Designs, Inc. reports fiscal 1995 results

Business Wire, March 12, 1996

CHESTNUT HILL, Mass.--(BUSINESS WIRE)--March 11, 1996--Designs, Inc. (NASDAQ: DESI), operator of specialty retail apparel stores, today announced its results for the fourth quarter and fiscal year 1995 ended Feb. 3, 1996.

Net income for the 14-week fourth quarter equaled $2.0 million, or $0.12 per share, compared to net income of $8.5 million, or $0.54 per share, for the 13-week fourth quarter last year. The fourth quarter of fiscal 1994 included nonrecurring pretax income of $4.2 million or $0.16 per share. For the 53-week fiscal year 1995, net income equaled $9.8 million, or $0.62 per share compared to the 52-week fiscal year 1994 net income of $16.9 million, or $1.06 per share. Both fiscal 1995 and 1994 reflect nonrecurring pretax income of $2.2 million, or $0.08 per share and $4.2 million or $0.16 per share respectively. Adjusting for this nonrecurring income which related to the fiscal 1993 restructuring charge and a gain recognized for the sale of certain stores to Levi's Only Stores, Inc., a subsidiary of Levi Strauss & Co., comparative earnings per share are $0.54 for fiscal 1995 and $0.90 for fiscal 1994.

"Although it was a year characterized by weak consumer demand for apparel which led to disappointing sales results for both the Back to School and Holiday selling seasons, we are pleased with our accomplishments towards positioning our company for future growth," said Joel H. Reichman, president and chief executive officer of Designs, Inc. "With the acquisition of the Boston Traders(R) brand and the further strengthening of our merchandising, design, production and logistics teams, we have made significant progress toward establishing Boston Traders(R) as our exclusive private label brand. It is one of our primary goals to become a vertically integrated retailer of quality branded casual apparel, laying the foundation for future growth."

As previously announced, sales for the 14-week fourth quarter of fiscal 1995 increased 10 percent to $87.5 million from $79.8 million in the prior year 13-week quarter. Sales for the 53-week fiscal 1995 year increased 13 percent to $301.1 million from $265.9 million in the prior 52-week year. Comparable store sales decreased 3 percent for the fourth quarter (14-week basis) and increased 0.5 percent for fiscal year 1995 (53-week basis).

The Company's gross margin rate for fiscal 1995, after occupancy costs, equaled 29.6 percent of sales, compared with 31.6 percent in the prior year. The decrease was due to the competitive retail marketplace and the impact of LIFO on inventory.

Selling, general and administrative expenses for fiscal 1995 increased as a percentage of sales to 22.2 percent, compared with 19.9 percent in the prior year, which included a portion of nonrecurring income. The increase was primarily attributable to additional ongoing infrastructure expenses associated with further development of the vertically integrated Boston Traders(R) brand. Store payroll expense, the largest component of selling, general and administrative expenses, decreased to 10.3 percent of sales for fiscal 1995 from 10.8 percent in the prior year.

During the fiscal year, the Company opened 10 new stores, including one "Designs" store and two "Boston Traders(R) Outlet" stores. In addition, the joint venture between subsidiaries of Designs, Inc. and Levi's Only Stores, Inc. opened three "Original Levi's(R) Stores" and four "Levi's(R) Outlet" stores. As of fiscal year end, the Company had closed six stores, including three "Designs" stores and three "Levi's(R) Outlet" stores, whose leases expired. Current plans, barring unforeseen circumstances, are to open up to 10 joint venture stores during fiscal 1996.

Designs, Inc. emphasizes the power of brand-name merchandising through 157 stores in four retail formats; 49 "Designs" stores, 58 "Levi's(R) Outlet by Designs" stores, 35 "Boston Traders(R) Outlet" stores and 15 joint venture "Original Levi's(R) Stores" and "Levi's(R) Outlet" stores. -0-

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