Oshkosh Bgosh (NASDAQ:GOSHA)
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OshKosh B'Gosh, Inc. Reports First Quarter 2004 Results; Company
Reaffirms Fiscal 2004 Guidance
OSHKOSH, Wis., April 21 /PRNewswire-FirstCall/ -- OshKosh B'Gosh, Inc. , today
reported financial results for its first quarter ended April 3, 2004.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030409/GOSHALOGO )
First quarter net sales were $79.5 million versus $99.3 million last year. The
first quarter of fiscal 2004 contained 13 weeks compared to 14 weeks in fiscal
2003, which accounts for a portion of the year-over-year sales decline. Softer
Spring 2004 bookings, including the impact of the previously announced Kids 'R'
Us store closings, resulted in wholesale net sales of $32.1 million compared to
$50.5 million in the year-ago period. The Company's first quarter retail
comparable store sales (for the comparable 13 week period) increased 1.1%.
Retail net sales declined 2.9% to $46.5 million. During the quarter, the
Company opened two new Family Lifestyle stores as planned, closed five outlet
stores, and ended the quarter with 162 total retail locations.
Gross margin was 38.7% compared to 41.0% for the first quarter of 2003,
primarily due to increases in promotional support to wholesale customers
combined with an aggressive promotional pricing policy in Company-operated
stores undertaken to liquidate excess inventory. Selling, general and
administrative expenses decreased to $36.6 million compared to $40.8 million
last year due in part to implementation of the Company's initiatives, announced
in December, to streamline its operations and workforce in light of the soft
wholesale market. Net loss was $1.2 million, or $0.10 per diluted share.
Excluding the gain on the sale of the vacant Oshkosh, Wisconsin distribution
facility that was sold during the first quarter of 2004, net loss totaled $1.9
million, or $0.16 per diluted share. This compares to net income of $1.3
million, or $0.11 per diluted share, last year.
Douglas W. Hyde, Chairman and Chief Executive Officer, said, "Despite the
difficult first quarter results, we believe we have now stabilized the core
businesses and can focus on executing our strategic initiatives to revitalize
the Company. As we've discussed before, our plan includes reinvigorating the
OshKosh brand, improving the core wholesale and outlet store businesses and
implementing our Family Lifestyle store strategy, which is our primary growth
vehicle.
Mr. Hyde concluded, "While the year ahead will be one of transition, our first
quarter results were generally in line with our internal targets and our
strategic initiatives are progressing as planned. Additionally, we are
confident that our strong balance sheet, with no long-term debt, and
industry-leading brand recognition provide us a very solid platform from which
to execute our long-term plan. As such, we reaffirm our previously announced
guidance for fiscal 2004 of net sales in the range of $390 million to $410
million, with retail sales accounting for approximately 65% of the total, and
earnings per share between $0.75 and $0.95."
OshKosh B'Gosh will host a webcast of its first quarter results conference call
today at 10:00 a.m., Eastern Time. Investors and the media are invited to
listen to the call at the Company's web site, http://www.oshkoshbgosh.com/. An
archive of the webcast will be available on the same site.
OshKosh B'Gosh, Inc. is best known as a premier marketer of quality children's
apparel and accessories, available in over 50 countries around the world. The
Company is headquartered in Oshkosh, Wisconsin.
Statements contained herein that relate to the Company's future performance
including, without limitation, statements with respect to the Company's
anticipated financial position, results of operations or level of businesses
for 2004 or any other future period, are "forward-looking statements" within
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such statements, which are generally indicated by words or phrases such
as "plan," "estimate," "guidance," "project," "anticipate," "reaffirm," "the
Company believes," "management expects," "currently anticipates," and similar
phrases are based on current expectations only and are subject to certain
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, projected, or
estimated.
Among the factors that could cause actual results to materially differ include
the level of consumer spending for apparel, particularly in the children's wear
segment; risks associated with competition in the market place, including the
financial condition of and consolidations, restructurings and other ownership
changes in, the apparel and related products industry and the retail industry,
the introduction of new products or pricing changes by the Company's
competitors, price deflation in the apparel industry, and the Company's ability
to remain competitive with respect to product, service and value; risks
associated with the Company's dependence on sales to a limited number of large
department and specialty store customers, including risks related to customer
requirements for vendor margin support, as well as risks related to extending
credit to large customers; risks associated with possible deterioration in the
strength of the retail industry, including, but not limited to, business
conditions and the economy, natural disasters, and the unanticipated loss of a
major customer; risks related to the failure of Company suppliers to timely
deliver needed raw materials, risks associated with importing its products
using a global transportation matrix and the Company's ability to correctly
balance the level of its commitments with actual orders; risks associated with
terrorist activities as well as risks associated with foreign operations
including global disease management; risks related to the Company's ability to
defend and protect its trademarks and other proprietary rights and other risks
related to managing intellectual property issues. In addition, the inability
to ship Company products within agreed time frames due to unanticipated
manufacturing, distribution system or freight carrier delays or the failure of
Company contractors to deliver products within scheduled time frames are risk
factors in ongoing business. As a part of the Company's product sourcing
strategy, it routinely contracts for apparel products produced by contractors
in Asia, Africa, Mexico and Central America. If financial, political or other
related difficulties were to adversely impact the Company's contractors in
these regions, it could disrupt the supply of product contracted for by the
Company.
The forward-looking statements included herein are only made as of the date of
this press release. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Summary of Net Sales
(In millions)
Net Sales
(in millions)
Domestic
Wholesale Retail Other Total
Three months ended:
April 3, 2004 $32.1 $46.5 $0.9 $79.5
April 5, 2003 50.5 47.9 0.9 99.3
Increase (decrease) $(18.4) $(1.4) $-- $(19.8)
Percent increase (decrease) (36.4%) (2.9%) -- (19.9%)
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
April 3, 2004 January 3, 2004*
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $17,411 $23,931
Accounts receivable, net 14,167 16,669
Inventories 62,205 61,358
Prepaid expenses and other current assets 8,791 8,316
Deferred income taxes 9,100 10,100
Total current assets 111,674 120,374
Property, plant and equipment 72,523 72,416
Less accumulated depreciation
and amortization 50,067 48,720
Net property, plant and equipment 22,456 23,696
Non-current deferred income taxes 2,550 2,000
Other assets 5,280 5,855
Total assets $141,960 $151,925
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $12,991 $16,961
Accrued liabilities 30,140 33,552
Total current liabilities 43,131 50,513
Employee benefit plan liabilities 13,320 13,647
Shareholders' equity
Preferred stock -- --
Common stock:
Class A 96 94
Class B 22 22
Additional paid-in capital 3,183 --
Retained earnings 85,193 87,649
Unearned compensation under
restricted stock plan (2,985) --
Total shareholders' equity 85,509 87,765
Total liabilities and shareholders' equity $141,960 $151,925
*Condensed from audited financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Month Period Ended
April 3, 2004 April 5, 2003
Net Sales $79,507 $99,287
Cost of products sold 48,709 58,583
Gross profit 30,798 40,704
Selling, general and administrative expenses 36,594 40,818
Royalty income, net (2,863) (2,213)
(Gain) loss on sale of assets (1,037) 39
Operating income (loss) (1,896) 2,060
Other income (expense):
Interest expense (49) (74)
Interest income 67 42
Miscellaneous 9 6
Other income (expense) -- net 27 (26)
Income (loss) before income taxes (1,869) 2,034
Income taxes (benefit) (673) 753
Net income (loss) $(1,196) $1,281
Net income (loss) per common share
Basic $(0.10) $0.11
Diluted $(0.10) $0.11
Weighted average common shares outstanding
Basic 11,693 11,915
Diluted (including share equivalents) 11,693 12,037
Cash dividends per common share
Class A $0.110 $0.070
Class B $0.095 $0.060
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Month Period Ended
April 3, 2004 April 5, 2003
Cash flows from operating activities
Net income (loss) $(1,196) $1,281
Depreciation and amortization 1,575 1,676
Deferred income taxes 450 580
Income tax benefit from stock options exercised 2 173
Items in net income not affecting
cash and cash equivalents (1,186) (33)
Changes in current assets 1,180 (10,455)
Changes in current liabilities (7,382) (6,426)
Net cash used in operating activities (6,557) (13,204)
Cash flows from investing activities
Additions to property, plant and equipment (472) (447)
Proceeds from disposal of assets 1,869 31
Changes in other assets (120) (278)
Net cash provided by
(used in) investing activities 1,277 (694)
Cash flows from financing activities
Dividends paid (1,259) (813)
Net proceeds from issuance of common shares 19 10
Repurchase of common shares -- (2,584)
Net cash used in financing activities (1,240) (3,387)
Net decrease in cash and cash equivalents (6,520) (17,285)
Cash and cash equivalents at beginning of period 23,931 36,198
Cash and cash equivalents at end of period $17,411 $18,913
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DATASOURCE: OshKosh B'Gosh, Inc.
CONTACT: David L. Omachinski, President and Chief Operating Officer,
+1-920-232-4140, or Michael L. Heider, Vice President Finance, Treasurer and
Chief Financial Officer, +1-920-232-4418, both of OshKosh B'Gosh, Inc.; or
Investor Relations - Cara O'Brien or Melissa Myron, both of Financial
Dynamics, +1-212-850-5600, for OshKosh B'Gosh, Inc.
Web site: http://www.oshkoshbgosh.com/