PHILADELPHIA, Nov. 16 /PRNewswire-FirstCall/ -- Deb Shops, Inc.
(NASDAQ: DEBS), a leading teen apparel retailer, today reported
financial results for the third quarter ended October 31, 2006. For
the third quarter of fiscal 2007, net sales decreased 0.7% to $82.5
million compared to $83.1 million in the third quarter a year ago.
Gross profit, which is net of buying and occupancy costs, was $22.7
million resulting in a gross margin of 27.5% for the period. This
compares to gross profit of $23.4 million and a 28.2% gross margin
in the third quarter of fiscal 2006. Third quarter net income was
$2.4 million compared to $3.1 million in the third quarter of
fiscal 2006, while diluted earnings per share were $0.17 versus
$0.21 in last year's third quarter. As of October 31, 2006, the
Company had $120.4 million in cash and marketable securities,
shareholders' equity of $137.4 million, and no debt. Marvin
Rounick, President and CEO of Deb Shops, stated, "Our third quarter
results were in line with the projections that support the sales
and earnings guidance we provided in early October. That guidance
reflects the impact of a later back to school season in certain
states. This later season shifted sales from August to September
compared with a year ago." Mr. Rounick added, "Our business was
mixed during the quarter, with some strength in dresses and tops,
offset by weakness in bottoms and accessories. Looking ahead, we
remain fully committed to further expanding our store base in order
to drive top-line growth which should allow us to realize
meaningful operating expense leverage and improve on our recent
financial performance." Net sales for the first nine months of
fiscal 2007 increased 1.3% to $239.6 million from $236.6 million
for the comparable prior year period. Gross profit, which is net of
buying and occupancy costs, was $74.1 million resulting in a gross
margin of 30.9% for the period. This compares to gross profit of
$74.3 million and a 31.4% gross margin in the comparable prior year
period. Net income for the period was $11.0 million, or $0.76 per
diluted share, versus $12.4 million, or $0.88 per diluted share, in
the first nine months of fiscal 2006. During the third quarter of
fiscal 2007, Deb Shops opened five new stores and closed one. As of
October 31, 2006, the Company operated plus-size departments in 178
Deb stores. Barry Susson, CFO of Deb Shops, added, "While we are
disappointed with our year-over-year comparisons, we are pleased
with our ability to maintain our quarterly dividend payout and
still end the period with over $120 million in cash and marketable
securities and no debt. We remain committed to growing our store
base and believe our financial strength will enable us to do so
while continuing to return value to our shareholders." Based on
management's current outlook, Deb Shops is reiterating its fiscal
2007 guidance of sales in the range of $325 million to $330 million
with a corresponding fully diluted earnings range of between $1.40
and $1.50 per share. These amounts are based on a projected low- to
mid-single-digit comparable store sales decrease for the full year,
offset by net new store growth. 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
338 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 (Unaudited) Nine Months Ended Three
Months Ended October 31, October 31, 2006 2005 2006 2005 Net sales
$239,641,679 $236,577,177 $82,525,663 $83,126,336 Cost of sales,
Including buying and occupancy costs 165,545,074 162,321,770
59,808,991 59,704,713 Gross profit 74,096,605 74,255,407 22,716,672
23,421,623 Operating expenses: Selling and administrative
56,517,863 53,530,261 18,812,735 17,908,951 Depreciation and
amortization 3,959,066 4,020,848 1,384,477 1,371,467 60,476,929
57,551,109 20,197,212 19,280,418 Operating income 13,619,676
16,704,298 2,519,460 4,141,205 Other income, principally interest
3,258,795 3,233,237 1,158,769 859,932 Income before income taxes
16,878,471 19,937,535 3,678,229 5,001,137 Income tax provision
5,882,000 7,497,000 1,282,000 1,911,000 Net income $10,996,471
$12,440,535 $2,396,229 $3,090,137 Net income per common share Basic
$0.76 $0.88 $0.17 $0.21 Diluted $0.76 $0.88 $0.17 $0.21 Weighted
average number of common shares outstanding Basic 14,326,336
14,060,414 14,327,808 14,319,308 Diluted 14,343,567 14,143,016
14,334,842 14,319,308 EBITDA(1) $17,578,742 $20,725,146 $3,903,937
$5,512,672 Balance Sheet Highlights (Unaudited) October 31, 2006
October 31, 2005 Cash and cash equivalents $28,454,464 $31,664,290
Marketable securities $91,900,000 $74,500,000 Merchandise
inventories $26,236,671 $25,910,803 Total current assets
$153,443,280 $136,438,604 Property, plant and equipment, net
$25,350,770 $22,354,276 Total assets $188,287,117 $167,927,038
Total current liabilities $38,358,071 $36,036,005 Total liabilities
$50,874,512 $47,570,030 Shareholders' equity $137,412,605
$120,357,008 (1)EBITDA Reconciliation (Unaudited) Nine Months Ended
Three Months Ended October 31, October 31, 2006 2005 2006 2005 Net
income $10,996,471 $12,440,535 $2,396,229 $3,090,137 Income tax
provision 5,882,000 7,497,000 1,282,000 1,911,000 Depreciation and
amortization 3,959,066 4,020,848 1,384,477 1,371,467 Other income,
( 3,258,795) (3,233,237) (1,158,769) (859,932) EBITDA $17,578,742
$20,725,146 $3,903,937 $5,512,672 (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 of Deb
Shops, Inc., +1-215-676-6000, or Brendon Frey or Tom Ryan of
Integrated Corporate Relations, +1-203-682-8200 Web Site:
http://www.debshops.com/
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