CHICAGO, March 30 /PRNewswire-FirstCall/ -- Hartmarx Corporation
(NYSE: HMX) today reported operating results for its first quarter
ended February 28, 2006. Sales were $144.2 million in 2006 compared
to $143.8 million in 2005. Net earnings were $2.6 million or $.07
per diluted share in 2006 compared to net earnings of $4.2 million
or $.11 per diluted share in 2005. Homi B. Patel, chairman and
chief executive officer of Hartmarx Corporation, commented, "We
remain comfortable with our previously stated full year guidance of
achieving a net earnings increase in the range of 12% - 20% on a
low to mid-single digit revenue improvement. First quarter revenues
and earnings were in line with our expectations and with the
cautious outlook expressed in our previous earnings release about
the uncertain retail environment in the first half of 2006 caused
by ongoing consolidation and other ownership changes in the retail
industry. Earnings for the first quarter reflect investments in our
most prominent brands, including incremental costs associated with
the new Wall Street Hickey-Freeman store and the Honolulu Bobby
Jones store that opened in the second half of 2005, as well as
additional marketing costs incurred to enhance the Hart Schaffner
Marx brand, launch the new "hickey" brand geared to the younger
preppie consumer, and other direct-to-consumer expenditures in our
luxury and women's product lines. We expect to see the benefits of
these expenditures starting in the second quarter and accelerating
during the second half. The Simply Blue business, acquired at the
end of October, 2005, is performing well and contributed
approximately $4.8 million in sales and approximately $.01 in
earnings per diluted share to first quarter consolidated results;
its full year contribution to earnings per diluted share is
expected to be in the range of $.05 - $.07. We continue to actively
pursue acquisitions that meet our clearly defined strategic
criteria and also launch internally generated new businesses," Mr.
Patel concluded. First quarter operating earnings were $6.3 million
in 2006 compared to $8.5 million in 2005. The gross margin rate of
33.5% was the same as in 2005. However, selling, general and
administrative expenses were $42.8 million in 2006 compared to
$40.4 million in 2005. The $2.4 million increase reflected, among
other things, incremental expenses of $2.1 million related to the
Simply Blue business, $.4 million of stock compensation expense
resulting from the adoption of FASB Statement No. 123R, effective
for the Company's fiscal year beginning on December 1, 2005, and
approximately $1.0 million of incremental costs associated with the
two new retail stores, the launch of the "hickey" brand,
direct-to-consumer marketing expenditures and additional Hart
Schaffner Marx brand advertising. Interest expense was $2.1 million
this year compared to $1.6 million in 2005, reflecting both the
higher borrowing level due to the $21 million paid in October 2005
for the Simply Blue acquisition as well as higher rates. Total debt
was $148.0 million at February 28, 2006, compared to $130.8 million
at February 28, 2005 and reflected a small reduction from the year
earlier period after excluding the amount paid for Simply Blue.
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. ---
UNAUDITED FINANCIAL SUMMARY -- (000's omitted, except per share
amounts) Statement of Earnings Three Months Ended February 28, 2006
2005 Net sales $ 144,204 $ 143,822 Licensing and other income 783
765 144,987 144,587 Cost of goods sold 95,909 95,658 Selling,
general & administrative expenses 42,766 40,404 138,675 136,062
Operating earnings 6,312 8,525 Interest expense 2,107 1,575
Earnings before taxes 4,205 6,950 Tax provision (1,620) (2,745) Net
earnings $ 2,585 $ 4,205 Earnings per share: Basic $ . 07 $ .12
Diluted $ .07 $ .11 Average shares: Basic 36,801 35,920 Diluted
37,510 36,789 * * * February 28, Condensed Balance Sheet 2006 2005
Cash $ 2,395 $ 4,527 Accounts receivable, net 138,272 137,586
Inventories 162,826 141,643 Other current assets 35,567 31,820
Current Assets 339,060 315,576 Other assets, including goodwill and
intangibles 81,843 66,178 Deferred income taxes 22,602 30,335
Intangible pension asset 35,963 39,411 Net fixed assets 36,807
28,991 Total $ 516,275 $ 480,491 Accounts payable and accrued
expenses $ 88,548 $ 94,491 Total debt 148,012 130,795 Accrued
pension liability 29,912 27,219 Shareholders' equity 249,803
227,986 Total $ 516,275 $ 480,491 Book value per share $ 6.71 $
6.27 Selected cash flow data: Capital expenditures $ 1,141 $ 2,636
Depreciation of fixed assets 1,365 1,243 Amortization of intangible
assets, long-lived assets and unearned employee benefits 1,022 809
This information is preliminary and may be changed prior to filing
Form 10-Q. No investment decisions should be based solely on this
data. DATASOURCE: Hartmarx Corporation CONTACT: Traci Young,
+1-212-893-2093, for Hartmarx Corporation Web site:
http://www.hartmarx.com/
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