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8-K - FORM 8-K - G-Estate Liquidation Stores, Inc.d590368d8k.htm

Exhibit 99.1

Gordmans Stores, Inc. Announces Second Quarter 2013 Results

And Special Cash Dividend

Second Quarter Net Sales Increased 6.7%;

Second Quarter Diluted EPS of $0.05

Special Cash Dividend of $3.60 Per Share Declared

Omaha, Nebraska (August 28, 2013) – Gordmans Stores, Inc. (NASDAQ: GMAN), an Omaha-based apparel and home décor retailer, today announced results for its second quarter (thirteen weeks) and six month period (twenty-six weeks) ended August 3, 2013. The Company also announced that its Board of Directors has declared a special cash dividend of $3.60 per share.

Second Quarter Highlights

 

   

Net sales increased 6.7% to $136.8 million compared to $128.2 million in the second quarter of fiscal 2012.

 

   

Comparable store sales decreased 2.6%.

 

   

Four new stores were opened in four new markets, including one new state.

 

   

Diluted earnings per share were $0.05, which exceeded guidance of $0.01 - $0.03.

Six Month Highlights

 

   

Net sales increased 2.3% to $268.2 million compared to $262.2 million in the six months ended July 28, 2012.

 

   

Seven new stores were opened in four new and two existing markets, including one new state.

 

   

Diluted earnings per share were $0.22.

“We delivered comparable store sales that were consistent with expectations despite some continued headwinds and represented a meaningful improvement from the trend we experienced in the first quarter of 2013. At the same time, our bottom line results were ahead of our guidance even as we had to increase our markdown cadence to clear seasonal product and better align inventory levels heading into the second half of the year,” said Jeff Gordman, President and Chief Executive Officer. “We believe that the adjustments we’ve made, and continue to make, to our merchandise assortments, combined with the rollout of our loyalty program, have positioned us to deliver further improvements over the remainder of fiscal 2013. In addition, we will open three stores next month for a total of 10 new stores this year, at which point we will have 93 locations in 19 states.”

The Company’s Board of Directors has declared a special cash dividend of $3.60 per share of common stock, payable on September 23, 2013 to shareholders of record on September 9, 2013. The Company will fund the $70 million special dividend through available cash balances and a new $45 million senior term loan with Cerberus Business Finance, LLC. The loan matures in 2018 and bears interest at Prime plus 5.25% with a Prime floor of 3.25%, or LIBOR plus 7.00% with a LIBOR floor of 1.50%, as selected by the Company. The term loan also contains an early payment provision, exercisable at the Company’s option, pursuant to which the Company may repay all or a portion of the outstanding principal amount, subject to a small prepayment penalty.

In addition, the Company entered into an amended credit facility with Wells Fargo Bank, as lead agent, which increased the line of credit to $80 million from $60 million, lowered the interest rate by 0.25%, lowered the unused line fee from 0.375% to 0.25% and extended the maturity date by 3 years to 2018. The credit facility will carry an interest rate of Prime plus 0.50% to 1.50% or LIBOR plus 1.25% to 2.50% on drawn proceeds, as selected by the Company, based on the excess availability and time of year. As of August 23, 2013, the Company had no outstanding borrowings under the credit facility.

 

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Mr. Gordman commented, “Today’s announcement of a special cash dividend underscores Gordmans’ commitment to maximize shareholder value. Our strong balance sheet, strong projected future cash flows, and finally, a favorable lending environment, enable us to issue this special dividend without impairing our ability to continue to execute our growth plans.”

Second Quarter Financial Results

Net sales for the thirteen weeks ended August 3, 2013 increased 6.7% to $136.8 million from $128.2 million for the thirteen weeks ended July 28, 2012. Comparable store sales for the second quarter of fiscal 2013 decreased by 2.6% versus a 0.1% comparable store sales increase in the second quarter of fiscal 2012. Gross profit, which includes license fees, increased by 0.9% to $59.2 million, or 43.3% of net sales, from $58.7 million, or 45.8% of net sales, in the second quarter of fiscal 2012. Selling, general and administrative costs were $57.6 million, or 42.1% of net sales, compared to $52.9 million, or 41.3% of net sales, in the second quarter of fiscal 2012. Net income for the second quarter of fiscal 2013 was $0.9 million, or $0.05 per diluted share, compared to net income of $3.5 million, or $0.18 per diluted share, in the second quarter of fiscal 2012.

Six Month Financial Results

Net sales for the twenty-six weeks ended August 3, 2013 increased 2.3% to $268.2 million from $262.2 million for the same period last year. Comparable store sales for the six month period ended August 3, 2013 decreased by 6.7% versus a 2.5% comparable store sales increase for the same period last year. Gross profit, which includes license fees, decreased by 3.3% to $118.2 million, or 44.1% of net sales, from $122.2 million, or 46.6% of net sales, in the prior year. Selling, general and administrative costs were $111.3 million, or 41.5% of net sales, compared to $103.4 million, or 39.4% of net sales, in the prior year. Net income for the twenty-six weeks ended August 3, 2013 was $4.2 million, or $0.22 per diluted share, compared to net income of $11.6 million, or $0.60 per diluted share, in the first twenty-six weeks of fiscal 2012.

Outlook

For the third quarter of fiscal year 2013 ending October 2, 2013, the Company currently expects net sales to be between $149 and $151 million, which reflects a low single digit comparable store sales decrease. The Company expects that the pressure on gross profit margins the Company experienced in the first two quarters of the year will abate in the third quarter, but that additional selling, general and administrative expenses related to depreciation and pre-opening in particular compared to the prior year will result in some deleveraging. In addition, the Company will incur additional interest expense associated with the term loan utilized to fund the dividend payment, which will result in a reduction in earnings per share of $0.02. Therefore, the Company projects diluted earnings per share in the range of $0.12 to $0.14 (using a weighted average diluted share count of approximately 19.4 million).

Conference Call Information

A conference call to discuss second quarter financial results is scheduled for today, August 28, 2013 at 11:00 a.m. Eastern Time. The conference call will be webcast live at http://investor.gordmans.com/events.cfm. A replay of this call will be available within two hours of the conclusion of the call and will remain on the website for one year.

About Gordmans Stores, Inc.

Gordmans (NASDAQ: GMAN) features a large selection of the latest name brands, fashions and styles at up to 60 percent off department and specialty store prices every day. The wide range of merchandise includes apparel for all ages, accessories, footwear, home décor, gifts, designer fragrances, fashion jewelry, bedding and bath, accent furniture and toys. Founded in 1915, Gordmans operates 90 stores in 19 states. For more information about Gordmans, visit www.gordmans.com.

 

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Safe Harbor Statement

Certain statements in this release are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “guidance,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding expected net sales, net income, comparable store sales, diluted earnings per share, and store expansion, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) changes in consumer spending and general economic conditions; (2) our ability to identify and respond to new and changing fashion trends, guest preferences and other related factors; (3) fluctuations in our sales and profitability on a seasonal basis; (4) intense competition from other retailers; (5) our ability to maintain or improve levels of comparable store sales; and (6) our successful implementation of advertising, marketing and promotional strategies.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

     August 3,
2013
     February 2,
2013
 
     (Unaudited)      (Unaudited)  

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

   $ 43,592       $ 40,824   

Accounts receivable

     1,996         2,049   

Landlord receivable

     5,174         8,787   

Income taxes receivable

     5,684         1,300   

Merchandise inventories

     100,050         78,006   

Deferred income taxes

     2,603         2,617   

Prepaid expenses and other current assets

     9,178         6,552   
  

 

 

    

 

 

 

Total current assets

     168,277         140,135   

PROPERTY AND EQUIPMENT, net

     65,963         45,966   

INTANGIBLE ASSETS, net

     1,948         1,992   

OTHER ASSETS, net

     3,298         3,033   
  

 

 

    

 

 

 

TOTAL ASSETS

   $ 239,486       $ 191,126   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

CURRENT LIABILITIES:

     

Accounts payable

   $ 64,202       $ 34,211   

Accrued expenses

     27,435         22,789   

Current portion of capital lease obligations

     —           189   
  

 

 

    

 

 

 

Total current liabilities

     91,637         57,189   
  

 

 

    

 

 

 

NONCURRENT LIABILITIES:

     

Deferred rent

     30,617         21,997   

Deferred income taxes

     9,503         9,236   

Other liabilities

     337         316   
  

 

 

    

 

 

 

Total noncurrent liabilities

     40,457         31,549   
  

 

 

    

 

 

 

COMMITMENTS AND CONTINGENCIES

     

STOCKHOLDERS’ EQUITY:

     

Preferred stock

     —           —     

Common stock

     19         19   

Additional paid-in capital

     53,283         52,461   

Retained earnings

     54,090         49,908   
  

 

 

    

 

 

 

Total stockholders’ equity

     107,392         102,388   
  

 

 

    

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 239,486       $ 191,126   
  

 

 

    

 

 

 

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands Except Share Data)

 

     13 Weeks
Ended
August 3,
2013
(Unaudited)
    13 Weeks
Ended
July 28,

2012
(Unaudited)
    26 Weeks
Ended
August 3,
2013
(Unaudited)
    26 Weeks
Ended
July  28,

2012
(Unaudited)
 

Net sales

   $ 136,769      $ 128,238      $ 268,203      $ 262,160   

License fees from leased departments

     1,768        1,620        3,689        3,557   

Cost of sales

     (79,317     (71,165 )     (153,681     (143,533 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     59,220        58,693        118,211        122,184   

Selling, general and administrative expenses

     (57,600     (52,898 )     (111,273     (103,384 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     1,620        5,795        6,938        18,800   

Interest expense, net

     (117     (123 )     (238     (248 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     1,503        5,672        6,700        18,552   

Income tax expense

     (569     (2,127 )     (2,518     (6,957 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 934      $ 3,545      $ 4,182      $ 11,595   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.05      $ 0.19      $ 0.22      $ 0.61   

Diluted earnings per share

   $ 0.05      $ 0.18      $ 0.22      $ 0.60   

Basic weighted average shares outstanding

     19,256,495        19,136,076        19,249,642        19,115,650   

Diluted weighted average shares outstanding

     19,356,867        19,470,133        19,339,099        19,443,441   

Company Contact:

Mike James

Chief Financial Officer

(402) 691-4126

Investor Relations:

ICR, Inc.

Brendon Frey / James Palczynski

(203) 682-8200

 

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