VALHALLA, N.Y.--(BUSINESS WIRE)--May 1, 2003--Candie's, Inc.
(NASDAQ: CAND) (the "Company") today announced operating results for
the fourth quarter and full fiscal year ended January 31, 2003
("Fiscal 2003").
Additionally, the Company announced in a separate release that it
entered into an agreement with Kenneth Cole productions, Inc. to
license the BONGO brand for footwear.
Since May 1, 2002, the operating results of Unzipped Apparel LLC
("Unzipped"), the Company's BONGO jeans wear division, have been
consolidated into the Company's operating results.
The Company's consolidated net revenues for Fiscal 2003 increased
by 54.6% to $156.8 million from $101.4 million in the prior year.
Consolidated gross profit for Fiscal 2003 was $40.5 million or
25.8% of net revenues compared to $30.9 million or 30.5% of net
revenues in prior year. The gross profit percentage decreased by 470
basis points primarily due to a shift in product mix that resulted
from the inclusion of Unzipped's operating results during the Fiscal
2003 period, which operates at lower gross profit margins than the
Candie's footwear segment. Selling, general, and administrative
expenses for Fiscal 2003 were $37.9 million, or 24.2% of net revenues
compared to $30.7 million, or 30.3% of net revenues in the prior year,
a decrease of 610 basis points primarily due to the inclusion of
Unzipped, which operates with lower selling, general, and
administrative expenses.
Operating income (before special charges) was $2.6 million, which
reflects an improvement of $2.4 million from the prior year. The
Company recorded $3.6 million of special charges, $3.1 of which
related to the closing of 4 retail stores in Fiscal 2003 and
impairment charges for an additional 11 stores for which the Company
believes it will not be able to recoup its investment. After special
charges, the loss from operations for Fiscal 2003 was $961,000, as
compared to a loss of $1.5 million in the prior year. Net loss was
$3.9 million or $0.17 per share in Fiscal 2003, as compared to a loss
of $2.3 million or $0.12 per share in the prior year.
Comparable licensing income for the year increased $905,000 or
23.7%. Total licensing income for Fiscal 2003 was flat as compared to
the prior year at $5.1 million. Royalties from Unzipped were $414,000
in Fiscal 2003, as compared to $1.3 million in the prior year, as a
result of the acquisition of Unzipped in the 1st quarter of Fiscal
2003, at which time Unzipped was no longer obligated to pay royalties
to the Company.
Net revenues for Unzipped were $55.9 million, with $3.2 million of
operating income for the year. Unzipped gross profit for the year was
17.3% of net revenues and selling, general, and administrative
expenses were 11.6% of net revenues for Fiscal 2003.
Net revenues in the Candie's footwear business, including
licensing income, decreased by 0.5% to $100.9 million from $101.4
million last year. Gross profit was flat at 30.5% of net revenues in
Fiscal 2003 as compared to the prior year. Selling, general, and
administrative expenses were 31.1% of net revenues compared to 30.3%
of net revenues last year, an increase of 80 basis points primarily
due to expenses resulting from new stores. Operating loss (after
special charges of $3.6 million) was $4.2 million versus $1.5 million
in the prior year.
For the three months ended January 31, 2003 ("Fourth Quarter")
consolidated net revenues increased by 102.7% to $38.4 million from
$18.9 million in the comparable period last year. Unzipped's net
revenues were $17.3 million in the Fourth Quarter. Candie's footwear
net revenues, including licensing income, were $21.1 million in the
Fourth Quarter, as compared to $18.9 million in the comparable prior
year period. Comparable licensing income increased by $100,000, or
6.7%. The Company recorded $3.2 million of special charges in the
Fourth Quarter. Net loss increased to $7.5 million or $0.30 per share
from $3.9 million or $0.19 per share in the comparable period last
year.
Neil Cole, CEO stated, "In what has been an extremely challenging
environment for retailers, we have been able to improve our operating
results by reducing overhead and increasing margins. We remain excited
about the opportunities that are available to us with respect to our
powerful CANDIE'S and BONGO brands and plan on capitalizing on those
assets to build shareholder value."
Candie's, Inc.
Condensed Consolidated Statements of Operations
(000's omitted, except per share data)
Three Months Twelve Months
Ended Ended
January 31, January 31,
--------------------- ------------------
2003 2002 2003 2002
---------- ---------- --------- --------
Net sales $37,443 $17,779 $151,643 $96,327
Licensing income 934 1,147 5,140 5,075
---------- ---------- --------- --------
Net revenue 38,377 18,926 156,783 101,402
Cost of goods sold 31,975 13,891 116,306 70,468
---------- ---------- --------- --------
Gross profit 6,402 5,035 40,477 30,934
Selling, general and
administrative 9,546 7,764 37,872 30,688
Special charges 3,266 1,428 3,566 1,791
---------- ---------- --------- --------
12,812 9,192 41,438 32,479
---------- ---------- --------- --------
Operating loss (6,410) (4,157) (961) (1,545)
Other expenses:
Interest expense 1,123 226 3,373 1,175
Equity (income)
in joint venture - (500) (250) (500)
---------- ---------- --------- --------
1,123 (274) 3,123 675
---------- ---------- --------- --------
Loss before income taxes (7,533) (3,883) (4,084) (2,220)
Provision (benefit)
for income taxes - 62 (139) 62
---------- ---------- --------- --------
Net loss $(7,533) $(3,945) $(3,945) $(2,282)
========== ========== ========= ========
Loss per share:
- Basic $(0.30) $(0.19) $(0.17) $(0.12)
========== ========== ========= ========
- Diluted $(0.30) $(0.19) $(0.17) $(0.12)
========== ========== ========= ========
Weighted average #
of common shares:
- Basic 24,962 20,265 23,681 19,647
========== ========== ========= ========
- Diluted 24,962 20,265 23,681 19,647
========== ========== ========= ========
Selected Balance
Sheet Data: 1/31/2003 1/31/2002
---------------------------------------- ----------
Current Assets $49,410 $22,730
Current Liabilities $45,921 $26,513
Stockholders' Equity $29,011 $23,519
Working Capital $3,489 $(3,783)
Current Ratio 1.08:1 0.86:1
About Candie's, Inc.
Candie's, Inc. is a leading designer and marketer of young women's
footwear under the Candie's and Bongo brands and jeans wear under the
Bongo brand through its wholly owned subsidiary, Unzipped Apparel,
LLC. The Company distributes its products under the Candie's and Bongo
brand names through department and specialty stores nationwide, as
well as through company-owned stores and specialty stores
internationally. Additionally, the Candie's brand is licensed for the
manufacture and sale of apparel, swimwear, fragrances, eyewear and
watches, and the Bongo brand is licensed for womens' and kids'
apparel, sportswear, cold weather accessories, swimwear, belts,
eyewear, jewelry and watches. Candie's, Inc. operates its website at
http://www.candies.com. For investor information please visit the
corporate web site at http://www.candiesinc.com.
Forward Looking Statement Disclosure
The statements which are not historical facts contained in this
press release are forward looking statements that involve a number of
known and unknown risks, uncertainties and other factors all of which
are difficult or impossible to predict and many of which are beyond
the control of the Company, which may cause the actual results,
performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or
implied by such forward looking statements. Such factors include, but
are not limited to the risks detailed in the Company's Securities and
Exchange Commission filings, and uncertainty associated with the
impact on the company in relation to recent events discussed in the
Company's form 10-K for fiscal 2002. Readers are cautioned not to
place undue reliance on these forward-looking statements.
CONTACT:
Candie's, Inc.
Richard Danderline, 914/749-2912
rdanderline@candiesinc.com
SOURCE: Candie's, Inc.