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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended April 30, 2003
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-12188
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DEB SHOPS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1913593
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9401 Blue Grass Road, Philadelphia, Pennsylvania 19114
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(Address of principal executive offices) (Zip Code)
(215) 676-6000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name and address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, Par Value $.01 13,684,900
- ---------------------------- -----------------------------
(Class) (Outstanding at June 6, 2003)
DEB SHOPS, INC. AND SUBSIDIARIES
INDEX
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Page
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PART I. Financial Information:
Item 1. Financial statements (Unaudited)
Consolidated Balance Sheets - 1
April 30, 2003 and January 31, 2003
Consolidated Statements of Operations 2
Three Months Ended April 30, 2003 and 2002
Consolidated Statements of Cash Flows - 3
Three Months Ended April 30, 2003 and 2002
Notes to Consolidated Financial Statements - 4-5
April 30, 2003
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - April 30, 2003 6-9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 9
Item 4. Controls and Procedures 9
PART II. Other Information 10
DEB SHOPS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
APRIL 30, JANUARY 31,
2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $149,897,081 $152,617,355
Merchandise inventories 25,471,208 29,911,290
Prepaid expenses and other 4,082,212 2,692,479
Deferred income taxes 1,453,227 1,453,227
------------------ -----------------
Total Current Assets 180,903,728 186,674,351
------------------ -----------------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 150,000 150,000
Buildings 2,365,697 2,365,697
Leasehold improvements 42,501,597 42,135,335
Furniture and equipment 17,565,951 17,619,473
------------------ -----------------
62,583,245 62,270,505
Less accumulated depreciation
and amortization 42,957,559 42,409,030
------------------ -----------------
19,625,686 19,861,475
------------------ -----------------
OTHER ASSETS
Deferred income taxes 4,892,273 4,892,273
Other 1,962,223 1,962,223
------------------ -----------------
Total Other Assets 6,854,496 6,854,496
------------------ -----------------
$207,383,910 $213,390,322
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $20,409,554 $21,616,666
Accrued expenses and other 9,486,711 9,864,161
Income taxes payable 552,412 3,871,945
------------------ -----------------
Total Current Liabilities 30,448,677 35,352,772
------------------ -----------------
Shareholders' Equity
Series A Preferred Stock, par value $1.00 per share:
Authorized - 5,000,000 shares
Issued and outstanding - 460 shares,
liquidation value $460,000 460 460
Common Stock, par value $.01 per share:
Authorized - 50,000,000 shares
Issued - 15,688,290 shares 156,883 156,883
Additional paid in capital 5,864,790 5,864,790
Retained earnings 183,337,820 184,440,137
------------------ -----------------
189,359,953 190,462,270
Less 2,003,390 common treasury shares, at cost 12,424,720 12,424,720
------------------ -----------------
176,935,233 178,037,550
------------------ -----------------
$207,383,910 $213,390,322
================== =================
See notes to consolidated financial statements.
-1-
DEB SHOPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended April 30,
-----------------------------------------
2003 2002
---- ----
Net sales $ 70,161,591 $ 76,964,343
-----------------------------------------
Costs and expenses
Cost of sales, including
buying and occupancy costs 52,394,003 55,628,532
Selling and administrative 16,679,097 15,752,090
Depreciation and amortization 1,038,659 922,463
-----------------------------------------
70,111,759 72,303,085
-----------------------------------------
Operating income 49,832 4,661,258
Other income, principally interest 401,142 592,840
-----------------------------------------
Income before income taxes 450,974 5,254,098
Income tax provision 171,000 1,970,000
-----------------------------------------
Net income $ 279,974 $ 3,284,098
=========================================
Net income per common share
Basic $ 0.02 $ 0.24
=========================================
Diluted $ 0.02 $ 0.24
=========================================
Cash dividend declared
per common share $ 0.100 $ 0.075
=========================================
Weighted average number of
common shares outstanding
Basic 13,684,900 13,633,593
=========================================
Diluted 13,684,900 13,804,991
=========================================
See notes to consolidated financial statements.
-2-
DEB SHOPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended April 30,
----------------------------------------
2003 2002
---- ----
Cash flows (used in) provided by operating activities:
Net income $ 279,974 $ 3,284,098
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Depreciation and amortization 1,038,659 922,463
Deferred income taxes (benefit) - (105,000)
Loss on retirement of property, plant and equipment 12,077 571
Change in assets and liabilities:
Decrease in merchandise inventories 4,440,082 6,325,313
Increase in prepaid expenses and other (1,389,733) (323,126)
Decrease in trade accounts payable (1,207,112) (1,327,587)
(Decrease) increase in accrued expenses and other (377,450) 284,376
Decrease in income taxes payable (3,319,533) (3,336,642)
----------------------------------------
Net cash (used in) provided by operating activities (523,036) 5,724,466
----------------------------------------
Cash flows used in investing activities:
Purchase of property, plant and equipment, net (814,948) (1,210,298)
----------------------------------------
Net cash used in investing activities (814,948) (1,210,298)
----------------------------------------
Cash flows used in financing activities:
Preferred stock cash dividends paid (13,800) (13,800)
Common stock cash dividends paid (1,368,490) (1,021,868)
Proceeds from exercise of stock options - 420,000
Principal payments under capital lease obligations - (180,670)
----------------------------------------
Net cash used in financing activities (1,382,290) (796,338)
----------------------------------------
(Decrease) increase in cash and cash equivalents (2,720,274) 3,717,830
----------------------------------------
Cash and cash equivalents at beginning of period 152,617,355 135,251,663
Cash and cash equivalents at end of period $ 149,897,081 $138,969,493
========================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes, net $ 3,473,000 $ 5,202,139
========================================
See notes to consolidated financial statements.
-3-
DEB SHOPS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
APRIL 30, 2003
NOTE A - ORGANIZATION / BASIS OF PRESENTATION
Deb Shops, Inc. (the "Company") sells popularly priced fashion apparel
for junior and plus-sized females and males through 330 stores. The Company's
stores are located in regional malls and strip shopping centers principally
located in the East and Midwest regions of the United States.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements. In
the first and third quarters, cost of goods sold and inventories are estimated
based on the use of the gross profit method. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended April 30, 2003 are not necessarily indicative of the results that may be
expected for the fiscal year ending January 31, 2004. The Consolidated Balance
Sheet at January 31, 2003 has been derived from the audited financial statements
at that date. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 2003.
The preparation of the consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE B - NET INCOME PER SHARE
The table below sets forth the reconciliation of the numerators and
denominators of the basic and diluted net income per common share computations.
Three Months Ended April 30,
2003 2002
----------------------------------------
Net income $ 279,974 $ 3,284,098
Dividends on preferred stock (13,800) (13,800)
----------------------------------------
Income available to common shareholders $ 266,174 $ 3,270,298
========================================
Basic weighted average number of
common shares outstanding 13,684,900 13,633,593
Effect of dilutive stock options - 171,398
----------------------------------------
Diluted weighted average number of
common shares outstanding 13,684,900 13,804,991
========================================
In February 2002, the Company granted options to purchase 1,426,500 shares of
common stock, at a weighted average exercise price of $23.77 per share. The
effect of these options on the diluted weighted average number of common shares
outstanding at April 30, 2002 is reflected in the above table.
Options to purchase 1,381,500 shares of common stock, at a weighted average
exercise price of $23.77 per share, were outstanding during the three months
ended April 30, 2003. These options were not included in the computation of
diluted earnings per share because the exercise price was greater than the
average market price of the common stock during the period and, therefore, the
effect would have been antidilutive.
-4-
NOTE C - INCOME TAXES
The Company's effective tax rate differs from the federal statutory rate
due primarily to state income taxes, offset by tax-exempt interest earnings.
NOTE D - STOCK RELATED COMPENSATION
The Company has a stock option plan whereby options may be granted to
employees or non-employee directors on the basis of contributions to the
operations of the Company. Details concerning the plan are described in Note F
to the financial statements included in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2003. The Company continues to use the
accounting method under Accounting Principles Board Opinion No. 25 ("APB No.
25"), "Accounting for Stock Issued to Employees," and related interpretations
for these plans. Under APB No. 25, generally, when the exercise price of the
Company's stock options equals the market price of the underlying stock on the
date of the grant, no compensation expense is recognized.
Had the Company recognized compensation cost for the stock option plan
consistent with the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," net income and basic and diluted net income per share would have
been adjusted to the following pro forma amounts.
Three months ended April 30,
----------------------------------
2003 2002
----------------------------------
Net income as reported $ 279,974 $ 3,284,098
Stock-based employee compensation cost 699,601 790,466
----------------------------------
Pro forma net (loss) income $ (419,627) $ 2,493,632
==================================
Basic net income per common share, as reported $ 0.02 $ 0.24
Pro forma basic net (loss) income
per common share $ (0.03) $ 0.18
Diluted net income per common share, as reported $ 0.02 $ 0.24
Pro forma diluted net (loss) income
per common share $ (0.03) $ 0.18
-5-
Item 2.
- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Deb Shops, Inc. (the "Company") has made in this report, 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 and financial
condition. This report includes, in particular, forward-looking statements
regarding store openings, 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 the Company's ability to attract and retain key
management personnel. Such factors may also include other risks and
uncertainties detailed in the Company's other filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2003 (the "2003 10-K"). 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.
Critical Accounting Policies
The Company's critical accounting policies are discussed in Management's
Discussion and Analysis of Financial Condition and Results of Operations and
notes accompanying the consolidated financial statements that appear in the 2003
10-K. Except as otherwise disclosed in the financial statements and accompanying
notes included in this report, there were no material changes subsequent to the
filing of the 2003 10-K in the Company's critical accounting policies or in the
assumptions or estimates used to prepare the financial information appearing in
this report.
Overview
The Company operates 324 women's specialty apparel retail stores
offering popularly priced, fashionable, coordinated sportswear, dresses, coats,
lingerie, accessories, shoes and novelty items to the junior and plus-sized
fashion-conscious female. Stores are located in 41 states, principally in the
East and Midwest portions of the United States. The Company also operates six
Tops 'N Bottoms stores which sell moderately priced men's and women's apparel.
-6-
Results of Operations
Three Months Ended April 30, 2003 Compared to Three Months Ended April 30, 2002
Net sales decreased 8.8% during the quarter ended April 30, 2003 (the
"Current Quarter") to $70,162,000 from $76,964,000 in the quarter ended April
30, 2002 (the "Comparable Quarter"). The $6,802,000 decrease was the result of a
13.4% comparable store sales decrease, offset by new store sales. The sales
decrease is attributable to weakness in the economy, the severe and prolonged
winter weather conditions in the Company's core markets, higher gas prices and
the war in Iraq.
The following table sets forth certain store information.
Store Data(1)
Three Months Ended April 30,
----------------------------------------
2003 2002
---- ----
Stores open at end of the period 330 316
Average number in operation during the period 330 315
Average net sales per store (in thousands) $213 $244
Average operating income
per store (in thousands) $ 0.2 $ 14
Comparable store sales(2) - percent change (13.4)% 6.2%
Cost of sales, including buying and occupancy costs, decreased 5.8%
during the Current Quarter to $52,400,000 from $55,600,000 in the Comparable
Quarter. As a percentage of net sales, these costs increased to 74.7% from 72.3%
in the Comparable Quarter. The increase as a percentage of sales was due to the
de-leveraging of buying and occupancy costs as a result of the comparable store
sales decrease.
Selling and administrative expenses increased 5.9% during the Current
Quarter to $16,679,000 from $15,752,000 in the Comparable Quarter. As a
percentage of net sales, these costs increased to 23.8% from 20.5% in the
Comparable Quarter. The $927,000 increase was due primarily to costs associated
with operating an average of 15 additional stores during the Current Quarter as
compared to the Comparable Quarter. Similar to the percentage increase in cost
of sales, including buying and occupancy expenses, this increase as a percentage
of net sales was due to the inability to leverage infrastructure expenses as a
result of the decrease in comparable store sales.
Depreciation expense increased $117,000, or 12.6% to $1,039,000 in the
Current Quarter from $922,000 in the Comparable Quarter. The increase was due to
the depreciation of costs incurred for new store openings and remodeling of
existing stores.
Other income, principally interest, decreased $192,000, or 32.3% to
$401,000 in the Current Quarter from $593,000 in the Comparable Quarter. The
decrease was primarily the result of declining interest rates, partially offset
by higher cash balances.
As a result of the foregoing, net income for the Current Quarter was
$0.3 million or $0.02 per diluted share versus $3.3 million or $0.24 per diluted
share for the Comparable Quarter.
- ----------
(1) Includes Tops 'N Bottoms stores
(2) Comparable store sales include stores open for both periods in the current
format and location. A store is added to the comparable store base in its
13th month of operation.
-7-
Liquidity and Capital Resources
During the Current Quarter and Comparable Quarter, the Company funded
all of its operating needs internally, including capital expenditures for the
opening of new stores and the remodeling of existing stores. For the Current
Quarter, cash used in operating activities was $523,000. The use of cash during
this period was the result of decreases in income taxes and accounts payable,
accrued expenses and an increase in prepaid expenses. Offsetting these uses of
cash was net income, a reduction in merchandise inventories and non-cash charges
for depreciation and amortization. For the Comparable Quarter, cash provided by
operating activities was $5,724,000. These funds were provided by net income,
decreases in merchandise inventories and non-cash charges for depreciation and
amortization, partially offset by decreases in income taxes payable and accounts
payable. The inventory turnover rates were approximately 0.7 and 0.8 times
during the Current Quarter and Comparable Quarter, respectively.
Net cash used in investing activities was $815,000 and $1,210,000 for
the Current Quarter and Comparable Quarter, respectively. These funds were used
for the opening of new stores and the remodeling of existing stores. During the
Current Quarter, the Company opened four and remodeled nine stores, while during
the Comparable Quarter the Company opened nine and remodeled seven stores.
Net cash used in financing activities was $1,382,000 and $796,000 for
the Current Quarter and Comparable Quarter, respectively. During both periods,
these funds were used for the payment of dividends on preferred and common stock
and during 2002 the use of funds was partially offset by proceeds from the
exercise of stock options.
As of April 30, 2003, the Company had cash and cash equivalents of
$149,897,000 compared with $138,969,000 at April 30, 2002.
On May 30, 2003, the Company announced a special dividend of $0.05 per
share on its common stock, and an increase to its existing quarterly dividend
from $0.10 to $0.125 per share on its common stock. The new rate and special
dividend will be incorporated into the Company's next dividend payment on August
19, 2003 for shareholders of record as of July 31, 2003.
The Company believes that its existing cash and cash equivalents and
internally generated funds will be sufficient to meet its anticipated capital
expenditures, none of which are material, and current operating needs. The
Company had an unsecured line of credit in the amount of $20,000,000 as of April
30, 2003. Of this amount, $2,767,000 was outstanding as letters of credit for
the purchase of inventory. The Company leases its retail apparel stores,
warehouse and office building for periods ranging from one to 20 years.
Following is a summary of the Company's contractual obligations for minimum
rental payments on its non-cancelable operating leases and minimum payments on
its other commitments as of April 30, 2003.
Payments Due by Period
Within 1 1 - 3 4 - 5 After 5
Total Year years years years
------------------------------------------------------------------------------------------------
Operating
leases $ 148,622,000 $ 24,108,000 $ 40,343,000 $ 30,626,000 $ 53,545,000
Other
commitments 2,767,000 2,767,000 -- -- --
------------------------------------------------------------------------------------------------
Total $ 151,389,000 $ 26,875,000 $ 40,343,000 $ 30,626,000 $ 53,545,000
================================================================================================
-8-
Other Matters
Seasonality and Quarterly Results
The Company's operating results are subject to seasonal fluctuations.
Highest sales levels have historically occurred during the five-month period
from August 1 to December 31 of each year (the back-to-school and holiday
periods). Sales generated during these periods have traditionally had a
significant impact on the Company's results of operations. Any decreases in
sales for these periods or in the availability of working capital needed in the
months preceding these periods could have a material adverse effect on the
Company's results of operations. Results of operations in any one fiscal quarter
are not necessarily indicative of the results of operations that can be expected
for any other fiscal quarter or for the full fiscal year.
The Company's results of operations may also fluctuate from quarter to
quarter as a result of the amount and timing of expenses incurred in connection
with, and sales contributed by, new stores, store remodels and the integration
of new stores into the operations of the Company.
Item 3.
- -------
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As of April 30, 2003, the Company had cash and cash equivalents of
$149,897,000 compared to $138,969,000 as of April 30, 2002, and $113,231,000 as
of April 30, 2001. These funds are invested primarily in money market mutual
funds and short-term municipal bonds, all of which are fully insured or
guaranteed by letters-of-credit. The Company does not invest for trading
purposes. Accordingly, the Company does not believe it has significant exposure
to market risk with respect to its investments.
Item 4.
- -------
CONTROLS AND PROCEDURES
(a) Within 90 days prior to the date of this report, the principal
executive officer and principal financial officer evaluated the Company's
controls and procedures relating to its reporting and disclosure obligations.
These officers have concluded that these disclosure controls and procedures are
sufficient to provide that (i) material information relating to the Company,
including its consolidated subsidiaries, is made known to these officers by
other employees of the Company and its consolidated subsidiaries, particularly
material information related to the period for which this periodic report is
being prepared; and (ii) this information is recorded, processed, summarized,
evaluated and reported, as applicable, within the time periods specified in the
rules and forms of the Securities and Exchange Commission.
(b) There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
-9-
PART II. OTHER INFORMATION
Items 1 - 5. NOT APPLICABLE
- ------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- ---------------------------------
(a) Exhibits
Exhibit 99.1 Certification of Periodic Report by President
and Chief Executive Officer
Exhibit 99.2 Certification of Periodic Report by
Chief Financial Officer
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended April 30, 2003.
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DEB SHOPS, INC.
DATE: June 13, 2003 By Marvin Rounick
-------------------------------------
Marvin Rounick
President and Chief Executive Officer
DATE: June 13, 2003 By Barry J. Susson, CPA
-------------------------------------
Barry J. Susson
Chief Financial Officer
Section 302 Certification by President and Chief Executive Officer
I, Marvin Rounick, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Deb Shops, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 13, 2003
Marvin Rounick
------------------------------
Marvin Rounick, President and
Chief Executive Officer
Section 302 Certification by Chief Financial Officer
I, Barry J. Susson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Deb Shops, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 13, 2003
Barry J. Susson, CPA
-----------------------
Barry J. Susson
Chief Financial Officer