-Reiterates Fiscal 2007 Guidance of $1.85 to $1.90 Per Diluted
Share- PHILADELPHIA, May 18 /PRNewswire-FirstCall/ -- Deb Shops,
Inc. (NASDAQ:DEBS), a leading teen apparel retailer, today reported
financial results for the first quarter ended April 30, 2006. For
the first quarter of fiscal 2007, net sales increased 5.1% to $81.5
million compared to $77.5 million in the first quarter a year ago.
Gross profit, which is net of buying and occupancy costs, was $22.9
million resulting in a gross margin of 28.1% for the period. This
compares to gross profit of $21.8 million and a 28.1% gross margin
in the first quarter of fiscal 2006. First quarter net income was
$2.7 million compared to $2.8 million in the year ago period, while
diluted earnings per share was $0.19 compared to $0.20 in last
year's first quarter. As of April 30, 2006, the Company had $118.9
million in cash and marketable securities, shareholders' equity of
$132.7 million, and no debt. Marvin Rounick, President and CEO of
Deb Shops, stated, "During the first quarter, we were able to
perform on-plan and report results that were in-line with our
internal projections. Sales were driven by the opening of new
stores and the continued expansion of our plus-size business. We
opened six new stores in the first quarter and we remain on track
for net store growth of between 15 to 20 locations in fiscal 2007
compared to an average annual net store growth of seven locations
over the past five years. As we approach the upcoming summer and
back-to-school selling seasons, we are confident in our product
assortments and merchandising strategy." During the first quarter
of fiscal 2007, Deb Shops opened six new stores, remodeled two
existing locations and closed three stores. The Company also added
a net of seven plus-size departments and as of April 30, 2006,
operated plus-size departments in 170 Deb Shops stores. Barry
Susson, CFO of Deb Shops, added, "We are pleased with our start to
the new fiscal year, particularly given the current economic
environment and our strong comparable store sales performance in
last year's first quarter. Importantly, we continued to return
value to our shareholders through our quarterly dividend payout,
and still ended the period with $118.9 million in cash and
marketable securities on our balance sheet. We move ahead focused
on achieving our strategic goals and committed to delivering
long-term growth and increased profitability." Based on
management's current outlook, Deb Shops is reiterating its fiscal
2007 guidance of sales in the range of $343 million to $348 million
with a corresponding fully diluted earnings range of between $1.85
and $1.90 per share. These amounts are based on a projected low
single digit comparable store sales increase and net new store
growth of between 15 and 20 locations. Deb Shops, Inc. is a
national specialty retailer of fashionable apparel, shoes and
accessories for juniors in both regular and plus sizes. The Company
currently operates 332 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) Three Months Ended April 30, 2006 2005 Net
sales $81,457,556 $77,484,747 Cost of sales, including buying and
occupancy costs 58,573,389 55,682,817 Gross profit 22,884,167
21,801,930 Operating expenses: Selling and administrative
18,255,023 17,095,260 Depreciation and amortization 1,264,148
1,366,807 19,519,171 18,462,067 Operating income 3,364,996
3,339,863 Other income, principally interest 933,074 1,048,455
Income before income taxes 4,298,070 4,388,318 Income tax provision
1,560,000 1,628,000 Net income $2,738,070 $2,760,318 Net income per
common share Basic $0.19 $0.20 Diluted $0.19 $0.20 Weighted average
number of common shares outstanding Basic 14,323,392 13,781,578
Diluted 14,352,326 13,948,925 EBITDA(1) $4,629,144 $4,706,670
Balance Sheet Highlights (Unaudited) April 30, 2006 April 30, 2005
Cash and cash equivalents $27,280,463 $32,868,176 Marketable
securities $91,500,000 $147,100,000 Merchandise inventories
$25,657,734 $25,476,107 Total current assets $149,301,235
$209,189,345 Property, plant and equipment, net $23,873,163
$22,700,640 Total assets $182,667,465 $241,024,144 Total current
liabilities $38,208,140 $38,000,013 Deferred lease credits
$11,768,843 $10,783,087 Total liabilities $49,976,983 $48,783,100
Shareholders' equity $132,690,482 $192,241,044 (1)EBITDA
Reconciliation (Unaudited) Three Months Ended April 30, 2006 2005
Net income $2,738,070 $2,760,318 Income tax provision 1,560,000
1,628,000 Depreciation expense 1,264,148 1,366,807 Other income,
principally interest (933,074) (1,048,455) EBITDA $4,629,144
$4,706,670 (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, Integrated Corporate Relations,
+1-203-682-8200, for Deb Shops Web site: http://www.debshops.com/
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