EX-99.1 2 c05465exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1

 
(WILSONS LEATHER BLK LOGO)
Contacts:
Stacy A. Kruse
Chief Financial Officer and Treasurer
Wilsons The Leather Experts Inc.
(763) 391-4000
For Immediate Release
Wilsons The Leather Experts Inc. Announces
First Quarter 2006 Operating Results
     MINNEAPOLIS — (BUSINESS WIRE) — May 16, 2006 — Wilsons The Leather Experts Inc. (NASDAQ: WLSN) today announced results for the quarter ended April 29, 2006. Net sales decreased 11.4% to $74.7 million compared to $84.3 million for the same period last year.
     Comparable store sales for the first quarter ended April 29, 2006 decreased 10.8% compared to an increase of 15.8% in the same period last year.
     Wilsons Leather reported a net loss for the 2006 first quarter of $6.5 million, or $0.17 per basic and diluted share. This compares to a net loss for the 2005 first quarter of $3.8 million, or $0.10 per basic and diluted share.
     Michael Searles, Chairman and Chief Executive Officer, commented, “Our results for the quarter are reflective of a store base that is in a state of transition. We fully expected that the multi-year, multi-format strategy that we have committed ourselves to would be accompanied with growing pains. Sales in the first quarter have reflected this, but we are not taken by surprise, nor are we disheartened. We remain committed to the initiatives we are undertaking and believe that they will move Wilsons Leather into a much stronger position as a company and brand. The process of planning and executing new strategies is slow, but they are beginning to take shape. We are excited about the future of Wilsons Leather.”
About Wilsons Leather
Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel in the United States. As of April 29, 2006, Wilsons Leather operated 421 stores located in 45 states, including 297 mall stores, 110 outlet stores and 14 airport stores.
Except for historical information, matters discussed in this press release are forward-looking statements that involve risks and uncertainties, and actual results may be materially different. Such statements are based on information available to management as of the time of such statements and include statements related to future comparable store sales results, business strategies, changes to merchandise mix and future sales results. Factors that could cause actual results to


7401 Boone Avenue North Brooklyn Park, Minnesota 55428
763.391.4000 phone, 763.391.4906 fax, www.wilsonsleather.com

 

 

 
(WILSONS LEATHER LOGO)
differ include: changes in customer shopping patterns; competition in our markets; uncertainty in general economic conditions, including rising energy prices; risks associated with our strategic initiatives, including development of our new store concept and wholesale business; continued declines in comparable store sales; unseasonably warm weather; our inability to effectively respond to changes in fashion trends and consumer demands; our inability to grow the business as planned; decreased availability and increased cost of leather; risks associated with foreign sourcing and international business; seasonality of our business; our inability to renew existing license agreements and/or enter into new licensing agreements; the public sale into the market of common stock issued pursuant to options granted under our employee benefit plans or shares issued in our 2004 equity financing or issuable upon exercise of warrants delivered in connection with our equity financing; risks associated with our debt service; risks associated with estimates made by management based on our critical accounting policies; changes to financial accounting standards that may affect our results of operations; loss of key members of our senior management team; concentration of our common stock; volatility of the market price of our common stock; failure of results of operations to meet expectations of research analysts; reliance on third parties for upgrading and maintaining our management information systems; war, acts of terrorism or the threat of either; and interruption in the operation of our corporate offices and distribution center. The information included in this press release is operative as of this date only. Wilsons Leather does not undertake any obligation to update its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. In order to ensure that all investors continue to have equal access to the same information, Wilsons Leather will refrain from updating forward-looking statements made in this press release unless it does so through means designed to provide broad distribution of the information to the public.
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WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                         
    April 29,     January 28,     April 30,  
    2006     2006(1)     2005  
    (Unaudited)             (Unaudited)  
ASSETS
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 49,479     $ 45,552     $ 43,006  
Accounts receivable, net
     2,766       4,063       3,480  
Inventories
     69,552       85,645       69,620  
Prepaid expenses and other current assets
     5,082       1,987       6,396  
 
                  
TOTAL CURRENT ASSETS
     126,879       137,247       122,502  
 
                        
Property and equipment, net
     41,046       41,045       43,005  
Other assets, net
     1,419       1,576       2,048  
 
                  
TOTAL ASSETS
   $ 169,344     $ 179,868     $ 167,555  
 
                  
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accounts payable
   $ 10,889     $ 12,036     $ 10,843  
Accrued expenses
     15,856       16,595       17,287  
Income taxes payable
     2,810       5,685       4,294  
Deferred income taxes
     53       53       5,585  
 
                  
TOTAL CURRENT LIABILITIES
     29,608       34,369       38,009  
 
                        
Long-term debt
     20,000       20,000       20,000  
Other long-term liabilities
     17,505       17,445       17,860  
Total shareholders’ equity
     102,231       108,054       91,686  
 
                  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 169,344     $ 179,868     $ 167,555  
 
                  
 
1.   Derived from audited consolidated financial statements.
Note: The Company’s inventories are determined by the retail method on the last-in, first-out (“LIFO”) basis. The difference in inventories between the LIFO method and the first-in, first-out method was not material as of April 29, 2006, January 28, 2006 or April 30, 2005.

 

 

WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                 
    For the three months ended  
    April 29,     April 30,  
    2006     2005  
 
                
NET SALES
   $ 74,680     $ 84,329  
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
     54,950       58,944  
 
            
Gross margin
     19,730       25,385  
 
                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     25,580       24,804  
DEPRECIATION AND AMORTIZATION
     3,172       3,711  
 
            
Operating loss
     (9,022 )     (3,130 )
INTEREST EXPENSE, net
     242       663  
 
            
Loss before income taxes
     (9,264 )     (3,793 )
INCOME TAX BENEFIT
     (2,764 )     —  
 
            
Net loss
   $ (6,500 )   $ (3,793 )
 
            
 
                
BASIC AND DILUTED LOSS PER SHARE:
                
Basic and diluted loss per share
   $ (0.17 )   $ (0.10 )
 
            
 
                
Weighted average shares outstanding — basic and diluted
     39,105       38,901