Celebrity second quarter sales up 27 percent

Business Wire, Jan 30, 1997

TYLER, Texas--(BUSINESS WIRE)--Jan. 30, 1997--

Net Income Increases Substantially

Celebrity, Inc. (NMS:FLWR) today announced major improvements in sales and profitability for the second quarter ended Dec. 31, 1996. Sales for the quarter totaled $34.6 million, a 27 percent increase over the $27.3 million in sales reported for the same quarter a year ago. Net income for the quarter increased to $601,000, or $0.10 per share, from $118,000, or $0.02 per share, in the second quarter a year ago.

Sales for the first half of fiscal 1997 increased 5 percent to $66.1 million, from $63.2 million in the corresponding period of fiscal 1996. Net income for the first half of fiscal 1997 was $1.1 million, or $0.17 per share, compared with $0.18 per share for the corresponding period of fiscal 1996.

Commenting on the company's performance, Robert H. Patterson, Jr., Chairman and CEO of Celebrity, said, "Our second quarter results demonstrate substantial progress on our fiscal 1997 plan to boost the profitability of the Company by concentrating on key operating characteristics and reducing our expenses. In our annual report we laid out a plan to cut our annual operating costs by about $2 million. We estimate that we have already completed at least 50 percent of the steps needed to accomplish this goal.

"Our operating expenses in the second quarter were over $600,000 less than in the first quarter, and more than $2 million, or 25 percent, below our expense levels for the fourth quarter of fiscal 1996 that ended just six months ago," Mr. Patterson continued, "although it should be noted that some of these reductions are attributable to quarterly fluctuations in the sales mix between direct and distribution center shipments. We believe the effects of our expense reduction plan will be more noticeable in the next two quarters. We are extremely pleased with the way our organization has responded to our efforts to boost Celebrity's profitability.

"As in the first quarter," Mr. Patterson continued, "We saw considerable strength in Celebrity Hong Kong, which accounted for more than half of our sales in the second quarter. Our operation in Hong Kong is the heart of our direct import program, which has proven very popular among our larger customers who prefer a more streamlined producer-to-consumer product flow. This program allows us to employ an inventory strategy that reduces our sale-to-delivery cycle time, cuts production and shipment times and substantially reduces costs associated with carrying a large inventory. Partially as a result of implementing this operating philosophy, we are reporting our second highest quarterly sales level in the Company's history and lowest inventory since our acquisition of India Exotics two years ago. Our efforts to identify leverage opportunities within the business are paying off," Mr. Patterson said.

"With our cost-cutting program clearly gaining momentum," Mr. Patterson continued, "We believe there is substantial leverage to be gained from incremental increases in sales. For example, in the second quarter sales increased 10 percent from the prior quarter, while yielding a net income increase of 24 percent. We believe if we can keep our sales growing at a brisk rate on a year-over-year basis, Celebrity can realize substantial additional improvements in its profitability. Our attendance at recent trade shows was met with great enthusiasm and we are very encouraged by order trends among some of our major customers. Due to the sales pattern of our business, investors should not necessarily expect consistent sequential gains in quarterly sales, but we foresee attractive year-over- year comparisons, in both top- and bottom-line performance, for the remaining quarters of fiscal 1997.

Celebrity, Inc. is one of the leading suppliers of high-quality artificial flowers, foliage, flowering bushes and other decorative accessories to craft store chains and other specialty retailers and to wholesale florists throughout North America and Europe. Celebrity imports and/or produces over 9,000 home accent, decorative accessory and giftware items, including artificial floral arrangements, floor planters and trees, a wide range of decorative brass and textile products, and a broad line of seasonal items such as Christmas trees, wreaths, garlands and other ornamental products. -0-

This press release contains forward-looking statements about the business, financial condition and prospects of Celebrity. The actual results of Celebrity could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including without limitation (i) changes in customer demand for our products at the retail level, (ii) trends in the retail and wholesale decorative accessories industries, (iii) inventory risks attributable to possible changes in customer demand, compounded by extended lead times in ordering our products from overseas suppliers and our strategy of maintaining a high merchandise in stock percentage, (iv) the effects of economic conditions, (v) supply and/or shipment constraints or difficulties, (vi) the impact of competitors' pricing, (vii) the effects of our accounting policies, (viii) changes in foreign trade regulations, including changes in duty rates, possible trade sanctions, import quotas and other restrictions imposed by U.S. and foreign governments and (ix) other risks detailed in our Securities and Exchange Commission filings. These risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this press release the words "foresee", "believes", "expects", "plans", "hope to" and similar expressions as they relate to the Company or its management generally are intended to identify forward- looking statements. -0-