 million related to the initial public offering. Excluding
the one-time pre-tax charges of $11.8 million, non-GAAP adjusted selling,
general and administrative expenses as a percentage of net sales decreased
by 60 basis points during the first nine months of 2010 to 38.2% of net
sales compared to 38.8% of net sales in the previous year. Net income was
$7.2 million, or $0.42 per diluted share compared to net income of $9.7
million, or $0.61 per diluted share in the prior year. Excluding the
one-time pre-tax charges of $11.8 million related to the initial public
offering, non-GAAP adjusted net income for the first nine months of fiscal
2010 increased 51.8% to $14.7 million over the prior year period, and
diluted earnings per share were $0.87.
Outlook
For the fourth quarter ending January 29, 2011, the Company currently
expects net sales to be between $160 million and $165 million, which
reflects an expected mid-single digit comparable store sales increase, up
from its previous forecast of net sales between $155 million and $160
million, which reflected a comparable store sales increase in the low
single digits. The Company now projects net income in the range of $7.2
million to $8.1 million for the fourth quarter, which translates into
diluted earnings per share in the range of $0.37 to $0.42 (using a diluted
share count of approximately 19.3 million), up from its previous
expectation for net income in the range of $5.9 million to $6.8 million and
earnings per share in the range of $0.30 to $0.35 (using a diluted share
count of approximately 19.5 million).
Conference Call Information
A conference call to discuss third quarter financial results is scheduled
for today, December 1, 2010 at 4:30 p.m. Eastern Time. The conference call
will be webcast live at http://investor.gordmans.com/events.com. A replay
of this call will be available within two hours of the conclusion of the
call and will remain on the website for one year.
About Gordmans Stores, Inc.
Gordmans (NASDAQ: GMAN) features a large selection of the latest name
brands, fashions and styles at up to 60 percent off department and
specialty store prices every day. The wide range of merchandise includes
apparel for all ages, accessories, footwear, home décor, gifts, designer
fragrances, fashion jewelry, bedding and bath, accent furniture and toys.
Founded in 1915, Gordmans operates 68 stores in 16 Midwestern and
surrounding states. For more information about Gordmans, visit
www.gordmans.com.
Safe Harbor Language
Certain statements in this release are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words such as "guidance," "expects," "intends,"
"projects," "plans," "believes," "estimates," "targets," "anticipates," and
similar expressions are used to identify these forward-looking statements.
Examples of forward-looking statements include, but are not limited to,
statements regarding expected net income, comparable store sales, diluted
earnings per share, and store expansion, as well as any other statement
that does not directly relate to any historical or current fact.
Forward-looking statements are based on our current expectations and
assumptions, which may not prove to be accurate. These statements are not
guarantees and are subject to risks, uncertainties and changes in
circumstances that are difficult to predict. Many factors could cause
actual results to differ materially and adversely from these
forward-looking statements. Among these factors are (1) changes in consumer
spending and general economic conditions; (2) our ability to identify and
respond to new and changing fashion trends, guest preferences and other
related factors; (3) fluctuations in our sales and results of operations on
a seasonal basis; (4) intense competition from other retailers; (5) our
ability to maintain or improve levels of comparable store sales; (6) our
successful implementation of advertising, marketing and promotional
strategies, (7) termination of our license agreements; (8) our ability to
obtain merchandise at acceptable prices; (9) shortages of inventory and
harm to our reputation due to difficulties or shut-down of our distribution
facilities; (10) our reliance on independent third-party transportation
providers for substantially all of our merchandise shipments; (11) our
growth strategy, including the ability to identify acceptable store
locations at appropriate costs; (12) our dependence on a strong brand
image; (13) our leasing of substantial amounts of space; (14) the inability
to find a sufficient number of store associates that reflect our brand
image and embody our culture; (15) our dependence upon key executive
management; (16) our reliance on information systems; (17) system security
risk issues that could disrupt our internal operations or information
technology services; (18) changes in laws and regulations applicable to our
business; (19) our inability to protect our trademarks or other
intellectual property rights; (20) fluctuations in energy costs; (21)
claims made against us resulting in litigation; (22) impairment on our
long-lived assets; (23) our substantial lease obligations; and (24)
restrictions imposed by our indebtedness on our current and future
operations.
Additional information concerning these and other factors can be found in
our filings with the Securities and Exchange Commission, including our
Registration Statement on Form S-1 (File No. 333-166436), as amended,
quarterly reports on Form 10-Q, and current reports on Form 8-K. Any
forward-looking statement speaks only as of the date on which it is made,
and we undertake no obligation to publicly update or revise any
forward-looking statement as a result of new information, future events or
otherwise, except as otherwise required by law.
GORDMANS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in 000's except share data)
October 30, January 30,
2010 2010
----------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,418 $ 16,601
Accounts receivable 2,007 2,544
Landlord receivable 1,269 423
Income tax receivable 2,496 --
Merchandise inventories 101,717 49,291
Deferred income taxes 2,767 2,491
Prepaid expenses 6,305 4,581
----------- ------------
Total current assets 124,979 75,931
PROPERTY, BUILDINGS AND EQUIPMENT, net 17,400 10,444
INTANGIBLE ASSETS, net 2,189 2,262
DEFERRED INCOME TAXES 1,149 1,050
OTHER ASSETS 2,368 2,431
----------- ------------
TOTAL ASSETS $ 148,085 $ 92,118
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 68,995 $ 30,685
Income taxes payable -- 3,715
Accrued expenses 25,011 24,633
Notes payable, current portion 1,502 667
Capital lease obligations, current portion 427 68
----------- ------------
Total current liabilities 95,935 59,768
----------- ------------
NONCURRENT LIABILITIES:
Notes payable, net of current portion 705 778
Deferred rent 6,471 4,686
Capital lease obligations, net of current
portion 737 --
Other liabilities 757 937
----------- ------------
Total noncurrent liabilities 8,670 6,401
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock -- --
Common stock 19 15
Additional paid-in capital 50,682 20,328
Retained earnings (deficit) (7,221) 5,606
----------- ------------
Total stockholders' equity 43,480 25,949
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 148,085 $ 92,118
=========== ============
GORDMANS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in 000's except share data)
(Unaudited)
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
October 30, October 30, October 30, October 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 123,606 $ 111,396 $ 348,615 $ 303,499
License fees from
leased departments 1,676 1,481 4,643 4,059
Cost of sales (70,590) (64,394) (196,076) (173,604)
----------- ----------- ----------- -----------
Gross profit 54,692 48,483 157,182 133,954
Selling, general
and administrative
expenses (58,412) (42,038) (144,983) (117,761)
----------- ----------- ----------- -----------
Income / (loss)
from operations (3,720) 6,445 12,199 16,193
Interest expense (167) (326) (571) (860)
----------- ----------- ----------- -----------
Income / (loss)
before taxes (3,887) 6,119 11,628 15,333
Income tax
(expense) / benefit 1,409 (2,257) (4,455) (5,655)
----------- ----------- ----------- -----------
Net income /
(loss) $ (2,478) $ 3,862 $ 7,173 $ 9,678
=========== =========== =========== ===========
Basic earnings /
(loss) per share $ (0.13) $ 0.25 $ 0.43 $ 0.62
Basic weighted
average shares
outstanding 18,869,339 15,488,800 16,729,537 15,488,800
Diluted earnings /
(loss) per share $ (0.13) $ 0.24 $ 0.42 $ 0.61
Dilutive weighted
average shares
outstanding 18,869,339 15,930,974 16,960,722 15,968,643
GORDMANS STORES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in 000's except share data)
(Unaudited)
The following information provides reconciliations of non-GAAP financial
measures presented in the accompanying earnings release to the most
comparable financial measures calculated and presented in accordance with
accounting principles generally accepted in the U.S. ("GAAP"). The company
has provided non-GAAP financial measures, which are not calculated or
presented in accordance with GAAP, as information supplemental and in
addition to the financial measures presented in the accompanying earnings
release that are calculated and presented in accordance with GAAP. Such
non-GAAP financial measures should not be considered superior to, as a
substitute for, or as an alternative to, and should be considered in
conjunction with, the GAAP financial measures presented in the earnings
release. The non-GAAP financial measures in the accompanying earnings
release may differ from similar measures used by other companies.
As used in the accompanying earnings release, the company defines non-GAAP
as reported amounts for the periods presented to exclude the effects of
one-time pre-tax charges related to the initial public offering primarily
including fees associated with the termination of our consulting agreement
with Sun Capital Partners Management V, LLC ("Sun Capital Management").
These non-GAAP financial measures provide the company and investors with an
understanding of the company's financial measures adjusted to exclude the
effect of the charges described above.
These non-GAAP financial measures assist the company and investors in
making a ready comparison of the company's financial measures for its first
nine months of fiscal 2010, against the company's results for the
respective current year period.
The following tables reconcile non-GAAP measures to the related GAAP
financial measure for the periods presented:
13 Weeks Ended October 30, 2010
GAAP Basis Amounts Non-GAAP
As Reported Adjusted As Adjusted
----------- ---------- -------------
Net sales $ 123,606 $ -- $ 123,606
License fees from leased
departments 1,676 -- 1,676
Cost of sales (70,590) -- (70,590)
----------- ---------- -------------
Gross profit 54,692 -- 54,692
Selling, general and
administrative expenses (58,412) 10,589(1) (47,823)
----------- ---------- -------------
Income / (loss) from
operations (3,720) 10,589 6,869
Interest expense (167) -- (167)
----------- ---------- -------------
Income / (loss) before taxes (3,887) 10,589 6,702
Income tax (expense) /
benefit 1,409 (3,837) (2,428)
----------- ---------- -------------
Net income / (loss) $ (2,478) $ 6,752 $ 4,274
=========== ========== =============
Basic earnings / (loss) per
share $ (0.13) $ 0.36 $ 0.23
Basic weighted average shares
outstanding 18,869,339 18,869,339 18,869,339
Diluted earnings / (loss) per
share $ (0.13) $ 0.35 $ 0.22
Dilutive weighted average
shares outstanding 18,869,339 19,034,912 19,034,912
(1) Includes one-time pre-tax charges of $10.6 million related to the
initial public offering primarily including fees associated with
the termination of our consulting agreement with Sun Capital
Management.
GORDMANS STORES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in 000's except share data)
(Unaudited)
39 Weeks Ended October 30, 2010
GAAP Basis Amounts Non-GAAP
As Reported Adjusted As Adjusted
----------- ----------- -----------
Net sales $ 348,615 $ -- $ 348,615
License fees from leased
departments 4,643 -- 4,643
Cost of sales (196,076) -- (196,076)
----------- ----------- -----------
Gross profit 157,182 -- 157,182
Selling, general and
administrative expenses (144,983) 11,849(2) (133,134)
----------- ----------- -----------
Income from operations 12,199 11,849 24,048
Interest expense (571) -- (571)
----------- ----------- -----------
Income before taxes 11,628 11,849 23,477
Income tax expense (4,455) (4,327) (8,782)
----------- ----------- -----------
Net income $ 7,173 $ 7,522 $ 14,695
========== =========== ===========
Basic earnings per share $ 0.43 $ 0.45 $ 0.88
Basic weighted average shares
outstanding 16,729,537 16,729,537 16,729,537
Diluted earnings per share $ 0.42 $ 0.44 $ 0.87
Dilutive weighted average
shares outstanding 16,960,722 16,960,722 16,960,722
(2) Includes one-time pre-tax charges of $11.8 million related to the
initial public offering primarily including fees associated with
the termination of our consulting agreement with Sun Capital
Management.