CHICAGO, Jan. 26 /PRNewswire-FirstCall/ -- Hartmarx Corporation
(NYSE: HMX) today reported operating results for its fourth quarter
and fiscal year ended November 30, 2005. Full year sales increased
2.0% to $598.2 million in 2005 compared to $586.4 million in 2004.
Net earnings in 2005 improved 48% to $23.6 million or $.65 per
basic share and $.63 per diluted share compared to net earnings of
$15.9 million or $.45 per basic share and $.44 per diluted share
last year. Fourth quarter revenues of $156.5 million increased 3.2%
over last year and net earnings of $7.3 million increased 27.5%,
representing $.20 per basic and diluted share. Last year's fourth
quarter revenues were $151.6 million with earnings of $.16 per
basic and diluted share. Homi B. Patel, chairman and chief
executive officer of Hartmarx, commented, "We are very pleased that
we surpassed our net earnings improvement goal of 30% - 40%
established at the beginning of the year. We also achieved our
revenue goal of a low to mid-single digit increase. Both our men's
and women's operating segments achieved sales and earnings
increases compared to 2004. Operating margins improved from our
ongoing changes to product mix, refinements to our off-shore
sourcing and efficient utilization of owned manufacturing
facilities. While we also reduced debt slightly, net of
acquisitions, we were disappointed that we fell well short of our
debt reduction goal. This will once again be a major priority for
us. We have established a 2006 goal of a 20% reduction in debt,
excluding the impact of acquisitions, share repurchases or
dividends. We actively continue to pursue acquisitions that meet
our clearly defined criteria." "Based on industry reports, we
remain cautious about retail business in the immediate future,
especially in the first half of fiscal 2006. However, we are
confident that the Company is well-positioned for sustained
mid-term and longer-term earnings growth. We currently anticipate
that our fiscal 2006 revenues will increase in the low to
mid-single digit range, which reflects the Simply Blue women's
operation for the full year compared to one month in fiscal 2005.
We expect 2006 full year diluted earnings per share to increase in
the range of 12% - 20%. We will continue eliminating those products
or programs that do not meet our margin requirements and replacing
them with higher margin alternatives," Mr. Patel concluded. The
Misook business, acquired in July 2004, generated fiscal 2005 sales
of $33 million and contributed approximately $.17 to diluted
earnings per share; in fiscal 2004, Misook represented
approximately $11 million in sales and $.04 of diluted earnings per
share. Simply Blue Apparel, acquired at the end of October, 2005,
contributed sales of $1.5 million and incurred a small operating
loss. For the full year 2006, the Simply Blue business is
anticipated to contribute approximately $20 million in incremental
sales and $.05 - $.07 to diluted earnings per share. This earnings
contribution is expected to be offset, in part, by $.03 - $.04 per
diluted share pursuant to the adoption of FASB No. 123R, effective
for the Company's fiscal year beginning on December 1, 2005,
related to the expensing of stock options. The full-year gross
margin rate in 2005 improved to 33.9% compared to 32.4% in 2004.
The current year reflected changes to product mix, which included
the revenues attributable to the Misook acquisition for the full
year. Men's Apparel Group's gross margins also improved and
reflected efficient utilization in owned tailored clothing
manufacturing facilities and opportunistic off-shore sourcing.
Selling, general and administrative expenses of $159.1 million
declined from $160.2 million on the higher sales, representing
26.6% of sales in 2005 compared to 27.3% in 2004. Operating
earnings were $45.5 million in 2005 compared to $32.4 million in
2004. Interest expense for the full year increased to $7.2 million
in 2005 from $6.5 million in 2004, principally attributable to
increased rates. Total debt at November 30, 2005 was $119.5
million, which reflected a small reduction from last year excluding
the $21 million paid for Simply Blue Apparel, compared to $102.0
million at November 30, 2004. The 2005 year-end debt level
reflected higher tailored clothing inventories, attributable in
part from earlier receipts and second half in-stock business
impacted unfavorably by high gas prices and the uncertainty of the
aftermath of the hurricanes. The increase in inventory levels is
anticipated to moderate during fiscal 2006. To-date, there have
been no share repurchases pursuant to the October, 2005
authorization. Fourth quarter revenues of $156.5 million in 2005
increased 3.2% compared to $151.6 million in last year's fourth
quarter. Operating earnings increased to $13.9 million compared to
last year's $11.0 million. After consideration of interest and
income tax expense, fourth quarter net earnings were $7.3 million
or $.20 per diluted share in 2005 compared to $5.8 million or $.16
per diluted share in 2004. Hartmarx produces and markets business,
casual and golf apparel under its own brands, including Hart
Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Cambridge,
Keithmoor, Society Brand, Racquet Club, Naturalife, Pusser's of the
West Indies, Royal, Brannoch, Riserva, Sansabelt, Exclusively
Misook, Barrie Pace, Christopher Blue, Worn, L. Paseo and Aura. In
addition, the Company has certain exclusive rights under licensing
agreements to market selected products under a number of premier
brands such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberry
men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus,
Claiborne, DKNY Donna Karan New York, Pierre Cardin, Perry Ellis,
Jeffrey Banks, Jhane Barnes, Lyle & Scott, Golden Bear, Jag and
Starington. The Company's broad range of distribution channels
includes fine specialty and leading department stores,
value-oriented retailers and direct mail catalogs. The comments set
forth above contain forward-looking statements made in reliance
upon the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements can
be identified by the use of forward-looking terminology such as
"anticipate," "believe," "continue," "estimate," "expect,"
"intend," "may," "should" or "will" or the negatives thereof or
other comparable terminology. Forward-looking statements are not
guarantees as actual results could differ materially from those
expressed or implied in such forward-looking statements. The
statements could be significantly impacted by such factors as the
level of consumer spending for men's and women's apparel, the
prevailing retail environment, the Company's relationships with its
suppliers, customers, licensors and licensees, actions of
competitors that may impact the Company's business, possible
acquisitions and the impact of unforeseen economic changes, such as
interest rates, or in other external economic and political factors
over which the Company has no control. The reader is also directed
to the Company's periodic filings with the Securities and Exchange
Commission for additional factors that may impact the Company's
results of operations and financial condition. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. HARTMARX CORPORATION --- UNAUDITED
FINANCIAL SUMMARY -- (000's omitted, except per share amounts)
Statement of Earnings Three Months Ended Twelve Months Ended
November 30, November 30, 2005 2004 2005 2004 Net sales $ 156,469 $
151,634 $ 598,167 $ 586,413 Licensing and other income 380 608
2,118 2,445 156,849 152,242 600,285 588,858 Cost of goods sold
103,099 94,363 395,680 396,272 Selling, general &
administrative expenses 39,816 46,849 159,063 160,207 142,915
141,212 554,743 556,479 Operating earnings 13,934 11,030 45,542
32,379 Interest expense 2,044 1,840 7,182 6,474 Earnings before
taxes 11,890 9,190 38,360 25,905 Tax provision (4,550) (3,435)
(14,805) (10,040) Net earnings $7,340 $5,755 $23,555 $15,865
Earnings per share: Basic $ .20 $ .16 $ .65 $ .45 Diluted $ .20 $
.16 $ .63 $ .44 Average shares: Basic 36,739 35,591 36,433 34,927
Diluted 37,370 36,665 37,212 36,286 November 30, Condensed Balance
Sheet 2005 2004 Cash $1,257 $2,356 Accounts receivable, net 123,058
119,033 Inventories 153,263 130,139 Other current assets 37,775
28,626 Current Assets 315,353 280,154 Other assets, including
goodwill and intangibles 82,282 67,166 Deferred income taxes 23,797
34,167 Intangible pension asset 35,963 39,411 Net fixed assets
37,250 27,643 Total $ 494,645 $448,541 Accounts payable and accrued
expenses $99,841 $98,307 Total debt 119,513 102,032 Accrued pension
liability 29,445 26,416 Shareholders' equity 245,846 221,786 Total
$494,645 $448,541 Book value per share $6.62 $6.16 Selected cash
flow data: Capital expenditures $14,588 $4,180 Depreciation of
fixed assets 5,111 5,559 Amortization of intangible assets,
long-lived assets and unearned employee benefits 3,308 3,801 This
information is preliminary and may be changed prior to filing Form
10-K. No investment decisions should be based solely on this data.
First Call Analyst: FCMN Contact: tyoung@hsmclothes.com DATASOURCE:
Hartmarx Corporation CONTACT: Traci Young of Hartmarx Corporation,
+1-212-893-2093 Web site: http://www.hartmarx.com/
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