EX-99.1 2 c13014exv99w1.htm PRESS RELEASE exv99w1
 

     
(WILSONS 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
Fourth Quarter and Full-Year 2006 Operating Results
     MINNEAPOLIS — (BUSINESS WIRE) — March 6, 2007 — Wilsons The Leather Experts Inc. (NASDAQ: WLSN) today announced results for the fourth quarter and full year ended February 3, 2007.
     Net sales for the fourth quarter ended February 3, 2007 decreased 25.7% to $133.0 million compared to $178.9 million for the same period last year. Comparable store sales for the fourth quarter decreased 21.6% compared to a decrease of 10.0% in the same period last year. Wilsons Leather reported net income for the 2006 fourth quarter of $12.0 million, or $0.31 per diluted share. This compares to net income for the 2005 fourth quarter of $41.7 million, or $1.04 per diluted share.
     Net sales for the year ended February 3, 2007 decreased 19.3% to $321.3 million compared to $398.0 million for the same period last year. Comparable store sales for the full year decreased 17.2% compared to a decrease of 2.9% for the same period last year. The net loss for the year was $33.1 million, or $0.85 per basic and diluted share. This compares to net income of $12.2 million, or $0.30 per diluted share, last year.
     Michael Searles, Chairman and Chief Executive Officer, commented, “During the 2006 fiscal year, we embarked on a strategy that we believed, in time, would lead to improved top-line performance. We are disappointed that the fourth quarter did not yield the results we had anticipated from a sales perspective. We missed the mark on improving the top line, and as a result have taken a significant step back from a merchandise margin, bottom line and working capital perspective.”
     Searles continued, “We anticipated that we would experience growing pains as we migrate to new consumers, store designs and strategies. We expected that the results of our initiatives would not be realized in one year but rather as part of a multi-year, multi-format strategy. However, we also anticipated that we would see some evidence that our strategies were beginning to take hold during the fourth quarter of 2006. We considered any improvement over our 2005 fourth quarter comparable store sales decrease of 10.0% to be some evidence that our strategies were beginning to take hold. A comparable store sales decrease of 21.6% during the fourth quarter has clearly shown us
Wilsons Leather
7401 Boone Avenue North
Brooklyn Park, Minnesota 55428
763.391.4000
www.wilsonsleather.com

 

 

     
(WILSONS LOGO)                     that the strategic course we have embarked upon needs refinement. While the average dollars spent per transaction
is encouraging, the number of transactions is clearly unacceptable. As we build our Wilsons Leather brand, we
have made a strategic decision to dedicate a portion of our inventory starting this fall to recognizable outerwear
brands to increase the willingness of our customers to cross the lease line.”
     Searles concluded, “During the fourth quarter, we renegotiated our senior credit facility. Our new facility provides greater flexibility and extends our Term B loan to June of 2010. We have begun looking at various financing strategies that will provide additional working capital and funds for capital expenditures.”
About Wilsons Leather
     Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel in the United States. As of February 3, 2007, Wilsons Leather operated 417 stores located in 45 states, including 287 mall stores, 116 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, future sales results and access to working capital. Factors that could cause actual results to differ include: risks associated with our strategic initiatives, including development of our wholesale business and our new branding strategies; continued declines in comparable store sales; changes in customer shopping patterns; competition in our markets; uncertainty in general economic conditions, including rising energy prices; 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 Leather
7401 Boone Avenue North
Brooklyn Park, Minnesota 55428
763.391.4000
www.wilsonsleather.com

 

 

WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    February 3,     January 28,  
ASSETS   2007     2006(1)  
    (Unaudited)          
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 19,909     $ 45,552  
Accounts receivable, net
     3,132       4,063  
Inventories
     74,897       85,645  
Prepaid expenses
     7,267       1,987  
 
            
TOTAL CURRENT ASSETS
     105,205       137,247  
 
                
Property and equipment, net
     38,890       41,045  
Other assets, net
     1,250       1,576  
 
            
TOTAL ASSETS
   $ 145,345     $ 179,868  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
                
Accounts payable
   $ 14,337     $ 12,036  
Accrued expenses
     14,534       16,595  
Income taxes payable
     921       5,685  
Deferred income taxes
     220       53  
 
            
TOTAL CURRENT LIABILITIES
     30,012       34,369  
 
                
Long-term debt
     20,000       20,000  
Other long-term liabilities
     16,832       17,445  
Total shareholders’ equity
     78,501       108,054  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 145,345     $ 179,868  
 
            
 
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 February 3, 2007 or January 28, 2006.

 

 

WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                 
    For the three months ended  
    February 3,     January 28,  
    2007     2006  
NET SALES
   $ 132,967     $ 178,851  
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
     82,985       98,589  
 
            
Gross margin
     49,982       80,262  
 
                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     33,933       36,279  
DEPRECIATION AND AMORTIZATION
     3,182       3,506  
 
            
Operating income
     12,867       40,477  
INTEREST EXPENSE, net
     719       861  
 
            
Income before income taxes
     12,148       39,616  
INCOME TAX PROVISION (BENEFIT)
     184       (2,098 )
 
            
Net income
   $ 11,964     $ 41,714  
 
            
 
                
BASIC INCOME PER SHARE:
                
Basic income per share
   $ 0.31     $ 1.07  
 
            
Basic weighted average shares outstanding
     39,190       39,057  
 
            
 
                
DILUTED INCOME PER SHARE:
                
Diluted income per share
   $ 0.31     $ 1.04  
 
            
Diluted weighted average shares outstanding
     39,190       39,951  
 
            

 

 

WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                 
    For the year ended  
    February 3,     January 28,  
    2007     2006  
    (Unaudited)          
NET SALES
   $ 321,262     $ 397,986  
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
     234,251       258,754  
 
            
Gross margin
     87,011       139,232  
 
                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     110,159       112,877  
DEPRECIATION AND AMORTIZATION
     12,462       14,073  
 
            
Operating income (loss)
     (35,610 )     12,282  
INTEREST EXPENSE, net
     1,862       3,156  
 
            
Income (loss) before income taxes
     (37,472 )     9,126  
INCOME TAX BENEFIT
     (4,377 )     (3,086 )
 
            
Net income (loss)
   $ (33,095 )   $ 12,212  
 
            
 
                
BASIC INCOME (LOSS) PER SHARE:
                
Basic income (loss) per share
   $ (0.85 )   $ 0.31  
 
            
Basic weighted average shares outstanding
     39,154       38,994  
 
            
 
                
DILUTED INCOME (LOSS) PER SHARE:
                
Diluted income (loss) per share
   $ (0.85 )   $ 0.30  
 
            
Diluted weighted average shares outstanding
     39,154       40,767