Deb Shops also Reports February Sales PHILADELPHIA, March 8
/PRNewswire-FirstCall/ -- Deb Shops, Inc. (NASDAQ: DEBS), a leading
teen apparel retailer, today reported financial results for the
fourth quarter ended January 31, 2007. For the fourth quarter of
fiscal 2007, net sales decreased 3.7% to $85.1 million compared to
$88.4 million in the fourth quarter a year ago. Gross profit, which
is net of buying and occupancy costs, was $36.7 million resulting
in a gross margin of 43.1% for the period. This compares to gross
profit of $39.0 million and a 44.2% gross margin in the fourth
quarter of fiscal 2006. Fourth quarter net income was $10.4 million
compared to $12.8 million in the fourth quarter of fiscal 2006,
while diluted earnings per share were $0.73 versus $0.89 in last
year's fourth quarter. As of January 31, 2007, the Company had
$127.7 million in cash and marketable securities, shareholders'
equity of $146.0 million, and no debt. Net sales for the year ended
January 31, 2007 were $324.7 million compared to $325.0 million for
the comparable prior year period. Gross profit, which is net of
buying and occupancy costs, was $110.8 million resulting in a gross
margin of 34.1% for fiscal 2007 versus gross profit of $113.3
million and a 34.9% gross margin in fiscal 2006. Net income was
$21.4 million, or $1.49 per diluted share, versus $25.3 million, or
$1.78 per diluted share, for the year ended January 31, 2006.
Marvin Rounick, President and CEO of Deb Shops, stated, "Despite a
difficult selling environment in our core markets, we finished the
year with earnings per share near the high-end of our revised
guidance range. Throughout fiscal 2007 we did experience some
softness in certain merchandise categories which we believe was
driven by a combination of our product assortment and at times,
difficult economic conditions for our value focused consumers. We
also incurred higher operating costs, primarily related to payroll
and store expenses, which also impacted our bottom line. Despite
these challenges we begin the new year committed to reestablishing
our momentum in order to improve our financial performance and
increase our share of the market." During the fourth quarter of
fiscal 2007, Deb Shops opened three new stores and remodeled two
existing locations. The Company also closed four locations at
year-end. As of January 31, 2007, the Company operated plus-size
departments in 181 Deb stores. Barry Susson, CFO of Deb Shops,
added, "Although we reported sales and earnings that were below our
original projections from the beginning of the year, fiscal 2007
was marked by the execution of several key objectives.
Operationally, we opened 18 new stores of which five were in the
under penetrated western portion of the country. Strategically, we
increased the number of plus size departments throughout our store
base, a key differentiator and important growth vehicle for our
Company. Financially, we maintained our commitment to shareholders,
returning $0.50 per share through our quarterly dividend payout. We
also ended the year with over $127 million in cash and marketable
securities. We move forward with a sound business plan and an
experienced management team focused on delivering long-term growth
and increased profitability." Based on current information, Deb
Shops has established fiscal 2008 sales guidance in the range of
$343 million to $348 million and fully diluted earnings guidance of
between $1.55 and $1.60 per share. The amounts are based on a
projected low- to mid-single-digit comparable store sales increase
and by net store growth of approximately 15 locations. Deb Shops
also today reported that comparable store sales decreased 2.0% for
the month ended February 28, 2007. Total sales increased 1.1% to
$25.6 million from $25.3 million for the month ended February 28,
2006. The Company reports financial results on the calendar month,
therefore, differences in timing will occur when comparing Deb
Shops' results to those of retailers reporting on a 4-5-4 calendar.
For the remainder of fiscal year 2008, Deb Shops, Inc. expects to
report monthly sales according to the following calendar: Month End
Reporting Date March 2007 April 5, 2007* April 2007 May 3, 2007*
May 2007 June 7, 2007 June 2007 July 5, 2007* July 2007 August 2,
2007* August 2007 September 6, 2007 September 2007 October 4, 2007*
October 2007 November 8, 2007 November 2007 December 6, 2007
December 2007 January 3, 2008* January 2008 February 7, 2008
*Denotes dates that differ from reporting dates under the 4-5-4
calendar. Deb Shops, Inc. is a national specialty retailer of
fashionable apparel, shoes and accessories for juniors in both
regular and plus sizes. The Company operates 336 specialty apparel
stores in 42 states under the DEB and Tops 'N Bottoms names. The
Company has made in this release, and from time to time may
otherwise make, "forward-looking statements" (as that term is
defined under federal securities laws) concerning the Company's
future operations, performance, profitability, revenues, expenses,
earnings and financial condition. This release includes, in
particular, forward-looking statements regarding expectations of
future performance, store openings and closings and other matters.
Such forward-looking statements are subject to various risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors. Such factors may
include, but are not limited to, the Company's ability to improve
or maintain sales and margins, respond to changes in fashion, find
suitable retail locations and attract and retain key management
personnel. Such factors may also include other risks and
uncertainties detailed in the Company's filings with the Securities
and Exchange Commission, including the Company's Annual Report on
Form 10-K for the fiscal year ended January 31, 2006. The Company
assumes no obligation to update or revise its forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be
realized. Income Statement Highlights (Unaudited) Year Ended Three
Months Ended January 31, January 31, 2007 2006 2007 2006 Net sales
$ 324,741,227 $ 324,963,607 $ 85,099,548 $ 88,386,430 Cost of
sales, including buying and occupancy costs 213,985,749 211,680,152
48,440,675 49,358,382 Gross profit 110,755,478 113,283,455
36,658,873 39,028,048 Selling and administrative 76,852,741
72,070,465 20,334,878 18,540,204 Depreciation and amortization
5,366,252 5,441,096 1,407,186 1,420,248 82,218,993 77,511,561
21,742,064 19,960,452 Operating income 28,536,485 35,771,894
14,916,809 19,067,596 Other income, principally interest 4,369,478
4,135,410 1,110,683 902,173 Income before income taxes 32,905,963
39,907,304 16,027,492 19,969,769 Income tax provision 11,493,000
14,617,000 5,611,000 7,120,000 Net income $ 21,412,963 $ 25,290,304
$ 10,416,492 $ 12,849,769 Net income per common share Basic $ 1.49
$ 1.79 $ 0.73 $ 0.90 Diluted $ 1.49 $ 1.78 $ 0.73 $0.89 Weighted
average number of common shares outstanding Basic 14,326,704
14,125,484 14,327,808 14,320,694 Diluted 14,343,173 14,195,078
14,341,991 14,351,262 EBITDA(1) $ 33,902,737 $ 41,212,990 $
16,323,995 $ 20,487,844 Balance Sheet Highlights (Unaudited)
January 31, 2007 January 31, 2006 Cash and cash equivalents $
25,779,592 $ 26,520,757 Marketable securities $ 101,950,000 $
91,000,000 Merchandise inventories $ 34,473,012 $ 32,902,705 Total
current assets $ 166,729,274 $ 154,851,005 Property, plant and
equipment, net $ 25,744,179 $ 23,325,292 Total assets $ 202,677,463
$ 187,669,364 Total current liabilities $ 43,977,099 $ 44,602,596
Total liabilities $ 56,631,768 $ 56,114,026 Shareholders' equity $
146,045,695 $ 131,555,338 (1) EBITDA Reconciliation (Unaudited)
Year Ended Three Months Ended January 31, January 31, 2007 2006
2007 2006 Net income $ 21,412,963 $ 25,290,304 $ 10,416,492 $
12,849,769 Income tax provision 11,493,000 14,617,000 5,611,000
7,120,000 Depreciation and amortization 5,366,252 5,441,096
1,407,186 1,420,248 Other income, principally interest (4,369,478)
(4,135,410) (1,110,683) (902,173) EBITDA $ 33,902,737 $ 41,212,990
$ 16,323,995 $ 20,487,844 (1) EBITDA is a financial measure that is
not recognized under accounting principles generally accepted in
the United States (US GAAP). The Company believes EBITDA provides a
meaningful measure of operating performance. As required, the
Company has presented the reconciliation of net income, a US GAAP
financial measure, to EBITDA. DATASOURCE: Deb Shops, Inc. CONTACT:
Barry Susson, Chief Financial Officer, Deb Shops, Inc.,
+1-215-676-6000; or Brendon Frey or Tom Ryan, of Integrated
Corporate Relations, +1-203-682-8200, for Deb Shops, Inc. Web site:
http://www.debshops.com/
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