Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

CHARLOTTE RUSSE HOLDING REPORTS FISCAL 2009 THIRD QUARTER AND

NINE MONTH FINANCIAL RESULTS

Achieves Third Quarter 2009 Non-GAAP Earnings Per Diluted Share of $0.33

SAN DIEGO, July 21, 2009 - Charlotte Russe Holding, Inc. (Nasdaq: CHIC) today announced financial results for the third quarter and nine months ended June 27, 2009.

Third quarter fiscal 2009 net sales increased 4.9% to $202.7 million, compared to $193.2 million in the third quarter of fiscal 2008. Comparable store sales for the period decreased 3.6%. Net income for the 2009 third quarter was $6.3 million, or $0.29 per diluted share compared to $6.6 million, or $0.31 per diluted share, for the same period in 2008. In the third quarter of fiscal 2009, the Company recorded cash charges of $1.3 million related to expenses for proxy solicitation, management transition and severance, as well as costs related to the review of strategic alternatives and subsequent sale process. Third quarter 2009 diluted earnings per share, excluding the aforementioned expenses, were $0.33. The Company opened seven new stores and closed two locations during the period.

Net sales for the nine month period ended June 27, 2009 increased 2.9% to $634.6 million compared to $616.5 million in the same period of fiscal 2008. Comparable store sales for the period decreased 7.1%. Net income for the first nine months of fiscal 2009 was $2.5 million, or $0.12 per diluted share, compared to $24.8 million, or $1.04 per diluted share, for the same period in fiscal 2008. In the first nine months of fiscal 2009, the Company recorded cash charges of $5.0 million related to expenses for proxy solicitation, management transition and severance, as well as costs associated with the review of strategic alternatives and subsequent sale process. The Company also recorded a non-cash charge of $1.6 million for store impairment. Diluted earnings per share, excluding the aforementioned expenses, were $0.29.

At June 27, 2009, the Company had $60.0 million in cash and no long-term debt. Cash flow from operations in the first nine months of fiscal 2009 totaled $31.6 million.


	Third Quarter Ended				Nine Months Ended
(in thousands, except per share data)	June 27, 2009		June 28, 2008		June 27, 2009		June 28, 2008
Net sales	$	202,711	$	193,233	$	634,617	$	616,528
GAAP net income	$	6,255	$	6,577	$	2,524	$	24,811
GAAP net income per share:
Basic	$	0.30	$	0.31	$	0.12	$	1.05
Diluted	$	0.29	$	0.31	$	0.12	$	1.04

Non-GAAP net income (1)	$	6,974	$	6,577	$	6,098	$	25,341
Non-GAAP net income per share:
Basic	$	0.33	$	0.31	$	0.29	$	1.07
Diluted	$	0.33	$	0.31	$	0.29	$	1.07

(1)	Please refer to the financial statements portion of this press release for an explanation of the non-GAAP financial measures contained in the table above and a reconciliation of such measures to the comparable GAAP financial measures.

John D. Goodman, Chief Executive Officer, stated, “During the third quarter, we continued to make progress with our strategic and operational initiatives, which resulted in reduced markdown levels and improved gross profits versus a year ago. The strength of gross margin, combined with prudent cost controls, enabled us to deliver higher than anticipated non-GAAP diluted earnings per share of $0.33.

“Although the environment remains extremely challenging, we believe there is a tremendous opportunity for Charlotte Russe to improve its leadership position in the fast fashion category. Importantly, we’re engaging the customer with trend right merchandise and providing her with a compelling shopping environment, both in-store and online. We’re excited about our back-to-school product assortments, which began arriving in stores earlier this month. The new collections communicate a distinct Charlotte Russe point of view, which is supported by elevated fashion imagery in stores and on our web site, as well as extensive editorial coverage in leading fashion publications.”

Goodman concluded, “We’re continuing to manage the business conservatively by controlling inventories, conserving costs and prudently investing in the resources, talent and systems necessary to help take the Charlotte Russe brand to the next level. At quarter-end, the Company had $60 million in cash and no long-term debt, affording us the financial flexibility to execute our growth plans despite the ongoing challenges presented by the macro environment.”

Outlook

For the fourth quarter of fiscal 2009, the Company expects comparable store sales to be in the negative low- to mid-single digits. Non-GAAP diluted earnings per share are expected to be in the range of $0.18 to $0.26, exclusive of anticipated charges related to management transition and severance, as well as the review of strategic alternatives and subsequent sale process. This compares to non-GAAP diluted earnings per share of $0.01 in the prior year period.

Conference Call Information

A conference call to discuss 2009 third quarter results is scheduled for today, Tuesday, July 21, 2009, at 1:30 p.m. Pacific Time (4:30 Eastern Time). The call will be hosted by John D. Goodman, Chief Executive Officer, Emilia Fabricant, President and Chief Merchandising Officer, and Frederick G. Silny, Chief Financial Officer. To access the call, please dial (888) 841-5034 approximately ten minutes prior to the start of the call. The conference call will also be webcast live and archived at www.charlotterusse.com. A telephone replay of this call will be available until July 28, 2009, and can be accessed by dialing (800) 642-1687 and entering code 11671210.

About Charlotte Russe

Charlotte Russe Holding, Inc. is a mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women in their teens and twenties. As of June 27, 2009, the Company operated 501 stores in 45 states and Puerto Rico. For more information about the Company, please visit http://www.charlotterusse.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Except for the historical information contained herein, this press release contains forward-looking statements. Such statements include, but are not limited to, projections of the Company’s fourth quarter financial results, as well as the impact of the Company’s business strategies, including future growth, inventory and cost control, customer penetration and value creation. Such forward-looking statements are

subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks that the Company will not achieve anticipated financial results or comparable store sales increases, the Company will not be able to execute its new strategic plan as intended, the Company will not open new Charlotte Russe stores or remodel existing stores in the numbers or on the schedule anticipated, general and regional economic conditions, industry trends, consumer demands and preferences, competition from other retailers and uncertainties generally associated with women’s apparel and accessory retailing. A complete description of these factors, as well as others that could affect the Company’s business, is set forth in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission.

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED STATEMENTS OF INCOME

(amounts in 000’s, except per share data)

(unaudited)


	Third Quarter Ended				Nine Months Ended
	June 27, 2009		June 28, 2008		June 27, 2009		June 28, 2008
Net Sales	$	202,711	$	193,233	$	634,617	$	616,528
Cost of goods sold		146,755		141,599		483,285		451,310

Gross profit		55,956		51,634		151,332		165,218

Selling, general & administrative expenses		45,080		41,273		146,960		128,253

Operating income		10,876		10,361		4,372		36,965

Interest income, net		22		298		261		2,311


Income before income taxes		10,898		10,659		4,633		39,276

Income tax expense		4,643		4,082		2,109		14,465


Net income	$	6,255	$	6,577	$	2,524	$	24,811


Income per share - basic:
Income per basic share	$	0.30	$	0.31	$	0.12	$	1.05


Income per share - diluted:
Income per diluted share	$	0.29	$	0.31	$	0.12	$	1.04


Basic weighted average shares outstanding		20,936		20,990		20,917		23,610

Diluted weighted average shares outstanding		21,296		21,168		21,136		23,772

CHARLOTTE RUSSE HOLDING, INC.

RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF INCOME

(amounts in 000’s, except per share data)

(unaudited)


	Third Quarter Ended
	June 27, 2009							June 28, 2008
	As Reported (GAAP)		Adjustments (1) (2)			Adjusted (non-GAAP) (1) (2)		As Reported (GAAP)
Net Sales	$	202,711	$	—		$	202,711	$	193,233
Cost of goods sold		146,755		74			146,829		141,599

Gross profit		55,956		(74	)		55,882		51,634

Selling, general & administrative expenses		45,080		(1,326	)		43,754		41,273

Operating income		10,876		1,252			12,128		10,361

Interest income, net		22		—			22		298


Income before income taxes		10,898		1,252			12,150		10,659

Income tax expense		4,643		533			5,176		4,082


Net income	$	6,255	$	719		$	6,974	$	6,577


Income per share - basic:
Income per basic share	$	0.30				$	0.33	$	0.31


Income per share - diluted:
Income per diluted share	$	0.29				$	0.33	$	0.31


Basic weighted average shares outstanding		20,936					20,936		20,990

Diluted weighted average shares outstanding		21,296					21,296		21,168

(1)

In the third quarter of fiscal 2009, the Company recorded cash charges of $1.3 million related to expenses for proxy solicitation, management transition and severance, as well as costs associated with the review of strategic alternatives and subsequent sale process. An adjustment has also been reflected for the related tax impact.

(2)

This earnings release contains non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company believes presenting its 2009 results excluding expenses for proxy solicitation, management transition and severance, as well as costs associated with the review of strategic alternatives and subsequent sale process, and a non-cash charge for store impairment, which is on a non-GAAP basis, provides useful additional information to investors. The Company believes that the exclusion of such amounts facilitates the comparability of the Company’s results from period to period and provides a basis for comparing current results against future results by eliminating amounts that it believes are not comparable between periods. The Company will use its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, the Company’s Board of Directors and others. These non-GAAP measures should be considered in addition to, not as a substitute for, measures of financial performance prepared in accordance with GAAP.

CHARLOTTE RUSSE HOLDING, INC.

RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF INCOME

(amounts in 000’s, except per share data)

(unaudited)


	Nine Months Ended
	June 27, 2009							June 28, 2008
	As Reported (GAAP)		Adjustments (1) (2)			Adjusted (non-GAAP) (1) (2)		As Reported (GAAP)		Adjustments (1) (2)			Adjusted (non-GAAP) (1) (2)
Net Sales	$	634,617	$	—		$	634,617	$	616,528	$	—		$	616,528
Cost of goods sold		483,285		22			483,307		451,310		—			451,310

Gross profit		151,332		(22	)		151,310		165,218		—			165,218

Selling, general & administrative expenses		146,960		(6,631	)		140,329		128,253		(840	)		127,413

Operating income		4,372		6,609			10,981		36,965		840			37,805

Interest income, net		261		—			261		2,311		—			2,311


Income before income taxes		4,633		6,609			11,242		39,276		840			40,116

Income tax expense		2,109		3,035			5,144		14,465		310			14,775


Net income	$	2,524	$	3,574		$	6,098	$	24,811	$	530		$	25,341


Income per share - basic:
Income per basic share	$	0.12				$	0.29	$	1.05				$	1.07


Income per share - diluted:
Income per diluted share	$	0.12				$	0.29	$	1.04				$	1.07


Basic weighted average shares outstanding		20,917					20,917		23,610					23,610

Diluted weighted average shares outstanding		21,136					21,136		23,772					23,772

(1)

In the first three quarters of fiscal 2009, the Company recorded cash charges of $5.0 million related to expenses for proxy solicitation, management transition and severance, as well as costs associated with the review of strategic alternatives and subsequent sale process, and a non-cash charge of $1.6 million for store impairment. In the first three quarters of fiscal 2008, the Company recorded a non-cash charge for store impairment. An adjustment has also been reflected for the related tax impact.

(2)

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(amounts in 000’s)

(unaudited)


	June 27, 2009		June 28, 2008
ASSETS
Cash and cash equivalents	$	59,992	$	45,902
Inventories		53,486		49,798
Landlord allowances receivable		441		9,770
Other current assets		10,581		7,168
Deferred tax assets		7,479		6,161

Total current assets		131,979		118,799

Fixed assets, net		205,879		222,291
Goodwill		28,790		28,790
Other assets		887		1,085
Deferred taxes		3,190		970

Total assets	$	370,725	$	371,935


LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable, trade	$	35,908	$	30,929
Accounts payable, other		6,109		7,979
Accrued payroll and related expense		4,663		5,466
Income and sales taxes payable		2,559		2,378
Other current liabilities		9,875		9,541

Total current liabilities		59,114		56,293

Deferred rent		113,295		115,261
Other liabilities		1,400		1,028

Total liabilities		173,809		172,582

Total stockholders’ equity		196,916		199,353


Total liabilities and stockholders’ equity	$	370,725	$	371,935


Contact:		Investors:

		The Consumer Group, LLC
		Christine Greany
		(858) 523-1732

		Media:

		Sard Verbinnen & Co.
		Stephanie Pillersdorf / Kara Findlay
		(212) 687-8080