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Claire’s Stores reports net sales of $314.6m in Q3

Published 05 December 2017

Claire’s Stores, a specialty retailers of fashionable jewelry and accessories for young women, teens, tweens, and kids, reported its financial results for the fiscal 2017 third quarter, which ended 28 October 2017.

Third Quarter Results

The Company reported net sales of $314.6 million for the fiscal 2017 third quarter, an increase of $2.5 million, or 0.8% compared to the fiscal 2016 third quarter. Sales would have decreased 1.1% excluding the favorable impact from foreign currency exchange rate changes.

Excluding the foreign currency exchange rate effect, the decrease was primarily due to the effect of store closures, partially offset by an increase in same store sales, an increase in new concession and company-operated store sales. Consolidated same store sales increased 1.1%, with North America same store sales increasing 2.4% and Europe same store sales decreasing 1.0%.

The Company computes same store sales on a local currency basis, which eliminates any impact from changes in foreign currency exchange rates.

For the fiscal 2017 fourth quarter-to-date period, consolidated same store sales are flat, with North America performing similarly to Europe. Gross profit percentage increased 200 basis points to 48.5% during the fiscal 2017 third quarter versus 46.5% for the prior year quarter. This increase in gross profit percentage consisted of a 120 basis point increase in merchandise margin and a 90 basis point decrease in occupancy, partially offset by a 10 basis point increase in buying and buying-related costs. The increase in merchandise margin percentage resulted primarily from higher initial markup and lower markdowns.

The decrease in occupancy costs, as a percentage of net sales, resulted primarily from the leveraging effect of an increase in same store sales.

Selling, general and administrative expenses increased $2.4 million, or 2.1%, compared to the fiscal 2016 third quarter. As a percentage of net sales, selling, general and administrative expenses increased 50 basis points. Selling, general, and administrative expenses would have increased $0.1 million excluding an unfavorable $2.3 million foreign currency translation effect 

Adjusted EBITDA in the fiscal 2017 third quarter was $42.4 million, an increase of $5.4 million, or 14.8% compared to the fiscal 2016 third quarter. Adjusted EBITDA would have been $41.7 million excluding the foreign currency translation effect in the third quarter of 2017. The Company defines Adjusted EBITDA as earnings before income taxes, net interest expense, depreciation and amortization, loss (gain) on early debt extinguishments, and asset impairments.

Adjusted EBITDA excludes management fees, severance, the impact of transaction-related costs and certain other items. A reconciliation of net loss to Adjusted EBITDA is attached. As of October 28, 2017, cash and cash equivalents were $25.8 million.

The Company had $71.0 million drawn on its ABL Credit Facility as of October 28, 2017. The fiscal 2017 third quarter cash balance decrease of $5.4 million from the second quarter consisted of $75.5 million of cash interest payments, $4.9 million of capital expenditures and $2.7 million for tax payments and other items, offset by positive impacts of $42.4 million of Adjusted EBITDA, $25.0 million from net borrowings under our ABL Credit Facility and $10.3 million from seasonal working capital sources.



Source: Company Press Release