Claires Stores Inc · 10-Q · For 10/28/00 · EX-99.1

Filed On 12/12/00 11:17am ET   ·   SEC File 1-08899   ·   Accession Number 34115-0-8

Quarterly Report   ·   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      10     33K 
 2: EX-99.1     Miscellaneous Exhibit                                  4     18K 
 3: EX-27       Financial Data Schedule                                1      4K 

EX-99.1   ·   Miscellaneous Exhibit

EX-99.1
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 CLAIRE'S STORES THIRD QUARTER SALES UP 35%;
EBITDA PER SHARE UP 43%;
EARNINGS PER SHARE UP 12%;

     PEMBROKE  PINES,  Florida,  November  16,  2000  -  Claire's  Stores,  Inc.
(NYSE:CLE)  today  announced  sales  and  earnings  for  the third quarter ended
October  28,  2000.  Diluted  earnings  per  share  from  continuing  operations
increased  12  percent  to  $0.28,  compared to $0.25 for the same period in the
prior  year.                                                                    

     Third  quarter  net  sales  increased  35%  to  $247,536,000  compared with
$182,750,000  for the third quarter of fiscal 2000.  The Company's third quarter
comparable  store  sales  increased  6% on a consolidated basis.  EBITDA for the
third  quarter  increased 43% to $0.70 per diluted share compared with $0.49 per
diluted  share  in  the  prior  year.                                           

     Net  sales for the first nine months of fiscal 2001 increased 36 percent to
$731,518,000  from  $539,503,000  for the same period last year.  Net income for
the  first  nine  months  of  fiscal 2001 decreased 25 percent to $34,950,000 or
$0.69  per  diluted  share, compared with $46,846,000 or $0.91 per diluted share
for  the first nine months of fiscal 2000.  Comparable store sales were flat for
the  first  nine  months.                                                       

     Rowland Schaefer, Claire's Chairman and Chief Executive Officer, said, "The
first  half  of the year was difficult for us as we integrated the Afterthoughts
stores  with  Claire's.  We  are pleased that we returned to positive same store
sales  comparisons  in  the  third quarter and we feel we are well positioned to
capitalize  on  the holiday selling season.  Our merchandise margins were better
than  planned  due  to  increased buying power from our Claire's Accessories and
Afterthoughts  divisions.  We  were also able to leverage our operating expenses
and  reported a 120 basis point improvement in SG&A as a percentage of sales for
the  third  quarter.                                                            

     As  discussed in our first quarter conference call, we made the decision to
close 300 stores over the next two years, 100 Claire's and 200 Afterthoughts, in
malls  which  cannot  support  multiple  stores.  This will help us achieve even
greater  profitability  in  the  stores that remain open, as the majority of the
proposed  store  closings  were  non-performing.  To  date  46  Claire's and 113
Afterthoughts  stores  were  closed  while  an  additional  27  Claire's  and 51
Afterthought  stores  will  be  closed  in  the fourth quarter.  We are happy to
report  that  in the last couple of months, we have seen a 31% increase in sales
in  the  stores  remaining  open  in  those  malls."  Mr.  Schaefer  added.     

Mr. Schaefer continued: "Our inventories at the end of October were on plan.  We
would  like  to  point out that our inventory is in line with our square footage
and  same  store  sales  growth over last year and we are comfortable with these
levels.  The transition from Halloween to holiday has already been completed and
we  are  optimistic  for  the  fourth  quarter."                                

"I  would  like  to  update  you  on  the president's position at Claire's North
America.  After  the  departure  of  Marty Nealon, we began to re-examine how we
function  as  an  organization  by speaking with our department heads in Hoffman
Estates.  In  the  past we had tried to overlay a corporate hierarchy on what is
essentially  an  entrepreneurial  entity.  We  have  decided to work with a flat
organizational  structure  which  is  how we have been operating for years.  Our
department  heads,  many of whom have been doing their jobs at Claire's for more
than  10  years,  communicate  directly  with each other and with me. We will be
cleaner  and more efficient.  We will monitor this new structure and adapt it if
needed."                                                                        

Store  count  at  the  end  of the third quarter for fiscal 2001 was as follows:

Claire's  North  America                                       1,644            
Claire's  U.K.                                                   330            
Claire's  Japan                                                   96            
Claire's  Bijoux  One  (Austria,  Switzerland  &  Germany)        69            
Claire's  Cleopatre  (France)                                     42            
Afterthoughts                                                    742            
Mr.  Rags                                                        154            
Velvet  Pixies                                                     3            

Total                                                          3,080            

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     Pursuant  to  the $50 million stock repurchase program authorized on May 3,
2000  by  the  Company's Board of Directors, the Company has purchased 2,466,200
shares of the Company's common stock at an average price of approximately $19.44
per  share  as  of  November  15,  2000.                                        

     The  Company  will  host  a conference call for the third quarter of fiscal
2001  today  at  10:00  a.m.  (EST).  The call in number is 888-809-8969 and the
password is "Claires."  A replay will be available through Friday November 24th.
The  replay  number  is  888-568-0743  and  the  password  is  25247.           

BUSINESS  OUTLOOK                                                               

The following statements are based on current expectations. These statements are
forward-looking,  and  actual  results  may  differ  materially.                

** The company expects revenue for the fourth quarter of fiscal 2001 to increase
17  percent  to  approximately $360 million from revenue of $307 million for the
fourth quarter last year.  Same store sales increases for the fourth quarter are
projected  to  be  4  percent.                                                  

**  The  company  expects  gross  margin as a percentage of sales for the fourth
quarter  to be approximately 54.8 percent of sales, versus 54.3 percent of sales
for the fourth quarter last year.  The increase in gross margin is primarily due
to  increased  buying  power  in  our  Claire's  Accessories  and  Afterthoughts
divisions.                                                                      

**  Selling,  General & Administrative expenses (SG&A) in the fourth quarter are
expected  to  be  approximately 26.7 as a percent of sales, versus 27 percent of
sales  for  the  fourth quarter last year.  The decrease in SG&A as a percent of
sales  is  mainly  due  to  leverage from same store sales and operating expense
synergies  realized  in  the  Claire's  Accessories and Afterthoughts divisions.

**  The company expects depreciation and amortization to be 3.2 percent of sales
compared  with 3.0 percent of sales for the same period last year.  The increase
in  depreciation and amortization is due to a larger store base and the goodwill
associated  with the acquisitions of the Afterthoughts and Cleopatre operations.

**  The  company expects interest expense, net of interest income for the fourth
quarter  of 2001 to be .6 percent of sales compared with .4 percent of sales for
the  fourth  quarter  of  last  year.  Interest  expense, net of interest income
depends  on  interest  rates  and  invested  cash  balances  during the quarter.

**  The  effective  tax rate for the fourth quarter is expected to be 35 percent
compared with 36.5 percent in the fourth quarter last year.  The decrease is due
to  lower  Federal  tax  rates  realized from the company's overseas operations.

** Net income for the fourth quarter is expected to be approximately $57 million
or  15.8  percent of sales compared with $41 million or 13.4 percent of sales in
the  same  period  last  year.                                                  

**  There  were  49,728,000  fully  diluted shares outstanding at the end of the
third  quarter  and  there  should be approximately 49,100,000 at the end of the
fourth  quarter  due  to  the  share  repurchase program.  Management expects to
complete  the  repurchase program of $50 million of stock in the fourth quarter.

The  company  remains comfortable with earnings consensus estimates of $1.16 for
the  fourth  quarter.                                                           

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CLAIRE'S  INITIATES  ITS  BUSINESS  OUTLOOK  PROCEDURE                          

                In  connection  with  the  recent  adoption  of new SEC rules on
corporate disclosure, Claire's is changing its procedures for updating investors
by  initiating  a Business Outlook for forward-looking statements.  This Outlook
will be updated on a quarterly basis in our quarterly Earnings Release. Claire's
will  continue  its  current  practice  of having corporate representatives meet
privately  during the quarter with investors, the media, investment analysts and
others.  At  these  meetings Claire's may reiterate the Outlook published in the
Earnings Release.  At the same time, Claire's will keep its Earnings Release and
Outlook publicly available on its Web site (www.clairestores.com).  Prior to the
start  of the Quiet Period (described below), the public can continue to rely on
the  Outlook  on  the  Web  site as still being Claire's current expectations on
matters  covered,  unless  Claire's  publishes  a  notice  stating  otherwise.  

              Towards the end of each fiscal quarter Claire's will have a "Quiet
Period"  when  it  no  longer  publishes  or  updates the Outlook as its current
expectations.  Claire's  representatives will not comment concerning the Outlook
or  Claire's  financial  results  or  expectations. The Quiet Period will extend
until  the  day  when Claire's next quarterly Earnings Release is published. For
the  fourth  quarter, the Quiet Period will be January 15, 2001 through February
22,  2001.                                                                      

SAFE  HARBOR  STATEMENT  UNDER  THE  PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:  This  release  contains  "forward-looking statements" which represent the
Company's  expectations  or  beliefs  with  respect  to  future  events.  These 
forward-looking  statements  are subject to certain risks and uncertainties that
could  cause  actual  results to differ materially from those anticipated. Those
factors  include,  without  limitation,  changes  in  consumer  preferences  for
pre-teen  and teen apparel and accessories, competition, and economic conditions
in  North  America,  Europe,  United  Kingdom  and  Japan.                      

     Claire's  Stores,  Inc.,  the leading mall-based retailer of popular-priced
pre-teen  and teens accessories, costume jewelry and apparel, currently operates
more  than  3,000  stores under the following trade names: Claire's Accessories,
Afterthoughts,  the  Icing,  Mr.  Rags and Velvet Pixies. The stores are located
throughout  North America, Japan, United Kingdom, Ireland, Switzerland, Austria,
Germany  and  France.                                                           

     Note:  Other  Claire's Stores, Inc. press releases, a corporate profile and
most  recent 10-K and 10-Q reports are available by fax at no charge. For a menu
of  available  material,  call  1-800-CLENYSE  (1-800-253-6973)  or via Claire's
Internet  home  page:  http://www.clairestores.com.                             

Contact:                                                                        
Sonia  Rohan                                                                    
Director  of  Investor  Relations                                               
Phone:  (212)  594-3127                                                         
Fax:      (212)  244-4237                                                       
E-mail:  sonia.rohan@claires.com                                                

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                                                        [Enlarge/Download Table]

CLAIRE'S  STORES,  INC.  AND  SUBSIDIARIES                                                                                   
CONSOLIDATED  STATEMENTS  OF  INCOME                                                                                         
(UNAUDITED)                                                                                                                  

                                              THREE MONTHS ENDED                                 NINE MONTHS ENDED           
                                              ------------------                                -------------------          

                                      OCT. 28, 2000          OCT. 30, 1999         OCT. 28, 2000         OCT. 30, 1999       
                                     --------------         --------------        --------------         -------------       
                                                                                                                             
Net sales                            $247,536,000  100.0%  $182,750,000   100.0%   $731,518,000  100.0%  $539,503,000  100.0%
Cost of sales, occupancy                                                                                                     
  and buying expenses                 127,505,000   51.5%     92,658,000   50.7%    380,951,000   52.1%   269,254,000   49.9%
                                     ------------          -------------           ------------          ------------        

                                      120,031,000   48.5%     90,092,000   49.3%    350,567,000   47.9%   270,249,000   50.1%
                                     ------------          -------------           ------------          ------------        
Expenses:                                                                                                                    
  Selling, general & administrative    84,974,000   34.3%     64,819,000   35.5%    256,685,000   35.1%   185,215,000   34.3%
  Depreciation and amortization        11,079,000    4.5%      6,872,000    3.8%     32,785,000    4.5%    19,595,000    3.6%

  Interest expense (income), net        2,674,000    1.1%     (1,574,000)  -0.9%      7,016,000    1.0%    (4,566,000)  -0.8%
  Gain on investments                           -                      -                      -            (3,929,000)  -0.7%
                                     ------------           ------------           ------------           -----------        

                                       98,727,000   39.9%     70,117,000   38.4%     296,486,000  40.5%   196,315,000   36.4%
                                     ------------           ------------           -------------         ------------        

Income before income taxes             21,304,000    8.6%     19,975,000   10.9%      54,081,000   7.4%    73,934,000   13.7%

Income taxes                            7,460,000    3.0%      7,249,000    4.0%      19,131,000   2.6%    27,088,000    5.0%
                                     ------------           ------------           -------------          -----------        

Net income                           $ 13,844,000    5.6%  $  12,726,000    7.0%    $ 34,950,000   4.8%  $ 46,846,000   8.7% 
                                     ============          =============            ============         ============        

Net income per share:                                                                                                        
    Basic                            $       0.28           $       0.25            $       0.69         $       0.92        
                                     ============           ============            ============         =============       

    Diluted                          $       0.28           $       0.25            $       0.69         $       0.91        
                                     ============           ============            ============         =============       

Weighted avg shares outstanding:                                                                                             
    Basic                              49,594,000             51,043,000              50,342,000            50,943,000       
                                     ============           ============            ============         =============       

    Diluted                            49,728,000             51,271,000              50,524,000            51,341,000       
                                     ============           ============            ============         =============       

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-Q Filing		Date		First		Last			Other Filings
		10/30/99		4					10-Q
		5/3/00		2
For The Period Ended		10/28/00		1		4
		11/15/00		2
		11/16/00		1
Filed On / Filed As Of		12/12/00
		1/15/01		3
		2/22/01		3
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