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Exhibit 99.1

NEWS BULLETIN

RE: CLAIRE’S STORES, INC.

2400 WEST CENTRAL ROAD, HOFFMAN ESTATES, ILLINOIS 60192

CLAIRE’S STORES, INC. REPORTS FISCAL 2017

FIRST QUARTER RESULTS

CHICAGO, June 6, 2017. Claire’s Stores, Inc. (the “Company”), one of the world’s leading specialty retailers of fashionable jewelry and accessories for young women, teens, tweens, and kids, today reported its financial results for the fiscal 2017 first quarter, which ended April 29, 2017.

First Quarter Results

The Company reported net sales of $299.6 million for the fiscal 2017 first quarter, flat compared to the fiscal 2016 first quarter. Net sales were affected by an increase in same store sales and an increase in new concession store sales and new store sales, offset by the effect of store closures, an unfavorable foreign currency translation effect of our non-U.S. net sales and decreased shipments to franchisees. Net sales would have increased 2.4% excluding the impact of foreign currency exchange rate changes.

Consolidated same store sales increased 4.4%, with North America same store sales increasing 0.3% and Europe same store sales increasing 13.0%. The Company computes same store sales on a local currency basis, which eliminates any impact from changes in foreign currency exchange rates. For the fiscal 2017 second quarter-to-date period, consolidated same store sales have increased in the low single digit range, with North America performing similarly to Europe.

Gross profit percentage increased 210 basis points to 49.3% during the fiscal 2017 first quarter versus 47.2% for the prior year quarter. This increase in gross profit percentage consisted of a 160 basis point decrease in occupancy costs and by a 60 basis point increase in merchandise margin, partially offset by a 10 basis point increase in buying and buying-related costs. The decrease in occupancy costs, as a percentage of net sales, resulted primarily from the leveraging effect of an increase in same store sales. The increase in merchandise margin percentage resulted primarily from higher trade discounts.

Selling, general and administrative expenses increased $2.8 million, or 2.6%, compared to the fiscal 2016 first quarter. As a percentage of net sales, selling, general and administrative expenses increased 100 basis points. Selling, general, and administrative expenses would have increased $5.8 million excluding a favorable $3.0 million foreign currency translation effect. Excluding the foreign currency translation effect, the increase was primarily due to increased compensation-related expense, including store incentive compensation, and concession store commission expense.

Adjusted EBITDA in the fiscal 2017 first quarter was $41.8 million compared to $37.0 million last year. Adjusted EBITDA would have been $41.5 million excluding the foreign currency translation effect in the first quarter of 2017. The Company defines Adjusted EBITDA as earnings before income taxes, net interest expense, depreciation and amortization, loss (gain) on early debt extinguishments, and asset impairments. Adjusted EBITDA excludes management fees, severance, the impact of transaction-related costs and certain other items. A reconciliation of net loss to Adjusted EBITDA is attached.

As of April 29, 2017, cash and cash equivalents were $25.7 million. The Company had $59.0 million drawn on its ABL Credit Facility and an additional $12.0 million of borrowing availability under its ABL Credit Facility as of April 29, 2017. The fiscal 2017 first quarter cash balance decrease of $30.1 million consisted of reductions for $71.3 million of cash interest payments, $23.5 million from seasonal working capital uses, $18.4 million due to retirement of 10.50% Senior Subordinated Notes, $4.3 million for payment of long-term debt, $3.4 million of capital expenditures and $3.8 million for tax payments and other items, offset by positive impacts of $41.8 million of Adjusted EBITDA and $52.8 million from net borrowings under our ABL Credit Facility.

 

1


Store Count as of:    April 29, 2017      January 28, 2017      April 30, 2016  

North America

     1,630        1,641        1,716  

Europe

     1,050        1,069        1,115  
  

 

 

    

 

 

    

 

 

 

Subtotal Company-operated

     2,680        2,710        2,831  
  

 

 

    

 

 

    

 

 

 

Franchise

     647        603        579  
  

 

 

    

 

 

    

 

 

 

Total global stores

     3,327        3,313        3,410  
  

 

 

    

 

 

    

 

 

 

Concession stores

     901        933        733  
  

 

 

    

 

 

    

 

 

 

Conference Call Information

The Company will host its first quarter conference call on Wednesday, June 7, at 10:00 a.m. (Eastern Time). To connect, please dial 888-455-9658 (domestic) or 210-839-8631 (international). The password is 2524737. An audio replay will be available through July 8, 2017, by dialing 888-566-0599 (domestic) or 203-369-3617 (international). The password is 52417. The conference call will also be webcast and archived until July 8, 2017 on the Company’s corporate website at www.clairestores.com, where it can be accessed by clicking the “Financial” tab and choosing the “Events” link.

Company Overview

Claire’s Stores, Inc. is one of the world’s leading specialty retailers of fashionable jewelry and accessories for young women, teens, tweens and girls ages 3 to 35. The Company operates through its stores under two brand names: Claire’s® and Icing®. As of April 29, 2017, Claire’s Stores, Inc. operated 2,680 stores in 17 countries throughout North America and Europe, excluding 901 concession locations. The Company franchised 647 stores in 26 countries primarily located in the Middle East, Central and Southeast Asia and Central and South America, and Southern Africa. More information regarding Claire’s Stores is available on the Company’s corporate website at www.clairestores.com.

Forward-looking Statements

This press release contains “forward-looking statements” which represent the Company’s expectations or beliefs with respect to future events. Statements that are not historical are considered forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those factors include, without limitation: our level of indebtedness; general economic conditions; changes in consumer preferences and consumer spending; unwillingness of vendors and service providers to supply goods or services pursuant to historical customary credit arrangements; competition; general political and social conditions such as war, political unrest and terrorism; natural disasters or severe weather events; currency fluctuations and exchange rate adjustments; failure to maintain our favorable brand recognition; failure to successfully market our products through other channels, such as e-commerce; uncertainties generally associated with the specialty retailing business, such as decreases in mall traffic; disruptions in our supply of inventory; inability to increase same store sales; inability to renew, replace or enter into new store leases on favorable terms; increase in our cost of merchandise; significant increases in our merchandise markdowns; inability to grow our company-operated store base, expand our international store base through franchise or similar licensing arrangements or expand our store base through store concessions; inability to design and implement new information systems; data security breaches of confidential information or other cyber attacks; delays in anticipated store openings or renovations; results from any future asset impairment analysis; changes in applicable laws, rules and regulations, including laws and regulations governing the sale of our products, particularly regulations relating to heavy metals and chemical content in our products; changes in anti-bribery laws; changes in employment laws, including laws relating to overtime pay, tax laws and import laws; product recalls; increases in the costs of healthcare for our employees; increases in the cost of labor; labor disputes; loss of key members of management; increases in the cost of borrowings; unavailability of additional debt or equity capital; and the impact of our substantial indebtedness on our operating income and our ability to grow. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from the Company’s forward-looking statements are included in the Company’s filings with the SEC, specifically as described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017 filed with the SEC on April 14, 2017. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. The historical results contained in this press release are not necessarily indicative of the future performance of the Company.

 

2


Additional Information

Other Claire’s Stores, Inc. press releases, a corporate profile and the most recent Form 10-K and Form 10-Q reports are available on Claire’s business website at: www.clairestores.com.

Contact Information

Scott Huckins, Executive Vice President and Chief Financial Officer

Phone: (847) 765-1100, or E-mail, investor.relations@claires.com

 

3


CLAIRE’S STORES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS

(In thousands)

FIRST FISCAL QUARTER

 

     Three Months     Three Months  
     Ended     Ended  
     April 29, 2017     April 30, 2016  

Net sales

   $ 299,621     $ 299,647  

Cost of sales, occupancy and buying expenses (exclusive of depreciation and amortization shown separately below)

     151,788       158,353  
  

 

 

   

 

 

 

Gross profit

     147,833       141,294  
  

 

 

   

 

 

 

Other expenses:

    

Selling, general and administrative

     110,512       107,722  

Depreciation and amortization

     11,203       14,060  

Severance and transaction-related costs

     143       1,573  

Other (income) expense, net

     (2,701     2,945  
  

 

 

   

 

 

 
     119,157       126,300  
  

 

 

   

 

 

 

Operating income

     28,676       14,994  

Interest expense, net

     43,580       55,079  
  

 

 

   

 

 

 

Loss before income tax benefit

     (14,904     (40,085

Income tax benefit

     (8,146     (1,327
  

 

 

   

 

 

 

Net loss

   $ (6,758   $ (38,758
  

 

 

   

 

 

 

 

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CLAIRE’S STORES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

     April 29, 2017     January 28, 2017  
     (In thousands, except share and per share amounts)  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 25,737     $ 55,792  

Inventories

     140,938       130,239  

Prepaid expenses

     16,924       14,642  

Other current assets

     26,809       25,270  
  

 

 

   

 

 

 

Total current assets

     210,408       225,943  
  

 

 

   

 

 

 

Property and equipment:

    

Furniture, fixtures and equipment

     220,369       218,804  

Leasehold improvements

     297,681       297,636  
  

 

 

   

 

 

 
     518,050       516,440  

Accumulated depreciation and amortization

     (389,476     (381,975
  

 

 

   

 

 

 
     128,574       134,465  
  

 

 

   

 

 

 

Leased property under capital lease:

    

Land and building

     18,055       18,055  

Accumulated depreciation and amortization

     (6,539     (6,313
  

 

 

   

 

 

 
     11,516       11,742  
  

 

 

   

 

 

 

Goodwill

     1,132,575       1,132,575  

Intangible assets, net of accumulated amortization of $81,640 and $80,502, respectively

     454,331       454,956  

Other assets

     41,052       40,525  
  

 

 

   

 

 

 
     1,627,958       1,628,056  
  

 

 

   

 

 

 

Total assets

   $ 1,978,456     $ 2,000,206  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDER’S DEFICIT

    

Current liabilities:

    

Current portion of long-term debt, net

   $ —       $ 18,405  

Trade accounts payable

     69,726       69,731  

Income taxes payable

     5,353       6,083  

Accrued interest payable

     24,003       53,266  

Accrued expenses and other current liabilities

     78,351       87,146  
  

 

 

   

 

 

 

Total current liabilities

     177,433       234,631  
  

 

 

   

 

 

 

Long-term debt, net

     2,115,167       2,118,653  

Revolving credit facility, net

     57,043       3,925  

Obligation under capital lease

     16,289       16,388  

Deferred tax liability

     91,900       99,255  

Deferred rent expense

     33,917       34,300  

Unfavorable lease obligations and other long-term liabilities

     8,800       10,376  
  

 

 

   

 

 

 
     2,323,116       2,282,897  
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholder’s deficit:

    

Common stock par value $0.001 per share; authorized 1,000 shares; issued and outstanding 100 shares

     —         —    

Additional paid-in capital

     630,558       630,496  

Accumulated other comprehensive loss, net of tax

     (49,956     (51,881

Accumulated deficit

     (1,102,695     (1,095,937
  

 

 

   

 

 

 
     (522,093     (517,322
  

 

 

   

 

 

 

Total liabilities and stockholder’s deficit

   $ 1,978,456     $ 2,000,206  
  

 

 

   

 

 

 

 

5


Net Loss Reconciliation to Adjusted EBITDA

Adjusted EBITDA represents net income (loss), adjusted to exclude income taxes, interest expense and income, depreciation and amortization, loss (gain) on early debt extinguishments, asset impairments, management fees, severance and transaction related costs, and certain non-cash and other items. We use Adjusted EBITDA as an important tool to assess our operating performance. We consider Adjusted EBITDA to be a useful measure in highlighting trends in our business. We reinforce the importance of Adjusted EBITDA with our bonus eligible associates by using this metric in our annual performance bonus program. We believe that Adjusted EBITDA is effective, when used in conjunction with net income (loss), in evaluating asset performance, and differentiating efficient operators in the industry. Furthermore, Adjusted EBITDA is defined in the covenants contained in our debt agreements and it is the metric we use to communicate our financial performance to our debt investors.

Adjusted EBITDA is not a measure of financial performance under GAAP, and is not intended to represent cash flow from operations under GAAP and should not be used as an alternative to net income (loss) as an indicator of operating performance or to represent cash flow from operating, investing or financing activities as a measure of liquidity. We compensate for the limitations of using Adjusted EBITDA by using it only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

Some of the limitations of Adjusted EBITDA are:

 

    Adjusted EBITDA does not reflect our cash used for capital expenditures;

 

    Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and Adjusted EBITDA does not reflect the cash requirements for such replacements;

 

    Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital requirements; and

 

    Adjusted EBITDA does not reflect the cash necessary to make payments of interest or principal on our indebtedness.

While Adjusted EBITDA is frequently used as a measure of operations and the ability to meet indebtedness service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation.

 

6


CLAIRE’S STORES, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

(UNAUDITED)

(In Thousands)

 

     Three Months
Ended

April 29, 2017
    Three Months
Ended

April 30, 2016
 

Net loss

   $ (6,758   $ (38,758

Income tax benefit

     (8,146     (1,327

Interest expense

     43,588       55,084  

Interest income

     (8     (5

Depreciation and amortization

     11,203       14,060  

Amortization of intangible assets

     1,068       658  

Stock compensation, book to cash rent (a)

     (394     (440

Management fee (b)

     795       945  

Other (c)

     454       6,765  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 41,802     $ 36,982  
  

 

 

   

 

 

 

 

a) Includes: non-cash stock compensation expense, net non-cash rent expense, amortization of rent free periods, the inclusion of cash landlord allowances, and the net accretion of favorable (unfavorable) lease obligations.

 

b) Includes: the management fee paid to Apollo Management and Cowen Group Inc.

 

c) Includes: non-cash losses on property and equipment primarily associated with remodels, relocations and closures and non-cash asset write-offs; other payments associated with store closures; costs, including third party charges, compensation, incurred in conjunction with the relocation of new employees; non-cash foreign exchange gains/losses resulting from intercompany transactions and remeasurements of U.S. dollar denominated cash accounts of our foreign entities into their functional currency; store pre-opening costs; and severance and transaction related costs.