Whitehall Jewellers, Inc. (NYSE:JWL) today reported financial
results for the first quarter ended April 30, 2005. Net sales for
the quarter ended April 30, 2005 decreased 2.8% to $71.0 million
compared to $73.0 million in the first quarter last year.
Comparable store sales decreased 3.8% in the first quarter compared
to an increase of 3.3% last year. For the quarter ended April 30,
2005, Whitehall posted a net loss of $4.9 million or $0.35 per
share compared to net loss of $3.7 million or $0.27 per share for
the same period a year ago. Professional fees and other charges in
the first quarter of fiscal 2005 were $1.2 million compared to $2.7
million for the first quarter last year. Lucinda Baier, Chief
Executive Officer, commented, "While we were not pleased with first
quarter results, beginning in March we began to see the positive
impact of initiatives put in place earlier this year. In addition,
sales during the Mothers Day period were comp store positive." Ms.
Baier continued, "During the first quarter, our gross profit rate
was lower than a year ago primarily due to the deleveraging impact
of lower sales. However, subsequent to February our sales
performance and merchandise margins improved compared to both
February and the fourth quarter of last year. Our action plans are
designed to continue that direction as we focus on preparing for
the fall and Christmas seasons". Today at 9:00 AM EDT, the Company
will host a conference call to review results for the quarter ended
April 30, 2005. To participate in the call, please dial
800-599-9816, participant passcode 22765004. This call will also be
broadcast live on the Internet at:
http://www.whitehalljewellers.com. Whitehall Jewellers, Inc. is a
leading national specialty retailer of fine jewelry, currently
operating 386 stores in 38 states. The Company operates stores in
regional and superregional shopping malls under the names Whitehall
Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers. Safe
Harbor Statement This release contains certain forward-looking
statements (as such term is defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934) and information relating to the Company that are based
on the current beliefs of management of the Company as well as
assumptions made by and information currently available to
management including statements related to the markets for our
products, general trends and trends in our operations or financial
results, plans, expectations, estimates and beliefs. In addition,
when used in this release, the words "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "predict," "opinion" and
similar expressions and their variants, as they relate to the
Company or our management, may identify forward-looking statements.
Such statements reflect our judgment as of the date of this release
with respect to future events, the outcome of which is subject to
certain risks, including the factors described below, which may
have a significant impact on our business, operating results or
financial condition. Investors are cautioned that these
forward-looking statements are inherently uncertain. Should one or
more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those described herein. The Company
undertakes no obligation to update forward-looking statements. The
following factors, among others, may impact forward-looking
statements contained in this release: (1) a change in economic
conditions or the financial markets which negatively impacts the
retail sales environment and reduces discretionary spending on
goods such as jewelry; (2) reduced levels of mall traffic caused by
economic or other factors; (3) increased competition from specialty
jewelry retail stores, the Internet and mass merchant discount
stores which may adversely impact our sales and gross margin; (4)
our ability to execute our business strategy and the related
effects on comparable store sales and other results; (5) the extent
and results of our store expansion strategy and associated
occupancy costs, and access to funds for new store openings; (6)
the high degree of fourth quarter seasonality of our business and
the impact on the Company's sales, profitability and liquidity; (7)
the extent and success of our merchandising, marketing and/or
promotional programs; (8) personnel costs and the extent to which
we are able to retain and attract key personnel; (9) the effects of
competition; (10) the availability and cost of consumer credit;
(11) relationships with suppliers including the timely delivery to
the Company of appropriate merchandise on payment terms consistent
with past practice; (12) our ability to maintain adequate
information systems capacity and infrastructure; (13) our continued
ability to secure sufficient financing on acceptable terms,
including, if an event of default were to occur pursuant to the
Company's revolving loan facility, that the Company may be required
to negotiate relief with its lenders or seek new financing with
respect to which there may be no assurance that new financing
agreements would be available on acceptable terms or at all; (14)
our leverage, liquidity, and cost of funds and changes in interest
rates that may increase such costs; (15) our ability to maintain
adequate loss prevention measures; (16) fluctuations in raw
material prices, including diamond, gem and gold prices; (17) the
impact of current or future price reductions on margins and
resultant valuation allowances taken on certain merchandise
inventory identified from time to time as items which would not be
part of the Company's future merchandise presentation as well as
alternative methods of disposition of this merchandise inventory
and resultant valuations taken; (18) developments relating to
settlement of the consolidated Capital Factors actions, the
non-prosecution agreement entered into with the United States
Attorney's Office, the SEC investigation, and shareholder and other
civil litigation, including the impact of such developments on our
results of operations and financial condition and relationship with
our lenders or with our vendors; (19) regulation affecting the
industry generally, including regulation of marketing practices;
and (20) the risk factors identified from time to time in our
filings with the SEC. -0- *T Whitehall Jewellers, Inc. Statements
of Operations For the three months ended April 30, 2005 and 2004
(unaudited) (in thousands, except per share data) Three months
ended April 30, 2005 April 30, 2004 -------------- --------------
Net sales $70,998 $73,028 Cost of sales (including buying and
occupancy expenses) 48,442 48,752 -------------- --------------
Gross profit 22,556 24,276 Selling, general and administrative
expenses 27,690 27,036 Professional fees and other charges 1,222
2,653 -------------- -------------- Loss from operations (6,356)
(5,413) Interest expense 1,298 905 -------------- --------------
Loss before income taxes (7,654) (6,318) Income tax benefit (2,705)
(2,622) -------------- -------------- Net loss $(4,949) $(3,696)
============== ============== Basic earnings per share: Net loss
$(0.35) $(0.27) ============== ============== Weighted average
common share and common share equivalents 13,958 13,930
============== ============== Diluted earnings per share: Net loss
$(0.35) $(0.27) ============== ============== Weighted average
common share and common share equivalents 13,958 13,930
============== ============== Whitehall Jewellers, Inc. Balance
Sheets (unaudited, in thousands) April 30, 2005 January 31, 2005
April 30, 2004 -------------- ---------------- --------------
ASSETS Current Assets: Cash $1,444 $2,206 $1,432 Accounts
receivable, net 3,034 2,688 1,078 Merchandise inventories 195,150
183,676 197,990 Other current assets 957 383 837 Current income tax
benefit 3,714 3,959 4,591 Deferred income taxes, net 2,758 2,255
5,791 Deferred financing costs 948 360 278 --------------
---------------- -------------- Total current assets 208,005
195,527 211,997 Property and equipment, net 52,698 54,200 60,032
Goodwill, net 5,662 5,662 5,662 Deferred income taxes, net 3,402
902 --- Deferred financing costs 237 539 690 --------------
---------------- -------------- Total assets $270,004 $256,830
$278,381 ============== ================ ============== LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities: Revolver loans
$84,333 $73,793 $104,849 Current portion of long-term debt --- ---
640 Accounts payable 64,380 60,076 32,289 Customer deposits 3,336
3,042 3,587 Accrued payroll 4,651 3,829 4,542 Other accrued
expenses 16,581 14,587 23,471 -------------- ----------------
-------------- Total current liabilities 173,281 155,327 169,378
Deferred income taxes, net --- --- 3,352 Other long-term
liabilities 4,932 4,880 3,534 -------------- ----------------
-------------- Total liabilities 178,213 160,207 176,264
Commitments and contingencies --- --- --- Stockholders' equity:
Common stock 18 18 18 Class B common stock --- --- --- Additional
paid-in capital 106,161 106,123 106,122 Retained earnings 24,479
29,428 35,615 Treasury stock, at cost (4,099,775; 4,108,703 and
4,119,010 shares, respectively) (38,867) (38,946) (39,638)
-------------- ---------------- -------------- Total stockholders'
equity 91,791 96,623 102,117 -------------- ----------------
-------------- Total liabilities and stockholders' equity $270,004
$256,830 $278,381 ============== ================ ============== *T
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