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| Candie's, Inc. Reports Record Second Quarter Results; Several New Licensing Agreements Signed |
NEW YORK, Sep 12, 2002 (BUSINESS WIRE) -- Candie's, Inc. (NASDAQ: CAND) (the "Company") today announced operating results for the second quarter ended July 31, 2002. Net revenues for the quarterly period increased 55.5% to $49.6 million versus $31.9 million in the comparable quarter for the prior year. The operating results of Unzipped Apparel, LLC ("Unzipped") the manufacturers of Bongo jeanswear, which was acquired by the Company on April 23, 2002, are included for the first time in the consolidated statement of operations for the quarter ended July 31, 2002. Unzipped contributed $19.8 million of net sales during the quarter. Net sales from the Company's Candie's footwear business were $28.4 million for the quarterly period versus $30.6 million in the prior year quarter. Licensing revenues for the period were $1.3 million versus the same amount in the prior year period. Comparable licensing income increased $375,000, as the prior year period included $346,000 of royalties from Unzipped. Consolidated gross profit margin for the second quarter was 28.2%, versus the prior year's level of 28.6%, due to a shift in product mix that resulted from the inclusion of the Bongo jeanswear business, which carries lower gross profit margins. Gross margins in the Company's Candie's footwear business increased 420 basis points from the comparable quarter in the prior year. The Company's consolidated SG&A expenses, as a percentage of consolidated net revenues, improved 410 basis points to 20.0%, versus 24.1% in the year-ago quarter, this shift was again primarily due to the inclusion of Bongo jeanswear. Comparable S,G&A expenses for the Company's Candie's footwear business was 26.2%. The Company recorded second quarter operating income of $4.0 million versus $1.3 million last year. Net income during the quarter increased to $3.5 million versus $974,000 in the year-ago period. The Bongo jeanswear business contributed $1.6 million of net income during the quarter. The Company reported fully diluted earnings per share for the second quarter of $0.12, versus $0.04 in the second quarter of the prior year. Neil Cole, Candies, Inc.'s Chief Executive Officer, said, "This second quarter was the best quarter in the Company's history. We improved our profitability and completed a long term financing deal to improve our working capital position. However, as we previously announced, there were unanticipated charges associated with the Bongo acquisition and a higher than anticipated share count that arose because of marked stock price appreciation. As a result, our earnings per share for the second quarter were lower than our initial projection." Mr. Cole continued, "Since the close of the quarter, an increasingly difficult retail environment has resulted in slow sales of some product categories and we anticipate an erosion of gross profit which will last through the second half of the year. To address these issues, we will continue to diversify our product mix and our distribution channels. We expect these difficulties to be short term and that these actions will make us a stronger company in the long run." In a separate release today, the Company announced the signing of three new licensing agreements, including a license for the manufacture and marketing of Bongo tops and activewear. Neil Cole concluded, "We are developing into a a well diversified lifestyle company that can leverage its brands into a variety of businesses. We are very focused on the current situation and continue to be excited about next year."
About Candie's, Inc. Candie's Inc. is a leading designer and marketer of young women's footwear, apparel and accessories. The Company distributes its products, under the Candies and Bongo brand names, through better department and specialty stores nationwide, as well as through company-owned stores and specialty stores internationally. Candie's also arranges for the manufacture of footwear products for mass market and discount retailers under the private label brand of the retailer or other trademarks owned or licensed by Candie's. Additionally, the Candie's brand is licensed for the manufacture, sale and distribution of apparel, fragrances and cosmetics, handbags, sunglasses, watches and cell phone accessories. Candie's Inc. operates its website at www.candies.com. For investor information please visit the corporate web site at www.candiesinc.com. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. 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. The words "believe", "expect", "anticipate", "seek" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements.
Candie's, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(000's omitted, except per share data)
Three Months Ended Six Months Ended
July 31, July 31,
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2002 2001 2002 2001
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Net sales $48,218 $30,570 $72,408 $53,222
Licensing income 1,345 1,316 2,772 2,518
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Net revenues 49,563 31,886 75,180 55,740
Cost of goods sold 35,568 22,755 52,492 38,300
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Gross profit 13,995 9,131 22,688 17,440
Selling, general and
administrative 9,898 7,683 17,623 15,209
Special charges 78 178 93 243
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9,976 7,861 17,716 15,452
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Operating income 4,019 1,270 4,972 1,988
Other expenses:
Interest income (50) - (50) -
Interest expense 558 296 835 621
Equity income in joint
venture - - (250) -
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508 296 535 621
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Income before income
taxes 3,511 974 4,437 1,367
Income tax benefit - - (139) -
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Net income 3,511 974 4,576 1,367
Dividend payable 200 - 200 -
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Net income available to
common stockholders $3,311 $974 $4,376 $1,367
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Earnings per share:
- Basic $0.14 $0.05 $0.20 $0.07
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- Diluted $0.12 $0.04 $0.17 $0.06
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Weighted average no. of common
shares:
- Basic 24,176 19,169 22,438 19,153
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- Diluted 27,835 22,327 25,499 22,405
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Selected Balance
Sheet Data: 7/31/2002 1/31/2002
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Current Assets $59,037 $22,730
Current Liabilities $49,020 $26,513
Stockholders' Equity $37,225 $23,519
Working Capital $10,017 $(3,783)
Current Ratio 1.20:1 0.86:1
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