Gordmans Stores, Inc. Announces Second Quarter 2013 Results and Special Cash Dividend

Gordmans Stores, Inc. Announces Second Quarter 2013 Results and Special Cash 
Dividend 
Second Quarter Net Sales Increased 6.7%; Second Quarter Diluted EPS
of $0.05; Special Cash Dividend of $3.60 per Share Declared 
OMAHA, NE -- (Marketwired) -- 08/28/13 --  Gordmans Stores, Inc.
(NASDAQ: GMAN), an Omaha-based apparel and home decor retailer, today
announced results for its second quarter (thirteen weeks) and six
month period (twenty-six weeks) ended August 3, 2013. The Company
also announced that its Board of Directors has declared a special
cash dividend of $3.60 per share. 
Second Quarter Highlights 


 
--  Net sales increased 6.7% to $136.8 million compared to $128.2 million
    in the second quarter of fiscal 2012.
--  Comparable store sales decreased 2.6%.
--  Four new stores were opened in four new markets, including one new
    state.
--  Diluted earnings per share were $0.05, which exceeded guidance of
    $0.01 - $0.03.

  
Six Month Highlights 


 
--  Net sales increased 2.3% to $268.2 million compared to $262.2 million
    in the six months ended July 28, 2012.
--  Seven new stores were opened in four new and two existing markets,
    including one new state.
--  Diluted earnings per share were $0.22.

  
"We delivered comparable store sales that were consistent with
expectations despite some continued headwinds and represented a
meaningful improvement from the trend we experienced in the first
quarter of 2013. At the same time, our bottom line results were ahead
of our guidance even as we had to increase our markdown cadence to
clear seasonal product and better align inventory levels heading into
the second half of the year," commented Jeff Gordman, President and
Chief Executive Officer. "We believe that the adjustments we've made,
and continue to make, to our merchandise assortments, combined with
the rollout of our loyalty program, have positioned us to deliver
further improvements over the remainder of fiscal 2013. In addition,
we will open three stores next month for a total of 10 new stores
this year, at which point we will have 93 locations in 19 states." 
The Company's Board of Directors has declared a special cash dividend
of $3.60 per share of common stock, payable on September 23, 2013 to
shareho
lders of record on September 9, 2013. The Company will fund
the $70 million special dividend through available cash balances and
a new $45 million senior term loan with Cerberus Business Finance,
LLC. The loan matures in 2018 and bears interest at Prime plus 5.25%
with a Prime floor of 3.25%, or LIBOR plus 7.00% with a LIBOR floor
of 1.50%, as selected by the Company. The term loan also contains an
early payment provision, exercisable at the Company's option,
pursuant to which the Company may repay all or a portion of the
outstanding principal amount, subject to a small prepayment penalty. 
In addition, the Company entered into an amended credit facility with
Wells Fargo Bank, as lead agent, which increased the line of credit
to $80 million from $60 million, lowered the interest rate by 0.25%,
lowered the unused line fee from 0.375% to 0.25% and extended the
maturity date by 3 years to 2018. The credit facility will carry an
interest rate of Prime plus 0.50% to 1.50% or LIBOR plus 1.25% to
2.50% on drawn proceeds, as selected by the Company, based on the
excess availability and time of year. As of August 23, 2013, the
Company had no outstanding borrowings under the credit facility. 
Mr. Gordman commented, "Today's announcement of a special cash
dividend underscores Gordmans' commitment to maximize shareholder
value. Our strong balance sheet, strong projected future cash flows,
and finally, a favorable lending environment, enable us to issue this
special dividend without impairing our ability to continue to execute
our growth plans." 
Second Quarter Financial Results
 Net sales for the thirteen weeks
ended August 3, 2013 increased 6.7% to $136.8 million from $128.2
million for the thirteen weeks ended July 28, 2012. Comparable store
sales for the second quarter of fiscal 2013 decreased by 2.6% versus
a 0.1% comparable store sales increase in the second quarter of
fiscal 2012. Gross profit, which includes license fees, increased by
0.9% to $59.2 million, or 43.3% of net sales, from $58.7 million, or
45.8% of net sales, in the second quarter of fiscal 2012. Selling,
general and administrative costs were $57.6 million, or 42.1% of net
sales, compared to $52.9 million, or 41.3% of net sales, in the
second quarter of fiscal 2012. Net income for the second quarter of
fiscal 2013 was $0.9 million, or $0.05 per diluted share, compared to
net income of $3.5 million, or $0.18 per diluted share, in the second
quarter of fiscal 2012.  
Six Month Financial Results
 Net sales for the twenty-six weeks ended
August 3, 2013 increased 2.3% to $268.2 million from $262.2 million
for the same period last year. Comparable store sales for the six
month period ended August 3, 2013 decreased by 6.7% versus a 2.5%
comparable store sales increase for the same period last year. Gross
profit, which includes license fees, decreased by 3.3% to $118.2
million, or 44.1% of net sales, from $122.2 million, or 46.6% of net
sales, in the prior year. Selling, general and administrative costs
were $111.3 million, or 41.5% of net sales, compared to $103.4
million, or 39.4% of net sales, in the prior year. Net income for the
twenty-six weeks ended August 3, 2013 was $4.2 million, or $0.22 per
diluted share, compared to net income of $11.6 million, or $0.60 per
diluted share, in the first twenty-six weeks of fiscal
2012. 
Outlook
 For the third quarter of fiscal year 2013 ending
October 2, 2013, the Company currently expects net sales to be
between $149 and $151 million, which reflects a low single digit
comparable store sales decrease. The Company expects that the
pressure on gross profit margins the Company experienced in the first
two quarters of the year will abate in the third quarter, but that
additional selling, general and administrative expenses related to
depreciation and pre-opening in particular compared to the prior year
will result in some deleveraging. In addition, the Company will incur
additional interest expense associated with the term loan utilized to
fund the dividend payment, which will result in a reduction in
earnings per share of $0.02. Therefore, the Company projects diluted
earnings per share in the range of $0.12 to $0.14 (using a weighted
average diluted share count of approximately 19.4 million). 
Conference Call Information
 A conference call to discuss second
quarter financial results is scheduled for today, August 28, 2013 at
11:00 a.m. Eastern Time. The conference call will be webcast live at
http://investor.gordmans.com/events.cfm. A replay of this call will
be available within two hours of the conclusion of the call and will
remain on the website for one year.  
About Gordmans Stores, Inc. 
 Gordmans (NASDAQ: GMAN) features a
large selection of the latest name brands, fashions and styles at up
to 60 percent off department and specialty store prices every day.
The wide range of merchandise includes apparel for all ages,
accessories, footwear, home decor, gifts, designer fragrances,
fashion jewelry, bedding and bath, accent furniture and toys. Founded
in 1915, Gordmans operates 90 stores in 19 states. For more
information about Gordmans, visit www.gordmans.com.  
Safe Harbor Statement
 Certain statements in this release are
"forward-looking statements" made pursuant to the safe harbo
r
provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "guidance," "expects," "intends," "projects," "plans,"
"believes," "estimates," "targets," "anticipates," and similar
expressions are used to identify these forward-looking statements.
Examples of forward-looking statements include, but are not limited
to, statements regarding expected net sales, net income, comparable
store sales, diluted earnings per share, and store expansion, as well
as any other statement that does not directly relate to any
historical or current fact. Forward-looking statements are based on
our current expectations and assumptions, which may not prove to be
accurate. These statements are not guarantees and are subject to
risks, uncertainties and changes in circumstances that are difficult
to predict. Many factors could cause actual results to differ
materially and adversely from these forward-looking statements. Among
these factors are (1) changes in consumer spending and general
economic conditions; (2) our ability to identify and respond to new
and changing fashion trends, guest preferences and other related
factors; (3) fluctuations in our sales and profitability on a
seasonal basis; (4) intense competition from other retailers; (5) our
ability to maintain or improve levels of comparable store sales; and
(6) our successful implementation of advertising, marketing and
promotional strategies. 
Additional information concerning these and other factors can be
found in our filings with the Securities and Exchange Commission,
including other risks, relevant factors and uncertainties identified
in the "Risk Factors" section of the Company's Annual Report on Form
10-K for the fiscal year ended February 2, 2013, Quarterly Reports on
Form 10-Q, and Current Reports on Form 8-K. Any forward-looking
statement speaks only as of the date on which it is made, and we
undertake no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law. 


 
                   GORDMANS STORES, INC. AND SUBSIDIARIES                   
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                           (Dollars in Thousands)                           
                                                                            
                                                   August 3,    February 2, 
                                                      2013          2013    
                                                 ------------- -------------
ASSETS                                            (Unaudited)   (Unaudited) 
CURRENT ASSETS:                                                             
  Cash and cash equivalents                      $      43,592 $      40,824
  Accounts receivable                                    1,996         2,049
  Landlord receivable                                    5,174         8,787
  Income taxes receivable                                5,684         1,300
  Merchandise inventories                              100,050        78,006
  Deferred income taxes                                  2,603         2,617
  Prepaid expenses and other current assets              9,178         6,552
                                                 ------------- -------------
    Total current assets                               168,277       140,135
PROPERTY AND EQUIPMENT, net                             65,963        45,966
INTANGIBLE ASSETS, net                                   1,948         1,992
OTHER ASSETS, net                                        3,298         3,033
                                                 ------------- -------------
                                                                            
TOTAL ASSETS                                     $     239,486 $     191,126
                                                 ============= =============
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Accounts payable                               $      64,202 $      34,211
  Accrued expenses                                      27,435        22,789
  Current portion of capital lease obligations               -           189
                                                 ------------- -------------
                                                                            
    Total current liabilities                           91,637        57,189
                                                 ------------- -------------
                                                                            
NONCURRENT LIABILITIES:                                                     
  Deferred rent                                         30,617        21,997
  Deferred income taxes                                  9,503         9,236
  Other liabilities                                        337           316
                                                 ------------- -------------
                                                                            
    Total noncurrent liabilities                        40,457        31,549
                                                 ------------- -------------
                                                                            
COMMITMENTS AND CONTINGENCIES                                               
                                                                            
STOCKHOLDERS' EQUITY:                                                       
  Preferred stock                                            -             -
  Common stock                                              19            19
  Additional paid-in capital                            53,283        52,461
  Retained earnings                                     54,090        49,908
                                                 ------------- -------------
                                                                            
    Total stockholders' equity                         107,392       102,388
                                                 ------------- -------------
                                                                            
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $     239,486 $     191,126
                                                 ============= =============
                                                                            
                                                                            
                                                                            
                   GORDMANS STORES, INC. AND SUBSIDIARIES                   
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                  (Dollars in Thousands Except Share Data)                  
                                                                            
                       13 Weeks      13 Weeks      26 Weeks      26 Weeks   
                         Ended         Ended         Ended         Ended    
                       August 3,      July 28,     August 3,     July 28,   
                         2013          2012          2013          2012     
                      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                     ------------  ------------  ------------  ------------ 
Net sales            $    136,769  $    128,238  $    268,203  $    262,160 
License fees from                                                           
 leased departments         1,768         1,620         3,689         3,557 
Cost of sales             (79,317)      (71,165)     (153,681)     (143,533)
                     ------------  ------------  ------------  ------------ 
  Gross profit             59,220        58,693       118,211       122,184 
Selling, general and                                                        
 administrative                                                             
 expenses                 (57,600)      (52,898)     (111,273)     (103,384)
                     ------------  
------------  ------------  ------------ 
  Income from                                                               
   operations               1,620         5,795         6,938        18,800 
Interest expense, net        (117)         (123)         (238)         (248)
                     ------------  ------------  ------------  ------------ 
  Income before taxes       1,503         5,672         6,700        18,552 
Income tax expense           (569)       (2,127)       (2,518)       (6,957)
                     ------------  ------------  ------------  ------------ 
  Net income         $        934  $      3,545  $      4,182  $     11,595 
                     ============  ============  ============  ============ 
                                                                            
Basic earnings per                                                          
 share               $       0.05  $       0.19  $       0.22  $       0.61 
Diluted earnings per                                                        
 share               $       0.05  $       0.18  $       0.22  $       0.60 
                                                                            
Basic weighted                                                              
 average shares                                                             
 outstanding           19,256,495    19,136,076    19,249,642    19,115,650 
Diluted weighted                                                            
 average shares                                                             
 outstanding           19,356,867    19,470,133    19,339,099    19,443,441 

  
Company Contact: 
Mike James 
Chief Financial Officer 
(402) 691-4126 
Investor Relations: 
ICR, Inc.
Brendon Frey
(203) 682-8200 
 
 
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