FYI**JUST FOR FEET, INC. Announces Second Quarter Results and Other Developments
BIRMINGHAM, Alabama, Aug. 24 /PRNewswire/ -- JUST FOR FEET, INC. (Nasdaq: FEET - news), today announced consolidated results for the second quarter and six months ended July 31, 1999.
JUST FOR FEET, INC. reported consolidated net sales of $225,768,000 for the second quarter ended July 31, 1999 representing a 28.8% increase over the second quarter consolidated net sales in the prior year of $175,329,000. For the six months ended July 31, 1999, consolidated net sales were $446,753,000, an increase of 36.5% over consolidated net sales of $327,250,000 for the first six months of the prior year. For the quarter and six months ended July 31, 1999, comparable store sales increased 0.9% and 1.6%, respectively. This represents the 22nd consecutive quarter of positive comparable store sales increases for the Company.
For the quarter ended July 31, 1999, the Company reported a net loss of $25,933,000 (a net loss of $0.83 per diluted share) as compared to net earnings of $7,976,000 ($0.25 per diluted share) for the second quarter of the prior year. For the six months ended July 31, 1999, the Company reported a net loss of $21,287,000 (a net loss of $0.68 per diluted share) before the cumulative effect of the change in accounting principle, discussed below. Comparable net income for the six months ended July 31, 1998 was $13,791,000 ($0.44 per diluted share). Diluted weighted average shares outstanding were 31,211,000 and 32,199,000 for the quarters ended July 31, 1999 and 1998, respectively, and 31,207,000 and 31,686,000 for the six month periods ended July 31, 1999 and 1998, respectively.
Helen M. Rockey, President and Chief Executive Officer, commented: ``Our aggressive inventory liquidation effort negatively impacted sales, gross margins and store operating expenses in the second quarter. As we executed vendor returns and moved goods from our specialty store division into the Superstore division during late June and early July, shipments of new goods were delayed. The lack of fresh product and the competitive industry environment resulted in an overly promotional sales mix.
``We are on schedule with previously announced inventory reductions. During July 1999, we sold substantially more footwear units than during the same period last year, at substantially lower retail prices. We have identified areas for expense reduction and continue our review of underperforming assets.
``We will continue to aggressively move inventory in the third quarter, which will put pressure on both sales and gross margins and create a net loss for the year. We remain convinced that the core concept of our business is strong however, and we believe that these actions will return us to a solid foundation for long term growth.'
The Company also announced that it has signed a commitment letter for a new $200 million secured revolving credit facility with Bank of America. This facility will replace the Company's current revolving credit facility with a syndicate of banks, also led by Bank of America. The Company anticipates closing the new facility by mid to late September 1999. The Company believes that the new facility, which will be secured by substantially all assets of the Company, provides greater flexibility and liquidity than the current facility.
Effective with the beginning of the current fiscal year, January 31, 1999, the Company changed its method of accounting for store opening costs as required by Statement of Position No. 98-5, ``Reporting on the Costs of Start-Up Activities' (the ``SOP'). The SOP requires that start-up costs be expensed as incurred. The Company previously expensed these costs in the month that the store opened. The cumulative effect of adopting the SOP was a charge to earnings of approximately $1,847,000 ($0.06 per basic and diluted share), net of applicable taxes of approximately $1,156,000.
There were 81 superstores and 95 specialty stores in the comparable store sales base at July 31, 1999. The Company will not include the superstores acquired on July 2, 1998 from Sneaker Stadium in its consolidated comparable store sales results until such stores have been operated as Just For Feet superstores for thirteen months.
The Company opened the following 11 new superstores, including the last two remodeled former Sneaker Stadium superstores, during the quarter:
Fresno, California (Store 2)
Fort Myers, Florida (Store 1)
Shreveport, Louisiana (Store 1)
Covington, Louisiana (Store 2)
Natick, Massachusetts (Store 2)
Springfield, Missouri (Store 1)
Princeton, New Jersey (Store 12)
Woodbridge, New Jersey (Store 16)
Laredo, Texas (Store 1)
Hurst, Texas (Store 10)
Newport News, Virginia (Store 4)
The Fort Myers, Florida, Shreveport, Louisiana, Springfield, Missouri and Laredo, Texas superstores opened in new markets for the Company whereas the other superstores opened in fill-in markets. In addition, the Company also opened 9 specialty stores during the second quarter.
JUST FOR FEET, INC. operates both large format superstores and smaller specialty stores that specialize in brand-name athletic and outdoor footwear and apparel. The Just For Feet superstores feature a full line of sports related apparel, a high level of customer service and a distinctive combination of entertainment elements creating an exciting shopping experience. The Company operates 148 Just For Feet superstores in 26 states and Puerto Rico and 174 Company and 37 franchised specialty stores in 22 states and Puerto Rico.
Certain statements contained in this press release are ``forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to expected future financial results generally and specifically relating to our inventory reduction initiative and its impact on sales and gross margins, as well as the impact of our proposed new credit facility and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions, competition and other uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.
PLEASE VISIT OUR WEBSITE AT www.feet.com
For additional information, please contact:
Helen M. Rockey, President and Chief Executive Officer
Eric L. Tyra, Executive Vice President and Chief Financial Officer
205-408-3000 |
