Reeds Jewelers Announces Third Quarter Sales and Earnings
WILMINGTON, N.C., Dec. 23 /PRNewswire-FirstCall/ -- Reeds Jewelers,
Inc. today announced net sales and earnings for the third fiscal
quarter ended November 30, 2003. Comparable store sales remained
constant for the quarter ended November 30, 2003 compared to the
same quarter of the prior year. The Company's total net sales for
the quarter decreased to $21,176,000 from $21,597,000, a 2%
decrease, while operating an average of 5% fewer stores in the
third quarter of the current fiscal year. Comparable store sales
increased 1% during the first three quarters of the year. The
Company's total net sales for the nine months ended November 30,
2003, decreased to $60,221,000 from $61,570,000, a 2% decrease,
while operating an average of 6% fewer stores in the first three
quarters of the current year. Gross margins were 49% during the
quarter, down from 50% in the third quarter of last year.
Year-to-date, gross margins were 49%, down from 50% for the first
nine months last year. The decline in gross margins is primarily
attributable to aggressive promotional pricing in order to gain
market share and management's commitment to improve inventory turns
by rapidly marking down slower-moving inventory. Selling, general,
and administrative expenses increased $163,000 or 2% in the third
quarter of this year compared to the same period a year ago. As a
percentage of net sales SG&A was 51% and 49% for the quarters
ended November 30, 2003 and 2002, respectively. Year-to-date
selling, general, and administrative expenses decreased $149,000 or
1% from the same period in the prior year. SG&A as a percentage
of net sales was 53% and 52% for the first nine months ended
November 30, 2003 and 2002, respectively. The average borrowings on
the Company's line of credit for the quarter decreased 4% over the
same quarter last year. The Company's effective pre-tax interest
rate during the quarter was 4.9%, down from 5.6% for the same
period in the previous year. As a result of these two factors,
interest expense for the quarter was $337,000, 15% lower than the
same quarter last year. The average borrowings on the Company's
line of credit for the nine months ended November 30, 2003 was 6%
lower than the same nine months last year. The Company's effective
pre-tax interest rate during the first three quarters of the year
dropped to 5.1% from 5.6% for the same period in the previous year.
As a result, year-to-date interest expense was $957,000, 14% lower
than the same period last year. On June 22, 2003, the Company
completed its exit from the state of Kansas resulting in an $86,000
year-to-date loss from disposal of discontinued operations, net of
$0 tax benefit. The Kansas operations for the nine months ended
November 30, 2003 resulted in a $125,000 loss from discontinued
operations, net of $0 tax benefit. Discontinued operations for the
three quarters ended November 30, 2002 is composed of a $105,000
loss, net of $62,000 tax benefit, relating to the Company's exit
from the state of Kansas and a loss of $126,000, net of $74,000 tax
benefit, resulting from the Company's exit from the state of Iowa.
Continuing operations for the third quarter of this year resulted
in a $1,458,000 loss, net of $0 tax benefit, compared to a loss of
$614,000, net of $361,000 tax benefit, for the same quarter last
year. Continuing operations for the nine months ended November 30,
2003 resulted in a loss of $5,165,000, net of $0 tax benefit,
compared to a loss of $2,889,000, net of $1,696,000 tax benefit, in
the prior year comparative period. Total net loss for the quarter
was $1,445,000 ($.17 per share), net of $0 tax benefit, compared to
a net loss of $692,000 ($0.08 per share), net of $406,000 tax
benefit, in the same period last year. Year-to-date net loss was
$5,376,000 ($.0.63 per share), net of $0 tax benefit, compared to a
net loss of $3,120,000 ($0.37 per share), net of $1,832,000 tax
benefit, for the nine months ended November 30, 2002. The Company
has established valuation allowances against the deferred tax
benefit from previous years' losses. The Company does not expect
its income tax expense for the current year to exceed the $1.1
million reserve against deferred tax assets. Therefore no income
tax expense or benefit is reflected in the current year. The
Company's anticipated net effective tax rate was 0% and 37% in the
first three quarters of fiscal 2004 and 2003, respectively. Reeds
Jewelers is a premier specialty retailer presently operating 91
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
Nine Months Ended 11/30/03 11/30/02 11/30/03 11/30/02 Net sales
$21,176 $21,597 $60,221 $61,570 Cost of sales 10,859 10,894 30,767
30,967 Gross profit 10,317 10,703 29,454 30,603 Selling, general,
and administrative 10,832 10,669 31,855 32,004 Depreciation and
amortization 606 611 1,807 1,806 Restructuring charge 0 0 0 270
Operating loss (1,121) (577) (4,208) (3,477) Interest expense 337
398 957 1,108 Loss from continuing operations before income taxes
(1,458) (975) (5,165) (4,585) Income tax benefit 0 (361) 0 (1,696)
Loss from continuing operations (1,458) (614) (5,165) (2,889) Loss
from discontinued operations, net of applicable tax benefit of $0,
$45, $0 and $136 respectively 0 (78) (125) (231) Gain (loss) on
disposal of discontinued operations, net of applicable tax benefit
of $0, and $0 respectively 13 0 (86) 0 Net loss ($1,445) ($692)
($5,376) ($3,120) Basic and diluted loss per share ($0.17) ($0.08)
($0.63) ($0.37) Weighted average shares outstanding 8,476,372
8,476,372 8,476,372 8,476,372 DATASOURCE: Reeds Jewelers, Inc.
CONTACT: Jim Rouse of Reeds Jewelers, Inc., +1-910-350-3116 Web
site: http://www.reeds.com/
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