CHICAGO, March 27 /PRNewswire-FirstCall/ -- Hartmarx Corporation
(NYSE:HMX) today reported operating results for its first quarter
ended February 29, 2008. Sales were $119.1 million in 2008 compared
to $120.0 million in 2007. The net loss was $3.5 million or $.10
per diluted share in 2008 compared to a net loss of $3.4 million or
$.09 per diluted share in 2007. Homi B. Patel, chairman and chief
executive officer of Hartmarx Corporation, commented, "Our first
quarter results were in line with our most recent guidance and
reflect the very difficult retail climate and current negative
consumer sentiments that we had correctly anticipated. The benefits
from the specific actions taken at the end of last year to reduce
our moderate priced tailored clothing lines are gradually taking
hold and we anticipate a return to profitability in the second
quarter, with expected diluted earnings per share in the range of
$.05 - $.08 on sales in the range of $125 - $135 million. Favorable
comparisons to the prior year are anticipated to commence in the
second half of the year. Despite the difficult first half outlook,
we continue to expect that various macro-economic actions including
personal income tax refunds and the significant lowering of
interest rates will have a positive impact on consumer sentiment
and we anticipate an earnings recovery for the full year of 2008
compared to 2007. Nonetheless, in light of the current uncertainty
and the notable slowdown in consumer spending, we believe it is
prudent for us to reduce our full-year diluted earnings per share
guidance to $.20 - $.35, from $.30 - $.40 previously, with
full-year revenues estimated in the $565 - $590 million range,
compared to our previous guidance of revenues in the $580 - $600
million range. The unusually large range in guidance is a
reflection of the uncertainty in general economic conditions for
the balance of the year. Mr. Patel continued, "Our emphasis
currently is on all areas that are controllable, most particularly,
inventory and expenses. In that regard, inventories were down $13
million from a year ago and operating expenses were slightly lower.
The Monarchy product lines, acquired in August, 2007, contributed
$3.6 million to this year's first quarter revenues. Tailored
clothing and sportswear revenues at the luxury and better price
points are close to previous year levels. The women's segment
represented approximately 22% of consolidated revenues for the
first quarter this year compared to 25% in last year's first
quarter. However, irrespective of the near-term economic pressures,
we believe it is important that we continue to invest in our
well-respected brands that serve the better, bridge and luxury
price points. In that regard, later this year we will be opening a
Hickey-Freeman retail store in downtown Chicago, following the
November, 2007 Hickey-Freeman store opening in San Francisco and
the first hickey retail store located in the Soho district of New
York City, which opened last October. We are also seeking a site
for the first Hart Schaffner Marx retail store to fully showcase
its lifestyle offerings of business and casual apparel," Mr. Patel
concluded. The first quarter operating loss was $3.6 million in
2008 compared to an operating loss of $3.3 million in 2007. The
gross margin rate was 33.1% in 2008 compared to 33.4% in 2007, and
included the effect this year of surplus inventory liquidations at
reduced gross margins. Selling, general and administrative expenses
were $43.6 million in 2008 compared to $43.9 million in 2007. The
$.3 million decrease reflected among other things, expense
reductions in the tailored clothing product lines, offset in part
by incremental expenses of $1.5 million related to Monarchy.
Interest expense was $2.0 million this year compared to $2.2
million in 2007, reflecting lower rates as average borrowing levels
were higher. Total debt was $150.1 million at February 29, 2008
compared to $134.3 million a year earlier and reflected the
trailing year incremental amounts for acquisitions, share
repurchases and capital expenditures. The Company has repurchased
423,400 of its shares during the first quarter of fiscal 2008,
pursuant to the October, 2007 authorization to repurchase up to
three million shares; repurchases to date under this authorization
have aggregated approximately 1.1 million shares at an average cost
of $4.12 per share. Hartmarx produces and markets business, casual
and golf apparel under its own brands, including Hart Schaffner
Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester
Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the
West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace,
Eye, Christopher Blue, Pine IV, Worn, Blue House Drive, One Girl
Who . . ., Zooey by alice heller and b.chyll. In addition, the
Company has certain exclusive rights under licensing agreements to
market selected products under a number of premier brands such as
Austin Reed, Tommy Hilfiger, Burberry men's tailored clothing, Ted
Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Perry
Ellis, Lyle & Scott, Golden Bear and Jag. The Company's broad
range of distribution channels includes fine specialty and leading
department stores, value-oriented retailers and direct mail
catalogs. The comments set forth above contain forward-looking
statements made in reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements can be identified by the use of
forward-looking terminology such as "anticipate," "believe,"
"continue," "estimate," "expect," "intend," "may," "should" or
"will" or the negatives thereof or other comparable terminology.
Forward-looking statements are not guarantees as actual results
could differ materially from those expressed or implied in such
forward-looking statements. The statements could be significantly
impacted by such factors as the level of consumer spending for
men's and women's apparel, the prevailing retail environment, the
Company's relationships with its suppliers, customers, licensors
and licensees, actions of competitors that may impact the Company's
business, possible acquisitions and the impact of unforeseen
economic changes, such as interest rates, or in other external
economic and political factors over which the Company has no
control. The reader is also directed to the Company's periodic
filings with the Securities and Exchange Commission for additional
factors that may impact the Company's results of operations and
financial condition. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. ---
UNAUDITED FINANCIAL SUMMARY -- (000's omitted, except per share
amounts) Statement of Earnings Three Months Ended February 29,
February 28, 2008 2007 Net sales $ 119,062 $ 120,045 Licensing and
other income 548 483 119,610 120,528 Cost of goods sold 79,605
79,922 Selling, general & administrative expenses 43,620 43,879
123,225 123,801 Operating earnings (loss) (3,615) (3,273) Interest
expense 1,971 2,186 Earnings (loss) before taxes (5,586) (5,459)
Tax (provision) benefit 2,039 2,047 Net earnings (loss) $(3,547)
$(3,412) Earnings (loss) per share: Basic $(.10) $(.09) Diluted
$(.10) $(.09) Average shares: Basic 34,870 36,043 Diluted 34,870
36,043 Condensed Balance Sheet February 29, February 28, 2008 2007
Cash $4,471 $ 3,881 Accounts receivable, net 94,173 101,428
Inventories 152,983 166,031 Prepaid expenses and other assets
28,741 20,120 Goodwill and intangible assets 100,257 85,975
Deferred income taxes 65,780 41,455 Prepaid/intangible pension
asset - 38,176 Net fixed assets 35,122 33,454 Total assets $481,527
$490,520 Accounts payable and accrued expenses $91,348 $90,297
Total debt 150,070 134,325 Accrued pension liability 15,200 8,498
Shareholders' equity (1) 224,909 257,400 Total liabilities and
shareholders' equity $481,527 $490,520 Book value per share $6.35
$7.04 Selected cash flow data: Capital expenditures $6,105 $1,064
Depreciation of fixed assets 1,411 1,286 Amortization of intangible
assets, long-lived assets and stock compensation expense 1,377
1,719 This information is preliminary and may be changed prior to
filing Form 10-Q. No investment decisions should be based solely on
this data. (1) Shareholders' equity at February 29, 2008 reflects
adoption of Statement of Financial Accounting Standard No. 158
related to pensions as of November 30, 2007, the effect of which
reduced shareholders' equity by $27.3 million. Web Site:
http://www.hartmarx.com/ DATASOURCE: Hartmarx Corporation CONTACT:
Eliza Tineo for Hartmarx Corporation, +1-212-826-6635 Web site:
http://www.hartmarx.com/
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