Deb Shops Reports Fourth Quarter and Fiscal 2007 Year-End Results

Share Name	Share Symbol	Market	Type
Deb Shops (MM)	NASDAQ:DEBS	NASDAQ	Common Stock

Deb Shops (NASDAQ:DEBS)
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Deb Shops also Reports February Sales PHILADELPHIA, March 8 /PRNewswire-FirstCall/ -- Deb Shops, Inc. (NASDAQ: DEBS), a leading teen apparel retailer, today reported financial results for the fourth quarter ended January 31, 2007. For the fourth quarter of fiscal 2007, net sales decreased 3.7% to $85.1 million compared to $88.4 million in the fourth quarter a year ago. Gross profit, which is net of buying and occupancy costs, was $36.7 million resulting in a gross margin of 43.1% for the period. This compares to gross profit of $39.0 million and a 44.2% gross margin in the fourth quarter of fiscal 2006. Fourth quarter net income was $10.4 million compared to $12.8 million in the fourth quarter of fiscal 2006, while diluted earnings per share were $0.73 versus $0.89 in last year's fourth quarter. As of January 31, 2007, the Company had $127.7 million in cash and marketable securities, shareholders' equity of $146.0 million, and no debt. Net sales for the year ended January 31, 2007 were $324.7 million compared to $325.0 million for the comparable prior year period. Gross profit, which is net of buying and occupancy costs, was $110.8 million resulting in a gross margin of 34.1% for fiscal 2007 versus gross profit of $113.3 million and a 34.9% gross margin in fiscal 2006. Net income was $21.4 million, or $1.49 per diluted share, versus $25.3 million, or $1.78 per diluted share, for the year ended January 31, 2006. Marvin Rounick, President and CEO of Deb Shops, stated, "Despite a difficult selling environment in our core markets, we finished the year with earnings per share near the high-end of our revised guidance range. Throughout fiscal 2007 we did experience some softness in certain merchandise categories which we believe was driven by a combination of our product assortment and at times, difficult economic conditions for our value focused consumers. We also incurred higher operating costs, primarily related to payroll and store expenses, which also impacted our bottom line. Despite these challenges we begin the new year committed to reestablishing our momentum in order to improve our financial performance and increase our share of the market." During the fourth quarter of fiscal 2007, Deb Shops opened three new stores and remodeled two existing locations. The Company also closed four locations at year-end. As of January 31, 2007, the Company operated plus-size departments in 181 Deb stores. Barry Susson, CFO of Deb Shops, added, "Although we reported sales and earnings that were below our original projections from the beginning of the year, fiscal 2007 was marked by the execution of several key objectives. Operationally, we opened 18 new stores of which five were in the under penetrated western portion of the country. Strategically, we increased the number of plus size departments throughout our store base, a key differentiator and important growth vehicle for our Company. Financially, we maintained our commitment to shareholders, returning $0.50 per share through our quarterly dividend payout. We also ended the year with over $127 million in cash and marketable securities. We move forward with a sound business plan and an experienced management team focused on delivering long-term growth and increased profitability." Based on current information, Deb Shops has established fiscal 2008 sales guidance in the range of $343 million to $348 million and fully diluted earnings guidance of between $1.55 and $1.60 per share. The amounts are based on a projected low- to mid-single-digit comparable store sales increase and by net store growth of approximately 15 locations. Deb Shops also today reported that comparable store sales decreased 2.0% for the month ended February 28, 2007. Total sales increased 1.1% to $25.6 million from $25.3 million for the month ended February 28, 2006. The Company reports financial results on the calendar month, therefore, differences in timing will occur when comparing Deb Shops' results to those of retailers reporting on a 4-5-4 calendar. For the remainder of fiscal year 2008, Deb Shops, Inc. expects to report monthly sales according to the following calendar: Month End Reporting Date March 2007 April 5, 2007* April 2007 May 3, 2007* May 2007 June 7, 2007 June 2007 July 5, 2007* July 2007 August 2, 2007* August 2007 September 6, 2007 September 2007 October 4, 2007* October 2007 November 8, 2007 November 2007 December 6, 2007 December 2007 January 3, 2008* January 2008 February 7, 2008 *Denotes dates that differ from reporting dates under the 4-5-4 calendar. Deb Shops, Inc. is a national specialty retailer of fashionable apparel, shoes and accessories for juniors in both regular and plus sizes. The Company operates 336 specialty apparel stores in 42 states under the DEB and Tops 'N Bottoms names. The Company has made in this release, and from time to time may otherwise make, "forward-looking statements" (as that term is defined under federal securities laws) concerning the Company's future operations, performance, profitability, revenues, expenses, earnings and financial condition. This release includes, in particular, forward-looking statements regarding expectations of future performance, store openings and closings and other matters. Such forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors. Such factors may include, but are not limited to, the Company's ability to improve or maintain sales and margins, respond to changes in fashion, find suitable retail locations and attract and retain key management personnel. Such factors may also include other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2006. The Company assumes no obligation to update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. Income Statement Highlights (Unaudited) Year Ended Three Months Ended January 31, January 31, 2007 2006 2007 2006 Net sales $ 324,741,227 $ 324,963,607 $ 85,099,548 $ 88,386,430 Cost of sales, including buying and occupancy costs 213,985,749 211,680,152 48,440,675 49,358,382 Gross profit 110,755,478 113,283,455 36,658,873 39,028,048 Selling and administrative 76,852,741 72,070,465 20,334,878 18,540,204 Depreciation and amortization 5,366,252 5,441,096 1,407,186 1,420,248 82,218,993 77,511,561 21,742,064 19,960,452 Operating income 28,536,485 35,771,894 14,916,809 19,067,596 Other income, principally interest 4,369,478 4,135,410 1,110,683 902,173 Income before income taxes 32,905,963 39,907,304 16,027,492 19,969,769 Income tax provision 11,493,000 14,617,000 5,611,000 7,120,000 Net income $ 21,412,963 $ 25,290,304 $ 10,416,492 $ 12,849,769 Net income per common share Basic $ 1.49 $ 1.79 $ 0.73 $ 0.90 Diluted $ 1.49 $ 1.78 $ 0.73 $0.89 Weighted average number of common shares outstanding Basic 14,326,704 14,125,484 14,327,808 14,320,694 Diluted 14,343,173 14,195,078 14,341,991 14,351,262 EBITDA(1) $ 33,902,737 $ 41,212,990 $ 16,323,995 $ 20,487,844 Balance Sheet Highlights (Unaudited) January 31, 2007 January 31, 2006 Cash and cash equivalents $ 25,779,592 $ 26,520,757 Marketable securities $ 101,950,000 $ 91,000,000 Merchandise inventories $ 34,473,012 $ 32,902,705 Total current assets $ 166,729,274 $ 154,851,005 Property, plant and equipment, net $ 25,744,179 $ 23,325,292 Total assets $ 202,677,463 $ 187,669,364 Total current liabilities $ 43,977,099 $ 44,602,596 Total liabilities $ 56,631,768 $ 56,114,026 Shareholders' equity $ 146,045,695 $ 131,555,338 (1) EBITDA Reconciliation (Unaudited) Year Ended Three Months Ended January 31, January 31, 2007 2006 2007 2006 Net income $ 21,412,963 $ 25,290,304 $ 10,416,492 $ 12,849,769 Income tax provision 11,493,000 14,617,000 5,611,000 7,120,000 Depreciation and amortization 5,366,252 5,441,096 1,407,186 1,420,248 Other income, principally interest (4,369,478) (4,135,410) (1,110,683) (902,173) EBITDA $ 33,902,737 $ 41,212,990 $ 16,323,995 $ 20,487,844 (1) EBITDA is a financial measure that is not recognized under accounting principles generally accepted in the United States (US GAAP). The Company believes EBITDA provides a meaningful measure of operating performance. As required, the Company has presented the reconciliation of net income, a US GAAP financial measure, to EBITDA. DATASOURCE: Deb Shops, Inc. CONTACT: Barry Susson, Chief Financial Officer, Deb Shops, Inc., +1-215-676-6000; or Brendon Frey or Tom Ryan, of Integrated Corporate Relations, +1-203-682-8200, for Deb Shops, Inc. Web site: http://www.debshops.com/

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DEBS Deb Shops (MM)