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Claire's Stores, Inc. Reports Fiscal 2008 Fourth Quarter and Full Year Results.

Article Excerpt
PEMBROKE PINES, Fla., April 22 /PRNewswire/ -- Claire's Stores, Inc., a leading specialty retailer offering value-priced fashion accessories and jewelry, today reported its financial results for the 2008 fourth quarter and fiscal year, which ended January 31, 2009. The results reported in this release do not materially differ from the preliminary results released on February 27, 2009.

Fourth Quarter Results

The Company reported net sales of $393.0 million for the 2008 fourth quarter, a 12.2% decrease from the 2007 fourth quarter. The decrease was primarily attributable to a decline in same store sales and the effect of foreign currency exchange rate changes, partially offset by new store sales. Sales would have declined 5.4% excluding the impact from foreign currency rate changes.

As previously reported, consolidated same store sales declined 7.2% in the 2008 fourth quarter. A decline in average transactions per store of 10.3% was partially offset by a 3.6% increase in average sales per transaction. The increase in sales per transaction reflects our strategy to increase average ticket prices through "good, better, best" price tiering, while maintaining an attractive entry price point within our "good" tier. The decline in the number of transactions reflects both weaker mall traffic and less reliance on low margin, low dollar value promotional transactions. In North America, same store sales decreased 7.8%, with sales at our Icing stores declining less than at our Claire's stores. European same store sales declined 5.9%. We compute same store sales on a local currency basis, which eliminates any impact from changes in foreign exchange rates.

Chief Executive Officer Gene Kahn commented, "Our fourth quarter performance was negatively impacted by the continued financial turmoil that worsened in the beginning of the quarter and impacted holiday sales, before beginning to improve in the latter part of December and into January. We positioned ourselves as a "gift headquarters" for the holiday season focusing on "giftables", important seasonal categories and key items, all with a compelling value proposition. We believe that this approach, coupled with a re-invented holiday in-store marketing effort, allowed us to outpace our competitor peer group of specialty retailers. We will leverage this experience in our planning throughout this year.

During the fourth quarter, we continued to execute upon our Cost Savings Initiative ("CSI"), achieving approximately $11 million of savings in the quarter and approximately $18 million of savings from CSI during fiscal 2008. We are continuing with steadfast determination to reduce our overall cost structure and expect to realize total savings of $60 million on an annual basis. These cost savings will be offset somewhat by increases in certain other expenses. We also expect to reduce our 2009 capital expenditures to approximately $25 million.

In 2008, we instituted a lease renewal and rent reduction program that has resulted in the previously announced closure of 118 stores in North America at year-end. This review is part of a broader ongoing real estate work plan to better control all components of occupancy costs globally.

Our first quarter 2009 same store sales to date are slightly negative, which indicates that our sales performance is stabilizing in both North America and Europe, as we appear to be benefiting from the progress we made against the...

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