Provides Fiscal 2018 First Quarter and Full-Year Financial Guidance;
Declares Quarterly Cash Dividend
Fourth Quarter Fiscal 2017 Highlights
- Net sales decreased 2.6% as the average number of stores declined approximately 3%;
- Company comparable sales increased 0.2%;
- E-Commerce sales increased 28% as compared to the same period a year ago;
- Gross profit expanded approximately
$10 million , or 290 basis points, to 39.2% of net sales; - Operating income increased 33% year-over-year to approximately
$45 million ; and - Earnings per share (GAAP) of
$0.33 ; adjusted earnings per share (non-GAAP) of$0.34 . Adjusted earnings per share excludes costs of approximately$2 million , or$1.2 million net of tax, in the fourth quarter related to the departure of the Company’s former Chief Executive Officer.
Full-Year Fiscal 2017 Highlights
- Net sales decreased 3.4%, as the average number of stores declined approximately 3%;
- Company comparable sales decreased 1.0%;
- Achieved e-Commerce sales penetration of approximately 20%;
- Earnings per share (GAAP) of
$0.37 ; adjusted earnings per share (non-GAAP) of$0.44 . Adjusted earnings per share excludes costs of approximately$10 million , or$5.6 million net of tax, related to the departure of the Company’s former Chief Executive Officer; - Generated cash flow from operations of
$116 million ; and - Returned nearly
$35 million to shareholders through share repurchases and cash dividends.
Fourth Quarter Fiscal 2017 Results of Operations
Net sales for the fourth quarter of fiscal 2017 decreased 2.6% to
Gross profit for the fourth quarter of fiscal 2017 totaled
Fourth quarter fiscal 2017 selling, general and administrative (“SG&A”) expenses were
Three Months Ended | |||||||||||||||||
|
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Expense | % of Sales | Expense | % of Sales | ||||||||||||||
Compensation for operations | $ | 64.5 | 12.2 | % | $ | 67.2 | 12.4 | % | |||||||||
Operational expenses | 24.0 | 4.5 | % | 26.2 | 4.8 | % | |||||||||||
Marketing | 24.2 | 4.6 | % | 23.0 | 4.2 | % | |||||||||||
Other selling, general and administrative (1) | 35.8 | 6.8 | % | 33.9 | 6.2 | % | |||||||||||
Total selling, general and administrative | $ | 148.5 | 28.1 | % | $ | 150.3 | 27.7 | % |
(1) |
Other selling, general and administrative expense for the three months ended |
|
Fourth quarter fiscal 2017 operating income was
Fiscal 2017 Results of Operations
Net sales for the twelve months ended
Gross profit for the twelve months ended
SG&A expenses for the twelve months ended
Twelve Months Ended | |||||||||||||||||
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Expense | % of Sales | Expense | % of Sales | ||||||||||||||
Compensation for operations | $ | 249.7 | 13.7 | % | $ | 260.2 | 13.7 | % | |||||||||
Operational expenses | 87.6 | 4.8 | % | 90.5 | 4.8 | % | |||||||||||
Marketing | 104.4 | 5.7 | % | 92.6 | 4.9 | % | |||||||||||
Other selling, general and administrative (1) | 146.1 | 8.0 | % | 135.6 | 7.2 | % | |||||||||||
Total selling, general and administrative | $ | 587.8 | 32.1 | % | $ | 578.8 | 30.6 | % |
(1) |
Other selling, general and administrative expense for the twelve months ended |
|
Operating income for the twelve months ended
Balance Sheet Highlights and Share Repurchase Program
As of
The Company did not repurchase any of its common stock during the fourth quarter ended
Real Estate Optimization Initiative
During the fourth quarter of fiscal 2017, the Company closed four stores, ending the year with 1,018
Store Statistics
Store Count | |||||||||||||||
Three Months Ended | Start | Openings | Closures | End |
Relocations (1) |
||||||||||
|
1,032 | 3 | (8) | 1,027 | 3 | ||||||||||
|
1,027 | 2 | (6) | 1,023 | 2 | ||||||||||
|
1,023 | 2 | (3) | 1,022 | 1 | ||||||||||
|
1,022 | 0 | (4) | 1,018 | 0 | ||||||||||
Full-Year Fiscal 2017: | 1,032 | 7 | (21) | 1,018 | 6 | ||||||||||
|
1,065 | 8 | (10) | 1,063 | 6 | ||||||||||
|
1,063 | 6 | (16) | 1,053 | 4 | ||||||||||
|
1,053 | 2 | 0 | 1,055 | 0 | ||||||||||
|
1,055 | 1 | (24) | 1,032 | 0 | ||||||||||
Full-Year Fiscal 2016: | 1,065 | 17 | (50) | 1,032 | 10 | ||||||||||
(1) Relocations are noted only in the period in which the new store opens. | |||||||||||||||
Fiscal 2018 First Quarter and Full-Year Financial Guidance
The Company’s 2018 fiscal year will include 53 weeks of operating results. The Company’s full-year guidance for fiscal 2018 includes approximately
Guidance Metric | 1st Quarter | Full Year | ||||
· Comparable sales growth (%) : | 1% to 2% | 1% to 2% | ||||
· Net sales growth (%): | Flat to 1% | 2% to 3% | ||||
· Merchandise margin (% of net sales): | Approximately 58% | Approximately 58% | ||||
· SG&A expenses: | Approximately |
Approximately 31.5% of net sales | ||||
· Marketing spend (% of net sales): | Approximately 6% | |||||
· Depreciation: | Approximately |
|||||
· Corporate tax rate: | Approximately 39% | |||||
· (Loss) Earnings per share: | ( |
|
||||
· Fully diluted share count: | Approximately 81 million shares | |||||
· Capital expenditures: | Approximately |
|||||
Declaration of Quarterly Cash Dividend
The Company announced that its Board of Directors declared a
Fourth Quarter and Full-Year Fiscal 2017
The Company will host a conference call to discuss fourth quarter and full-year fiscal 2017 financial results at
Alasdair James Appointed President and Chief Executive Officer
As previously announced on
Financial Disclosure Advisory
The Company reports its financial results in accordance with
The Company believes that the non-GAAP financial measures included in this press release allow management and investors to understand and compare results in a more consistent manner for the three- and twelve-month periods ended
Merchandise margin represents the result of adding back delivery and fulfillment net costs and store occupancy costs to gross profit. Contribution from operations represents gross profit less compensation for operations (which includes store and customer service payroll) and operational expenses. EBITDA represents earnings before interest, taxes, depreciation and amortization. Management believes merchandise margin, contribution from operations and EBITDA are meaningful indicators of the Company’s performance which provide useful information to investors regarding its financial condition and results of operations. Management uses merchandise margin, contribution from operations and EBITDA, together with financial measures prepared in accordance with GAAP, to assess the Company’s operating performance, to enhance its understanding of core operating performance and to compare the Company’s operating performance to other retailers. These non-GAAP financial measures should not be considered in isolation or used as an alternative to GAAP financial measures and do not purport to be an alternative to net income or gross profit as a measure of operating performance. A reconciliation of net income to EBITDA to contribution from operations to merchandise margin is shown below for the periods indicated (in millions).
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||
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$ Amount | % of Sales | $ Amount | % of Sales | $ Amount | % of Sales | $ Amount | % of Sales | ||||||||||||||||||||||||||||||
Merchandise margin (non-GAAP) | $ | 299.5 | 56.7 | % | $ | 284.8 | 52.5 | % | $ | 1,048.2 | 57.3 | % | $ | 1,046.0 | 55.3 | % | |||||||||||||||||||||
Less: | Delivery and fulfillment net costs | 20.3 | 3.8 | % | 13.8 | 2.5 | % | 59.0 | 3.2 | % | 42.5 | 2.2 | % | ||||||||||||||||||||||||
Store occupancy costs | 72.3 | 13.7 | % | 74.1 | 13.7 | % | 291.9 | 16.0 | % | 298.6 | 15.7 | % | |||||||||||||||||||||||||
Gross profit (GAAP) | 206.9 | 39.2 | % | 196.9 | 36.3 | % | 697.3 | 38.1 | % | 705.0 | 37.3 | % | |||||||||||||||||||||||||
Less: | Compensation for operations | 64.5 | 12.2 | % | 67.2 | 12.4 | % | 249.7 | 13.7 | % | 260.2 | 13.7 | % | ||||||||||||||||||||||||
Operational expenses | 24.0 | 4.5 | % | 26.2 | 4.8 | % | 87.6 | 4.8 | % | 90.5 | 4.8 | % | |||||||||||||||||||||||||
Contribution from operations (non-GAAP) | 118.5 | 22.4 | % | 103.5 | 19.1 | % | 360.1 | 19.7 | % | 354.3 | 18.7 | % | |||||||||||||||||||||||||
Less: | Other nonoperating (income) expense | (0.1 | ) | 0.0 | % | 1.0 | 0.2 | % | (1.1 | ) | (0.1 | %) | 0.9 | 0.0 | % | ||||||||||||||||||||||
Marketing and other SG&A | 60.1 | 11.4 | % | 56.9 | 10.5 | % | 250.6 | 13.7 | % | 228.2 | 12.1 | % | |||||||||||||||||||||||||
EBITDA (non-GAAP) | 58.5 | 11.1 | % | 45.6 | 8.4 | % | 110.6 | 6.0 | % | 125.2 | 6.6 | % | |||||||||||||||||||||||||
Less: | Income tax provision | 16.0 | 3.1 | % | 11.6 | 2.2 | % | 15.1 | 0.9 | % | 23.5 | 1.2 | % | ||||||||||||||||||||||||
Interest expense, net | 2.2 | 0.4 | % | 2.3 | 0.4 | % | 10.7 | 0.6 | % | 11.1 | 0.6 | % | |||||||||||||||||||||||||
Depreciation | 13.6 | 2.6 | % | 13.0 | 2.4 | % | 54.6 | 3.0 | % | 50.9 | 2.7 | % | |||||||||||||||||||||||||
Net income (GAAP) | $ | 26.6 | 5.0 | % | $ | 18.7 | 3.4 | % | $ | 30.1 | 1.6 | % | $ | 39.6 | 2.1 | % | |||||||||||||||||||||
This press release also references adjusted net income and adjusted earnings per share, which exclude the impact of severance and other charges related to the departure of the Company’s former CEO in fiscal 2017. Management believes these non-GAAP financial measures are useful in comparing the Company’s year-over-year operating performance. Adjusted net income and adjusted earnings per share should be considered supplemental and not a substitute for the Company’s net income and earnings per share results reported in accordance with GAAP for the periods presented. A reconciliation of net income and earnings per share to adjusted net income and adjusted earnings per share is shown below for the three- and twelve-month periods ended
Three Months Ended | Twelve Months Ended | |||||||
|
|
|||||||
Net income (GAAP) | $ | 26.6 | $ | 30.1 | ||||
Add back: Former CEO departure-related costs, net of tax (1) | 1.2 | 5.6 | ||||||
Adjusted net income (non-GAAP) | $ | 27.8 | $ | 35.7 | ||||
Earnings per share (GAAP) | $ | 0.33 | $ | 0.37 | ||||
Add back: Former CEO departure-related costs, net of tax (1) | 0.01 | 0.07 | ||||||
Adjusted earnings per share (non-GAAP) | $ | 0.34 | $ | 0.44 |
(1) |
For the three months ended |
|
Except for historical information contained herein, the statements in this press release or otherwise made by our management in connection with the subject matter of this press release are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors. This press release includes forward-looking statements that are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. Management’s expectations and assumptions regarding future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements included in this press release. These risks and uncertainties include, but are not limited to: the effectiveness of the Company’s marketing campaigns, merchandising and promotional strategies and customer databases; consumer spending patterns; inventory levels and values; the Company’s ability to implement planned cost control measures; expected benefits from the real estate optimization initiative, including cost savings and increases in efficiency; and changes in foreign currency values relative to the
About
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(in thousands except per share amounts) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
|
% of | |
% of | |||||||||||||||
2017 | Sales | 2016 | Sales | |||||||||||||||
Net sales | $ | 528,352 | 100.0 | % | $ | 542,325 | 100.0 | % | ||||||||||
Cost of sales | 321,440 | 60.8 | % | 345,431 | 63.7 | % | ||||||||||||
Gross profit | 206,912 | 39.2 | % | 196,894 | 36.3 | % | ||||||||||||
Selling, general and administrative expenses | 148,509 | 28.1 | % | 150,272 | 27.7 | % | ||||||||||||
Depreciation | 13,647 | 2.6 | % | 13,014 | 2.4 | % | ||||||||||||
Operating income | 44,756 | 8.5 | % | 33,608 | 6.2 | % | ||||||||||||
Nonoperating (income) and expenses: | ||||||||||||||||||
Interest, investment income and other | (793 | ) | 224 | |||||||||||||||
Interest expense | 2,896 | 3,076 | ||||||||||||||||
2,103 | 0.4 | % | 3,300 | 0.6 | % | |||||||||||||
Income before income taxes | 42,653 | 8.1 | % | 30,308 | 5.6 | % | ||||||||||||
Income tax provision | 16,012 | 3.1 | % | 11,633 | 2.2 | % | ||||||||||||
Net income | $ | 26,641 | 5.0 | % | $ | 18,675 | 3.4 | % | ||||||||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.33 | $ | 0.23 | ||||||||||||||
Diluted | $ | 0.33 | $ | 0.23 | ||||||||||||||
Dividends declared per share: | $ | 0.07 | $ | 0.07 | ||||||||||||||
Average shares outstanding during period: | ||||||||||||||||||
Basic | 80,898 | 81,546 | ||||||||||||||||
Diluted | 81,156 | 81,574 | ||||||||||||||||
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CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(in thousands except per share amounts) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Year Ended | |||||||||||||||||||
|
% of | |
% of | ||||||||||||||||
2017 | Sales | 2016 | Sales | ||||||||||||||||
Net sales | $ | 1,828,446 | 100.0 | % | $ | 1,892,230 | 100.0 | % | |||||||||||
Cost of sales | 1,131,138 | 61.9 | % | 1,187,250 | 62.7 | % | |||||||||||||
Gross profit | 697,308 | 38.1 | % | 704,980 | 37.3 | % | |||||||||||||
Selling, general and administrative expenses | 587,843 | 32.1 | % | 578,828 | 30.6 | % | |||||||||||||
Depreciation | 54,603 | 3.0 | % | 50,944 | 2.7 | % | |||||||||||||
Operating income | 54,862 | 3.0 | % | 75,208 | 4.0 | % | |||||||||||||
Nonoperating (income) and expenses: | |||||||||||||||||||
Interest, investment income and other | (2,470 | ) | (237 | ) | |||||||||||||||
Interest expense | 12,073 | 12,280 | |||||||||||||||||
9,603 | 0.5 | % | 12,043 | 0.7 | % | ||||||||||||||
Income before income taxes | 45,259 | 2.5 | % | 63,165 | 3.3 | % | |||||||||||||
Income tax provision | 15,130 | 0.9 | % | 23,531 | 1.2 | % | |||||||||||||
Net income | $ | 30,129 | 1.6 | % | $ | 39,634 | 2.1 | % | |||||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 0.37 | $ | 0.47 | |||||||||||||||
Diluted | $ | 0.37 | $ | 0.46 | |||||||||||||||
Dividends declared per share: | $ | 0.28 | $ | 0.28 | |||||||||||||||
Average shares outstanding during period: | |||||||||||||||||||
Basic | 80,919 | 84,939 | |||||||||||||||||
Diluted | 80,984 | 85,370 | |||||||||||||||||
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CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands except share amounts) | ||||||||||
(unaudited) | ||||||||||
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2017 | 2016 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents, including temporary investments of |
$ | 154,460 | $ | 115,221 | ||||||
Accounts receivable, net of allowance for doubtful accounts of |
22,945 | 22,639 | ||||||||
Inventories | 400,976 | 405,859 | ||||||||
Prepaid expenses and other current assets | 31,607 | 31,175 | ||||||||
Total current assets | 609,988 | 574,894 | ||||||||
Properties and equipment, net | 191,476 | 207,633 | ||||||||
Other noncurrent assets | 41,618 | 36,664 | ||||||||
$ | 843,082 | $ | 819,191 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 68,981 | $ | 72,570 | ||||||
Gift cards and other deferred revenue | 60,398 | 64,081 | ||||||||
Accrued income taxes payable | 26,058 | 6,324 | ||||||||
Current portion of long-term debt | 2,000 | 2,000 | ||||||||
Other accrued liabilities | 133,866 | 101,712 | ||||||||
Total current liabilities | 291,303 | 246,687 | ||||||||
Long-term debt | 199,077 | 200,255 | ||||||||
Other noncurrent liabilities | 60,674 | 87,492 | ||||||||
Shareholders’ equity: | ||||||||||
Common stock, |
125 | 125 | ||||||||
Paid-in capital | 191,501 | 211,019 | ||||||||
Retained earnings | 737,165 | 729,537 | ||||||||
Cumulative other comprehensive loss | (7,414 | ) | (10,637 | ) | ||||||
Less — 42,050,000 and 41,760,000 common shares in treasury, at cost, respectively |
(629,349 | ) | (645,287 | ) | ||||||
Total shareholders’ equity | 292,028 | 284,757 | ||||||||
$ | 843,082 | $ | 819,191 | |||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Year Ended | ||||||||||||||||
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2017 | 2016 | 2015 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 30,129 | $ | 39,634 | $ | 75,162 | ||||||||||
Adjustments to reconcile to net cash provided by operating activities: |
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Depreciation | 60,504 | 55,830 | 49,472 | |||||||||||||
Stock-based compensation expense | 8,228 | 5,065 | 7,332 | |||||||||||||
Deferred compensation, net | 8,438 | 5,641 | 8,244 | |||||||||||||
Deferred income taxes | (19,645 | ) | 4,617 | 7,647 | ||||||||||||
Excess tax benefit from stock-based awards | (312 | ) | (585 | ) | (2,936 | ) | ||||||||||
Amortization of deferred gains | (1,073 | ) | (1,907 | ) | (3,575 | ) | ||||||||||
Other | 9,374 | 2,928 | (3,322 | ) | ||||||||||||
Changes in cash from: | ||||||||||||||||
Inventories | 4,883 | 72,984 | (101,193 | ) | ||||||||||||
Prepaid expenses and other assets | 863 | 20,560 | 356 | |||||||||||||
Accounts payable and other liabilities | (5,697 | ) | (33,611 | ) | 26,330 | |||||||||||
Accrued income taxes payable, net of payments | 20,046 | (7,109 | ) | 2,174 | ||||||||||||
Net cash provided by operating activities | 115,738 | 164,047 | 65,691 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Capital expenditures | (44,181 | ) | (51,813 | ) | (81,859 | ) | ||||||||||
Proceeds from disposition of properties | 74 | 18 | 35 | |||||||||||||
Proceeds from sale of restricted investments | 3,409 | 9,020 | 1,715 | |||||||||||||
Purchase of restricted investments | (2,375 | ) | (8,914 | ) | (3,192 | ) | ||||||||||
Net cash used in investing activities | (43,073 | ) | (51,689 | ) | (83,301 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||
Cash dividends | (22,501 | ) | (23,672 | ) | (21,627 | ) | ||||||||||
Purchases of treasury stock | (10,566 | ) | (75,000 | ) | (185,540 | ) | ||||||||||
Proceeds from stock options exercised, stock purchase plan and other, net |
1,329 | 2,886 | 1,846 | |||||||||||||
Excess tax benefit from stock-based awards | 312 | 585 | 2,936 | |||||||||||||
Issuance of long-term debt, net of discount | – | – | 198,000 | |||||||||||||
Repayments of long-term debt | (2,000 | ) | (2,000 | ) | (1,000 | ) | ||||||||||
Debt issuance costs | – | – | (3,636 | ) | ||||||||||||
Borrowings under revolving line of credit | 38,000 | 63,000 | 60,000 | |||||||||||||
Repayments of borrowings under revolving line of credit | (38,000 | ) | (63,000 | ) | (60,000 | ) | ||||||||||
Net cash used in financing activities | (33,426 | ) | (97,201 | ) | (9,021 | ) | ||||||||||
Change in cash and cash equivalents | 39,239 | 15,157 | (26,631 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 115,221 | 100,064 | 126,695 | |||||||||||||
Cash and cash equivalents at end of period | $ | 154,460 | $ | 115,221 | $ | 100,064 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170412006110/en/
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