Claire’s Stores Inc. reported that its same-store sales improved in January and moved into positive territory in February.
However, in its preliminary report on results for the fourth quarter ended Jan. 31, the privately held value-priced jewelry and accessories retailer said sales and earnings were pressured down in the final quarter of 2008 by declining same-store sales and damaging currency flucuation.
The Pembroke Pines, Fla.-based company, acquired by Apollo Management LP in 2007, said it expects to record operating income of between $39 million and $42 million, down from $78 million in the year-ago quarter. Excluding cost-cutting initiatives and other items, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is anticipated to be in the $75 million to $78 million range, compared with adjusted EBITDA of $115 million in the 2007 quarter.
Claire’s projected net sales to fall 12.2 percent, to $393 million from $447.4 million. Excluding currency fluctuation, Claire’s said revenue would have decreased 5.4 percent.
Comparable-store sales were down 7.2 percent, including a 7.8 percent decline in North America, but began to improve in January and were “slightly positive” in February. During the quarter, Claire’s, which closed 118 underperforming North American stores, said it saved roughly $9 million, and it has identified about $20 million in new potential reductions for 2009.
For the year, the company expects operating income of between $77 million and $80 million, versus $114 million in the previous year. Claire’s anticipates adjusted EBITDA of $212 million to $215 million, compared with $300 million in the previous year. Revenue is expected to dip 6.5 percent to $1.41 billion from $1.51 billion.
The company said it is analyzing the “recoverability” of its goodwill and other assets and expects to record a material noncash impairment charge for the quarter, which will be disclosed when it releases its audited fourth-quarter results in April.
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