The Right Start, Inc. Reports Initial Internet Results, 13.3% Same Store Sales Increase and Improved Second Quarter Operating Results
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Sept. 8, 1999--The
Right Start, Inc. (Nasdaq:RTST) today reported the initial results for
its newly formed subsidiary, Rightstart.com, and significantly
improved operating results for The Right Start stores for the quarter
and six months ended July 31, 1999.
Jerry R. Welch, Chairman and CEO, said "We are very excited about
our second quarter and first half results. Our stores turned in an
excellent performance with same store sales increases of 13.3% and
19.4% for the quarter and first half, respectively. In addition,
Rightstart.com is off to a very good start. Since its launch,
Rightstart.com has already generated over $750,000 in total sales and
our sales run rate has now climbed to over $100,000 a week."
As previously announced, the Company formed a separate
subsidiary, Rightstart.com, in April 1999 to conduct electronic
commerce over the Internet. As part of the formation of
Rightstart.com, the Company contributed the operating assets of its
catalog operation. To fund operations, the Company raised $15 million
for Rightstart.com through a private placement of convertible
preferred stock to Sierra Ventures and Palomar Ventures, representing
an approximate 33% fully diluted interest in the subsidiary.
Rightstart.com commenced operations over the Internet on June 29,
1999. The results for Rightstart.com for both the second quarter and
six months reflect catalog operations for the months of May, June and
July and online operations for the 33-day period from June 29, 1999 to
July 31, 1999.
Consolidated net sales for the thirteen weeks ended July 31, 1999
were $10.6 million, an increase of 20.4% over net sales of $8.8
million for the thirteen weeks ended August 1, 1998. Included in
consolidated net sales for the quarter were retail store sales of
$9,464,000, catalog sales of $869,000 and internet sales of $226,000,
compared to retail sales of $7,791,000 and catalog sales of $964,000
for the prior year period.
For the twenty-six weeks ended July 31, 1999, consolidated net
sales were $21.3 million, an increase of 19.6% over net sales of $17.8
million for the same period last year. Included in consolidated net
sales for the six months were retail store sales of $18,499,000,
catalog sales of $2,555,000 and internet sales of $226,000, compared
to retail sales of $15,120,000 and catalog sales of $2,676,000 for the
prior year period.
For the second quarter, the Company reported consolidated
earnings before interest, taxes, depreciation and amortization
(EBITDA), and before new store pre-opening costs and other
nonrecurring charges, of a loss of $237,000, compared to a loss of
$507,000 for the same period last year. On an unconsolidated basis for
this year's second quarter, EBITDA for The Right Start, Inc. was a
positive $94,000 and a loss of $331,000 for Rightstart.com.
For the first half of fiscal 1999, the Company reported
consolidated earnings before interest, taxes depreciation and
amortization (EBITDA), and before new store pre-opening costs and
other nonrecurring charges, of a positive $279,000, compared to a loss
of $1,186,000 last year. On an unconsolidated basis for the first six
months, EBITDA for The Right Start, Inc. was a positive $610,000 and a
loss of $331,000 for Rightstart.com.
During the second quarter, the Company incurred a nonrecurring,
non-cash expense of $1,770,000 related to the vesting of performance
stock options granted to the Company's executive officers. This
expense results from the increase in the price of the Company's common
stock from the date of grant of the options to the date on which
vesting occurred. The recording of this expense has no net effect on
consolidated shareholders' equity, as a corresponding credit is
required to be recorded directly to shareholders' equity as an offset
to the charge. In addition, the Company recorded a $151,000 charge
related to the closing of an under-performing mall store. Accordingly,
for the quarter, the Company reported a consolidated net loss of
$2,747,000, or $.56 a share, compared to a net loss of $1,018,000, or
$.20 a share, last year.
For the six-month period, the Company reported a consolidated net
loss of $2,736,000, or $.57 a share, compared to a net loss of
$2,225,000, or $.44 a share for the first six months of 1998. On a
pro-forma basis, after removing the effects of the non-recurring,
non-cash charges of $1,770,000 and $151,000, mentioned above, and the
loss of $332,000 for Rightstart.com, the Company incurred a net loss
of $494,000, or $.10 a share, for the quarter and $483,000, or $.10 a
share, for the six-month period.
The Company reported that during the quarter it opened three new
neighborhood street locations in Seattle, WA., Naperville, IL., and in
Tarzana, CA., and that it ended the quarter with 43 stores in
operation. Since the end of the second quarter, the Company has opened
two new stores in Philadelphia, PA. and Westport, CT., and expects to
open approximately 10 to 15 more stores over the balance of the year.
"Our move from the regional mall store format to the neighborhood
street location format has positively impacted the Company's
operations. We are very excited about the new store opening schedule
for the second half of the year and we look forward to accelerated
growth in our store network," concluded Mr. Welch.
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