The Right Start Inc. Reports Fourth-Quarter Operating Profit, 30 Percent Same-Store Sales Increase, New Store Growth Plan and New Internet Subsidiary
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--March 15, 1999--The Right Start Inc. (Nasdaq:RTST - news) Monday reported its fourth-quarter results, 1999 new store growth plan and plan to establish a separate Internet subsidiary.
For the fourth quarter ended Jan. 30, 1999, the company reported operating income of $233,000, compared with an operating loss of $2,913,000 last year, while earnings before interest, taxes, depreciation and amortization (EBITDA) and before new store preopening expenses improved to $667,000, compared with a loss of $2,297,000 last year.
After recording a noncash accounting charge for debt discount amortization of $2,384,000 and a noncash accounting gain of $1,184,000, both related to the company's previously announced recapitalization transaction, the company reported a net loss of $1,057,000 or 21 cents per share, vs. a net loss of $3,244,000, or 64 cents per share last year.
After eliminating the one-time effect of the items mentioned above related to the company's recapitalization transaction, the company's 1998 pro forma fourth quarter net income was $143,000, or 3 cents per share.
The company announced that same-store sales increased 29.7 percent for the quarter, while total sales increased 14.1 percent to $10,742,000 from $9,413,000 last year. Included in this year's fourth- quarter results were retail store sales of $9,579,000 and catalog sales of $1,163,000, compared with retail store sales of $8,212,000 and catalog sales of $1,201,000 last year.
For the quarter, the company opened 6 stores and closed 1 store, ending the quarter with 40 stores in operation vs. 43 in operation at Jan. 31, 1998.
Jerry R. Welch, chairman and chief executive officer, said: ''We are very pleased with our fourth-quarter turnaround and the progress that we made this year. At the beginning of the year, we established a new direction for our company.
''Specifically, we made the decision to close poor performing regional mall stores, to open new stores only in convenient neighborhood street locations, to enhance our product mix by better emphasizing developmental toys, puzzles, books, videos and CDs, and to increase our print advertising. The effect of these actions became apparent in our fourth-quarter results as same-store sales increased 30 percent and we achieved profitable operations.''
For the fiscal year, the company reported an operating loss of $2,379,000, compared with an operating loss of $8,071,000 last year, while earnings before interest, taxes, depreciation and amortization (EBITDA) and before new store preopening expenses improved to a loss of $682,000, compared with a loss of $5,752,000 for the year ended Jan. 31, 1998.
After recording a noncash accounting charge for debt discount amortization of $3,850,000 and a noncash accounting gain of $1,211,000, both related to the company's previously announced recapitalization transaction, the company reported a net loss of $5,680,000, or $1.13 per share, vs. a net loss of $9,241,000, or $2.01 per share last year.
After eliminating the one-time effect of the items mentioned above related to the company's recapitalization transaction, the company's pro forma 1998 net loss was $3,041,000, or 60 cents per share.
For the fiscal year, same-store sales increased 6.6 percent, while total sales decreased 5.0 percent to $36,611,000 from $38,521,000 last year. Included in the year's results were retail store sales of $31,875,000 and catalog sales of $4,736,000, compared with retail store sales $31,107,000 and catalog sales of $7,414,000 last year. For the fiscal year, the company opened 8 stores and closed 11 stores.
For fiscal 1999, the company stated that its plans call for the addition of 22-24 new stores, primarily in existing markets. Welch added: ''We are very excited about our new neighborhood street location format. The 8 new stores opened in fiscal 1998 certainly met our expectations and we look forward to growing our retail store base by 50 percent this year.''
In another announcement, the company reported that it was forming a separate subsidiary, rightstart.com, to engage in electronic commerce over the Internet. As part of the formation of rightstart.com, the company has engaged Guidance Solutions of Marina del Rey, Calif., to develop its Web site and assist the company in its operation.
Further, the company has engaged the financial advisory firm of CEA Montgomery of Santa Monica, Calif., to advise it on its e-commerce strategy and to assist in funding and financing rightstart.com. The financing will likely consist of the sale of a minority equity stake in rightstart.com to strategic investors.
Welch stated: ''After watching online retailing take shape over the past year, we are now ready to enter this exciting new retail channel. Our plans call for us to be operational by mid-summer and we are anxious to get started. Over the past 14 years, The Right Start has clearly created a valuable brand name with consumers through our catalog and retail stores.
''We intend to leverage our brand recognition, our knowledge and expertise in children's specialty retailing, and our existing merchandising, distribution and fulfillment infrastructure in the Internet arena.'' |
