Whitehall Jewel (NYSE:JWL)
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Whitehall Jewellers, Inc. (NYSE:JWL) today reported
financial results for the first quarter ended April 30, 2005.
Net sales for the quarter ended April 30, 2005 decreased 2.8% to
$71.0 million compared to $73.0 million in the first quarter last
year. Comparable store sales decreased 3.8% in the first quarter
compared to an increase of 3.3% last year. For the quarter ended April
30, 2005, Whitehall posted a net loss of $4.9 million or $0.35 per
share compared to net loss of $3.7 million or $0.27 per share for the
same period a year ago. Professional fees and other charges in the
first quarter of fiscal 2005 were $1.2 million compared to $2.7
million for the first quarter last year.
Lucinda Baier, Chief Executive Officer, commented, "While we were
not pleased with first quarter results, beginning in March we began to
see the positive impact of initiatives put in place earlier this year.
In addition, sales during the Mothers Day period were comp store
positive."
Ms. Baier continued, "During the first quarter, our gross profit
rate was lower than a year ago primarily due to the deleveraging
impact of lower sales. However, subsequent to February our sales
performance and merchandise margins improved compared to both February
and the fourth quarter of last year. Our action plans are designed to
continue that direction as we focus on preparing for the fall and
Christmas seasons".
Today at 9:00 AM EDT, the Company will host a conference call to
review results for the quarter ended April 30, 2005. To participate in
the call, please dial 800-599-9816, participant passcode 22765004.
This call will also be broadcast live on the Internet at:
http://www.whitehalljewellers.com.
Whitehall Jewellers, Inc. is a leading national specialty retailer
of fine jewelry, currently operating 386 stores in 38 states. The
Company operates stores in regional and superregional shopping malls
under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks
Bros. Jewelers.
Safe Harbor Statement
This release contains certain forward-looking statements (as such
term is defined in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934) and information
relating to the Company that are based on the current beliefs of
management of the Company as well as assumptions made by and
information currently available to management including statements
related to the markets for our products, general trends and trends in
our operations or financial results, plans, expectations, estimates
and beliefs. In addition, when used in this release, the words
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"predict," "opinion" and similar expressions and their variants, as
they relate to the Company or our management, may identify
forward-looking statements. Such statements reflect our judgment as of
the date of this release with respect to future events, the outcome of
which is subject to certain risks, including the factors described
below, which may have a significant impact on our business, operating
results or financial condition. Investors are cautioned that these
forward-looking statements are inherently uncertain. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary
materially from those described herein. The Company undertakes no
obligation to update forward-looking statements. The following
factors, among others, may impact forward-looking statements contained
in this release: (1) a change in economic conditions or the financial
markets which negatively impacts the retail sales environment and
reduces discretionary spending on goods such as jewelry; (2) reduced
levels of mall traffic caused by economic or other factors; (3)
increased competition from specialty jewelry retail stores, the
Internet and mass merchant discount stores which may adversely impact
our sales and gross margin; (4) our ability to execute our business
strategy and the related effects on comparable store sales and other
results; (5) the extent and results of our store expansion strategy
and associated occupancy costs, and access to funds for new store
openings; (6) the high degree of fourth quarter seasonality of our
business and the impact on the Company's sales, profitability and
liquidity; (7) the extent and success of our merchandising, marketing
and/or promotional programs; (8) personnel costs and the extent to
which we are able to retain and attract key personnel; (9) the effects
of competition; (10) the availability and cost of consumer credit;
(11) relationships with suppliers including the timely delivery to the
Company of appropriate merchandise on payment terms consistent with
past practice; (12) our ability to maintain adequate information
systems capacity and infrastructure; (13) our continued ability to
secure sufficient financing on acceptable terms, including, if an
event of default were to occur pursuant to the Company's revolving
loan facility, that the Company may be required to negotiate relief
with its lenders or seek new financing with respect to which there may
be no assurance that new financing agreements would be available on
acceptable terms or at all; (14) our leverage, liquidity, and cost of
funds and changes in interest rates that may increase such costs; (15)
our ability to maintain adequate loss prevention measures; (16)
fluctuations in raw material prices, including diamond, gem and gold
prices; (17) the impact of current or future price reductions on
margins and resultant valuation allowances taken on certain
merchandise inventory identified from time to time as items which
would not be part of the Company's future merchandise presentation as
well as alternative methods of disposition of this merchandise
inventory and resultant valuations taken; (18) developments relating
to settlement of the consolidated Capital Factors actions, the
non-prosecution agreement entered into with the United States
Attorney's Office, the SEC investigation, and shareholder and other
civil litigation, including the impact of such developments on our
results of operations and financial condition and relationship with
our lenders or with our vendors; (19) regulation affecting the
industry generally, including regulation of marketing practices; and
(20) the risk factors identified from time to time in our filings with
the SEC.
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Whitehall Jewellers, Inc.
Statements of Operations
For the three months ended April 30, 2005 and 2004
(unaudited)
(in thousands, except per share data)
Three months ended
April 30, 2005 April 30, 2004
-------------- --------------
Net sales $70,998 $73,028
Cost of sales (including buying and
occupancy expenses) 48,442 48,752
-------------- --------------
Gross profit 22,556 24,276
Selling, general and administrative
expenses 27,690 27,036
Professional fees and other charges 1,222 2,653
-------------- --------------
Loss from operations (6,356) (5,413)
Interest expense 1,298 905
-------------- --------------
Loss before income taxes (7,654) (6,318)
Income tax benefit (2,705) (2,622)
-------------- --------------
Net loss $(4,949) $(3,696)
============== ==============
Basic earnings per share:
Net loss $(0.35) $(0.27)
============== ==============
Weighted average common share and
common share equivalents 13,958 13,930
============== ==============
Diluted earnings per share:
Net loss $(0.35) $(0.27)
============== ==============
Weighted average common share and
common share equivalents 13,958 13,930
============== ==============
Whitehall Jewellers, Inc.
Balance Sheets
(unaudited, in thousands)
April 30, 2005 January 31, 2005 April 30, 2004
-------------- ---------------- --------------
ASSETS
Current Assets:
Cash $1,444 $2,206 $1,432
Accounts receivable,
net 3,034 2,688 1,078
Merchandise
inventories 195,150 183,676 197,990
Other current assets 957 383 837
Current income tax
benefit 3,714 3,959 4,591
Deferred income
taxes, net 2,758 2,255 5,791
Deferred financing
costs 948 360 278
-------------- ---------------- --------------
Total current
assets 208,005 195,527 211,997
Property and equipment,
net 52,698 54,200 60,032
Goodwill, net 5,662 5,662 5,662
Deferred income taxes,
net 3,402 902 ---
Deferred financing
costs 237 539 690
-------------- ---------------- --------------
Total assets $270,004 $256,830 $278,381
============== ================ ==============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loans $84,333 $73,793 $104,849
Current portion of
long-term debt --- --- 640
Accounts payable 64,380 60,076 32,289
Customer deposits 3,336 3,042 3,587
Accrued payroll 4,651 3,829 4,542
Other accrued
expenses 16,581 14,587 23,471
-------------- ---------------- --------------
Total current
liabilities 173,281 155,327 169,378
Deferred income
taxes, net --- --- 3,352
Other long-term
liabilities 4,932 4,880 3,534
-------------- ---------------- --------------
Total liabilities 178,213 160,207 176,264
Commitments and
contingencies --- --- ---
Stockholders' equity:
Common stock 18 18 18
Class B common stock --- --- ---
Additional paid-in
capital 106,161 106,123 106,122
Retained earnings 24,479 29,428 35,615
Treasury stock, at
cost
(4,099,775;
4,108,703 and
4,119,010 shares,
respectively) (38,867) (38,946) (39,638)
-------------- ---------------- --------------
Total stockholders'
equity 91,791 96,623 102,117
-------------- ---------------- --------------
Total liabilities
and stockholders'
equity $270,004 $256,830 $278,381
============== ================ ==============
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