Exhibit 99.1- Press Release of Candie's, Inc.
dated September 15, 2003.
Candie's, Inc. Reports Second Quarter Fiscal 2004 Results
Monday September 15, 8:56 am ET
NEW YORK--(BUSINESS WIRE)--Sept. 15, 2003--Candie's, Inc. (NASDAQ: CAND - News;
the "Company") today announced that, as anticipated, the operating results of
the Company's footwear segment were significantly negatively impacted by the
Company's transition out of footwear operations to its new licensing business.
The Company licensed its BONGO(R)footwear to Kenneth Cole Productions, Inc., and
its CANDIE'S(R)footwear to Steven Madden Ltd. in May 2003.
In connection with the wind-down of its footwear operations, the Company
reported a consolidated operating loss (before special charges of $2.5 million)
of $487,000 or $.02 per share for the quarter ending July 31, 2003 of its fiscal
year ending January 31, 2004 ("Second Quarter"), and consolidated operating
income (before special charges of $2.9 million) of $1.5 million or $.06 per
share for the six months ended July 31, 2003. After the special charges noted
above, resulting primarily from the wind-down of its footwear operations, the
Company reported a consolidated net loss of $3.8 million, or $.15 per share for
the Second Quarter and a consolidated net loss of $3.1 million, or $.12 per
share for the six months ended July 31, 2003 as compared to consolidated net
income of $3.3 million, or $.12 per diluted share and consolidated net income of
$4.4 million, or $.17 per diluted share for the prior year three and six month
periods, respectively.
Consolidated net revenues for the Second Quarter were $42.1 million, a decrease
of $7.5 million from $49.6 million in the comparable prior year period. Of this
decrease in the Second Quarter, net sales for the footwear segment decreased to
$16.6 million from $28.4 million, down $11.8 million from the comparable prior
year period. For the six months ended July 30, 2003, net sales increased to
$84.1 million, up $8.9 million from $75.2 million in the comparable prior year
period. The $8.9 million net sales increase for the six months period resulted
primarily from the $21.0 million sales increase in the BONGO jeans wear business
operated through the Company's wholly-owned subsidiary Unzipped Apparel LLC
("Unzipped"), of which $17.2 million from the quarter ended April 30, 2003 was
not comparable to the prior year quarter when Unzipped's sales were not
consolidated. For the six months period, the sales in the footwear segment
decreased to $40.2 million, down $12.4 million from $52.6 million in the
comparable prior year period.
In connection with the ongoing licensing business, the Company reported an
increase in $496,000 in licensing income for the Second Quarter to $1.8 million
from $1.3 million in the comparable prior year period. The six month results
also reflected gains, with an increase of $247,000 to $3.0 million from $2.8
million in the comparable period for the prior year. Comparable licensing income
increased $661,000, as the prior year six month period included $414,000 of
royalties the Company received from Unzipped prior to its acquisition. The
increase was due primarily to revenue generated by new licenses.
The Company's BONGO jeans wear business also reported positive results, with
operating income increasing to $2.3 million versus $1.9 million for the
comparable quarter in the prior year. Unzipped also increased revenues to $23.6
million, up $3.8 million from $19.8 from the comparable period in the prior
year. Unzipped recorded gross profit of $5.4 million compared to $4.0 million in
the comparable quarter for the prior year, an increase of $1.4 million.
Unzipped's gross profit margin increased, as a percentage of its net sales, by
270 basis points to 22.9% as compared to 20.2% in the second quarter of the
prior year. Unzipped's results have been consolidated with the Company's since
May 2002 when the Company acquired the division.
Included in special charges of $2.5 million relating to the discontinuance of
footwear operations for the Second Quarter were $1.5 million of asset impairment
charges for leasehold improvements, furniture and fixtures, computer hardware
and software and other capitalized costs resulting from the Company's cessation
of its operating footwear business. The Company is also closing its remaining
company-owned outlet stores, resulting in an impairment reserve for unamortized
fixed assets and leasehold improvements, plus additional special charges for the
Second Quarter for lease termination liabilities relating to the closing of the
Company's concept store chain, which charges together totaled $600,000.
The Company will continue to operate its BONGO jeans wear division and Bright
Star Footwear, Inc., also a wholly-owned subsidiary, which sells casual men's
boots on a direct basis.
Neil Cole, President and CEO stated, "The transition to our new licensing model
is on plan and will be completed by the end of the year. We have two powerful
lifestyle brands, CANDIE'S and BONGO, both of which are continuing to gain
recognition in the marketplace. We are confident that our strategic decision to
transition to the new licensing structure will result in increased profitability
and shareholder value in the future."
About Candie's, Inc.
Candie's, Inc. is in the business of licensing the CANDIE'S and BONGO names on a
variety of young women's footwear, apparel and fashion products, and is a
leading designer, distributor and marketer of jeans wear under the BONGO brand
through its wholly owned subsidiary, Unzipped Apparel, LLC. Through its wholly
owned subsidiary Brightstar Footwear, Inc., the Company also arranges for the
manufacture of footwear products for mass market and discount retailers under
the private label brand of the retailer. The Company operates Candie's retail
stores across the United States. For investor information please visit the
corporate web site at http://www.candiesinc.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995. The statements that are not historical facts contained in this press
release are forward looking statements that involve a number of known and
unknown risks, uncertainties and other factors, all of which are difficult or
impossible to predict and many of which are beyond the control of the Company,
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward looking statements. Such factors include,
but are not limited to, uncertainty regarding the results of the Company's
decision to license its footwear business, continued market acceptance of
current products and the ability to successfully develop and market new products
particularly in light of rapidly changing fashion trends, the impact of supply
and manufacturing constraints or difficulties relating to the Company's
dependence on foreign manufacturers and suppliers, uncertainties relating to
customer plans and commitments, the ability of licensees to successfully market
and sell branded products, competition, uncertainties relating to economic
conditions in the markets in which the Company operates, the ability to hire and
retain key personnel, the ability to obtain capital if required, the risks of
litigation and regulatory proceedings, the risks of uncertainty of trademark
protection, the uncertainty of marketing and licensing acquired trademarks and
other risks detailed in the Company's SEC filings. The words "confident", and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward looking statements, which speak
only as of the date the statement was made.
Candie's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
----------------- -----------------
2003 2002 2003 2002
(000's omitted, except per share data)
Net sales $ 40,214 $ 48,218 $ 81,077 $ 72,408
Licensing income 1,841 1,345 3,019 2,772
-------- -------- -------- --------
Net revenues 42,055 49,563 84,096 75,180
Cost of goods sold 32,986 35,568 63,133 51,829
-------- -------- -------- --------
Gross profit 9,069 13,995 20,963 23,351
Operating expenses:
Selling, general and administrative
expenses 9,556 9,898 19,417 18,286
Special charges 2,450 78 2,884 93
-------- -------- -------- --------
12,006 9,976 22,301 18,379
-------- -------- -------- --------
Operating (loss) income (2,937) 4,019 (1,338) 4,972
Other expenses:
Interest expense 843 708 1,716 985
Equity income in joint venture - - - (250)
-------- -------- -------- --------
843 708 1,716 735
-------- -------- -------- --------
(Loss) income before income taxes (3,780) 3,311 (3,054) 4,237
Income tax benefit - - - (139)
-------- -------- -------- --------
Net (loss) income $ (3,780)$ 3,311 $ (3,054)$ 4,376
======== ======== ======== ========
(Loss) Earnings per common share:
Basic $ (0.15)$ 0.14 $ (0.12)$ 0.20
======== ======== ======== ========
Diluted $ (0.15)$ 0.12 $ (0.12)$ 0.17
======== ======== ======== ========
Weighted average number of common shares outstanding:
Basic 25,068 24,176 25,042 22,438
======== ======== ======== ========
Diluted 25,068 27,835 25,042 25,499
======== ======== ======== ========
Selected Balance
Sheet Data: 7/31/2003 1/31/2003
Current Assets $ 47,357 $ 51,816
Current Liabilities $ 42,542 $ 45,921
Stockholders' Equity $ 26,175 $ 29,011
Working Capital $ 4,815 $ 5,895
Current Ratio 1.11:1 1.13:1
[GRAPHIC OMITTED]
Contact:
Candie's, Inc.
Richard Danderline, 212-730-0030