Reeds Jewelers Announces Year-End Sales and Earnings WILMINGTON,
N.C., April 8 /PRNewswire-FirstCall/ -- Reeds Jewelers, Inc. today
announced net sales and earnings results for the year ended
February 29, 2004. Comparable storesales increased 5% for the
quarter ended February 29, 2004 compared to the same quarter of the
prior year. The Company's total net sales for the current fiscal
quarter increased 3% to $41,088,000 from $39,969,000 while
operating an average of 2% fewerstores in the fourth quarter of the
current fiscal year. Comparable store sales increased 3% for the
year ended February 29, 2004. The Company's total net sales for the
year ended February 29, 2004, were flat at $101,309,000 compared to
$101,539,000,while operating an average of 5% fewer stores in the
current year. Gross margins were 48% during the quarter, up from
47% in the fourth quarter of last year. Year-to-date gross margins
remained flat at 49%. The higher gross margins in the fourth
quarter of the current year are primarily attributable to less
aggressive markdowns and a more profitable merchandise mix.
Selling, general, and administrative expenses decreased $748,000 or
5% in the last quarter of this year compared to the same period a
year ago. As a percentage of net sales SG&A was 34% and 37% for
the quarters ended February 29, 2004 and February 28, 2003,
respectively. Year-to-date selling, general, and administrative
expenses decreased $895,000 or 2% from the same period in the prior
year. SG&A as a percentage of net sales was 45% in the fiscal
year ended February 29, 2004 compared to 46% of net sales in the
prior year. The average borrowings for the quarter were 15% lower
than the same quarter last year. The Company's effective pre-tax
interest rate during the quarter was 5.9%, up from 5.5% for the
same period in the previous year. As a result of these two factors,
interest expense for the quarter (including interest from
discontinued operations) was 8% lower than the same quarter of the
prior year. The average borrowings for the year ended February 29,
2004 were 8% lower than the fiscal year ended February 28, 2003.
The Company's effective pre-tax interest rate during fiscal year
2004 dropped to 5.3% from 5.8% for fiscal year 2003. As a result,
year-to-date interest expense (including interest from discontinued
operations) was 15% lower than the same period last year. In
anticipation of the expiration of the Company's current revolving
credit facility on February 28, 2005, management is negotiating
with a new lender to replace its existing revolving credit
facility, and expects to close the new revolving credit facility in
mid-to-late April 2004. On June 22, 2003, the Company completed its
exit from the stateof Kansas resulting in an $82,000 year-to-date
loss from disposal of discontinued operations, net of $0 tax
benefit. The Kansas operations for the year ended February 29, 2004
resulted in a $125,000 loss from discontinued operations, net of $0
tax benefit. The Company incurred a $105,000 loss, net of $62,000
tax benefit, on the disposal of its Iowa operations in the fiscal
year ended February 28, 2003. Discontinued operations for the year
ended February 28, 2003 is composed of a $136,000 loss, netof
$80,000 tax benefit, relating to the Company's exit from the state
of Kansas and a loss of $151,000, net of $88,000 tax benefit,
resulting from the Company's exit from the state of Iowa. Income
from continuing operations for the fourth quarter of the current
year was $4,656,000, net of $0 tax benefit, compared to income of
$1,776,000, net of $1,042,000 tax expense, for the same quarter
last year. Continuing operations for the year ended February 29,
2004 resulted in a loss of $509,000, net of $0 tax benefit,
compared to a loss of $1,113,000, net of $654,000 tax benefit, for
the prior year. The total net income for the fourth quarter was
$4,660,000 ($.55 per share), compared to net income of $1,615,000
($0.19 per share), in the same quarter last year. Year-to-date net
loss was $716,000 ($0.08 per share) compared to a net loss of
$1,505,000 ($0.18 per share), for the year ended February 28, 2003.
The Company has established valuation allowances against the
deferred tax benefit from current years' losses. Therefore no
income tax expense or benefit is reflected in the current year. The
Company's net effective tax rate was 0% and 37% for the years ended
February 29, 2004 and February 28, 2003, respectively. In December
2003, the Company closed one under-performing store in Charlotte NC
in which the lease was expiring and in February 2004 bought out the
lease and closed another under-performing store in Fredericksburg
VA. Reeds Jewelers is a premier specialty retailer presently
operating 89 stores in 18 states, primarily in the Southeast and
Midwest, and markets online at http://www.reeds.com/. Additional
information on Reeds Jewelers, Inc. is available on the Internet at
http://www.reeds.com/ . REEDS JEWELERS, INC. FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data) Three Months Ended
Fiscal Year Ended 2/29/04 2/28/03 2/29/04 2/28/03 Net sales $41,088
$39,969 $101,309 $101,539 Cost of sales 21,396 21,340 52,163 52,307
Gross profit 19,692 18,629 49,146 49,232 Selling, general, and
administrative 14,143 14,891 45,998 46,893 Depreciation and
amortization 573 599 2,267 2,317 Restructuring charge 0 0 0 270
Operating earnings (loss) 4,976 3,139 881 (248) Interest expense
320 321 1,390 1,519 Earnings (loss) from continuing operations
before income taxes 4,656 2,818 (509) (1,767) Income tax expense
(benefit) 0 1,042 0 (654) Earnings (loss) from continuing
operations 4,656 1,776 (509) (1,113) Loss from discontinued
operations, net of applicable tax benefit of $0, $33, $0 and $168
respectively 0 (56) (125) (287) Gain (loss) on disposal of
discontinued operations, net of applicable tax benefit of $0, $62,
$0, and $62 respectively 4 (105) (82) (105) Net earnings (loss)
$4,660 $1,615 ($716) ($1,505) Basic and diluted earnings (loss) per
share $0.55 $0.19 ($0.08) ($0.18) Weighted averageshares
outstanding - basic 8,476,372 8,476,372 8,476,372 8,476,372
Weighted average shares outstanding - diluted 8,480,790 8,476,372
8,476,372 8,476,372 2/29/04 2/28/03 ASSETS Cash $606 $384
Merchandise inventories 40,728 41,637 Other current assets 4,722
3,808 Total current assets 46,056 45,829 Property and equipment,
net 9,241 10,442 Other assets 9,136 9,748 Total assets $64,433
$66,019 LIABILITIES & EQUITY Accounts payable & accrued
liabilities $15,820 $12,279 Current portion of long-term debt
17,030 - Total current liabilities 32,850 12,279 Revolving credit
note - 18,873 Other long-term liabilities 4,148 6,716 Shareholders'
equity 27,435 28,151 Total liabilities & equity $64,433 $66,019
SOURCE Reeds Jewelers, Inc. CONTACT: Jim Rouse of Reeds Jewelers,
Inc., +1-910-350-3116 Web site: http://www.reeds.com/
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