Current Report


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): August 19, 2016

 

 

GORDMANS STORES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware
  001-34842
  26-3171987
(State or other jurisdiction of
incorporation or organization)
 

(Commission

File Number)

  (IRS Employer
Identification No.)

1926 South 67 th Street

Omaha, Nebraska 68106

(Address of principal executive offices, zip code)

(402) 691-4000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 19, 2016, Gordmans Stores, Inc. (the “Company”) issued a press release providing information regarding earnings for the thirteen and twenty-six week periods ended July 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1.

The information, including Exhibit 99.1, in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

 

99.1    Press Release of Gordmans Stores, Inc. dated August 19, 2016.

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  GORDMANS STORES, INC.
Date: August 19, 2016   By:  

/s/ James B. Brown

    Name:   James B. Brown
    Title:   Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary

 

3


EXHIBIT INDEX

 

99.1    Press Release of Gordmans Stores, Inc. dated August 19, 2016.

 

4

Exhibit 99.1

Gordmans Stores, Inc. Announces Second Quarter 2016 Results

Adjusted Diluted Loss per Share Excluding Deferred Tax Valuation Allowance, In-line With Guidance

Omaha, Nebraska (August 19, 2016) – Gordmans Stores, Inc. (NASDAQ: GMAN), an Omaha-based apparel and home décor retailer, announced results for its second quarter and six months ended July 30, 2016.

Second Quarter Review

 

    Adjusted diluted loss per share of ($0.28), which excludes a ($0.03) charge related to a deferred tax valuation allowance, was in-line with guidance range of ($0.29) to ($0.25).

 

    Brick and mortar comparable store inventory decreased 13.6% compared to a year ago.

 

    Comparable store sales on an owned basis decreased 11.1%.

Andy Hall, President and Chief Executive Officer, commented, “With the sales environment remaining challenging during the second quarter, we took actions to protect our bottom line and better position the company for the second half of the year. This included reducing second quarter merchandise receipts by 15%. While our proactive inventory reduction contributed to our less than expected comp performance, it allowed us to end the second quarter with comp store inventory down 14% compared to a year ago and improve our inventory currency.”

Hall continued, “We have completed our comprehensive expense review and have identified significant cost saving opportunities throughout the organization. We will start to realize these savings beginning in the third quarter and in earnest next year.”

“While our top line has been challenging, we expect modest improvement in our sales trend beginning in the third quarter. Our inventory positioning allows us to be more proactive in chasing trending businesses, receipting of go forward merchandise and flexibility regarding markdowns. From a long term perspective, our current strategies are focused on yielding sustained, profitable growth and increased value for our shareholders,” concluded Hall.

Second Quarter Financial Results

Net sales for the second quarter ended July 30, 2016 decreased $11.3 million, or 7.9%, to $132.1 million as compared to $143.4 million for the second quarter last year. Comparable store sales on an owned basis decreased 11.1%. On an owned plus licensed basis, comparable store sales declined 10.8%.

Gross profit decreased to $57.1 million, or 43.2% of net sales, from $62.8 million, or 43.8% of net sales, in the second quarter of fiscal 2015. The 60 basis point decrease in gross margin was primarily due to higher markdowns compared to the same period last year to ensure the quality of our inventory as we head into the back half of the year.

Selling, general and administrative expenses increased $0.4 million to $65.3 million or 49.4% of net sales, compared to $64.8 million, or 45.2% of net sales, in the second quarter last year. The increase was primarily due to higher professional fees related to the comprehensive expense review, eCommerce operations which were launched in mid-2015 and higher depreciation expense, partially offset by reduced store payroll, lower pre-opening expenses and lower distribution center expenses.

The income tax benefit of $3.0 million for the second quarter of 2016 was reduced by $0.5 million related to a partial valuation allowance on deferred taxes associated with certain long term leases which represented a ($0.03) charge to the diluted loss per share.

The net loss for the 2016 second quarter, as adjusted to exclude the deferred tax valuation allowance charge, was $5.5 million, or ($0.28) per diluted share. The GAAP basis net loss for the second quarter of fiscal 2016 was $6.1 million, or ($0.31) per diluted share, compared to a net loss of $3.0 million, or ($0.16) per diluted share in the second quarter of fiscal 2015.

 

-1-


At the conclusion of this press release is a reconciliation of GAAP to Non-GAAP adjusted financial measures.

Six Month Financial Results

Net sales for the first six months of fiscal 2016 decreased $15.1 million or 5.2% to $274.3 million as compared to $289.4 million in the corresponding period a year ago. Comparable store sales decreased 8.0% on an owned basis and decreased 7.8% on an owned plus licensed basis. Gross profit decreased to $119.1 million, or 43.4% of net sales, compared to $127.8 million, or 44.2% of net sales last year.

New Stores

The Company opened one new store in Coon Rapids, Minnesota during the second quarter of 2016 and closed one store. The Company plans to open three additional new stores in the third quarter of 2016.

Third Quarter Outlook

For the 2016 third quarter, the Company expects net sales to be between $142 and $147 million, which reflects a comparable store sales decrease on an owned plus licensed basis in the range of (7%) to (10%). The Company expects gross profit margin to be comparable to last year. Total selling, general and administrative expenses are expected to be at or below last year with higher eCommerce related expense and higher depreciation offset by lower stores and distribution center expenses. The Company projects a diluted loss per share in the range of ($0.24) to ($0.29) for the third quarter. The weighted average diluted share count is expected to be approximately 19.5 million.

Conference Call Information

A conference call to discuss first quarter financial results is scheduled for today, August 19, 2016 at 11:00 a.m. Eastern Time. The conference call will be webcast live at http://investor.gordmans.com/events.cfm. A replay of this call will be available within two hours of the conclusion of the call and will remain on the website for one year.

About Gordmans Stores, Inc.

Gordmans (NASDAQ: GMAN) is an everyday value priced department store featuring a large selection of name brands and the latest fashions and styles at up to 60 percent off department and specialty store prices. The wide range of merchandise includes apparel and footwear for men, women and children, as well as accessories, home décor, gifts, designer fragrances, fashion jewelry, bedding and bath, accent furniture and toys. Founded in 1915, Gordmans guests can shop in any of our 103 stores in 22 states or at gordmans.com. For more information about Gordmans, please visit www.gordmans.com .

Safe Harbor Statement

Certain statements in this release are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “guidance,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding expected net sales, net income <loss>, comparable store sales, diluted earnings <loss> per share, and store expansion, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) changes in consumer spending and general economic conditions; (2) our ability to identify and respond to new and changing fashion trends, guest preferences and other related factors; (3) fluctuations in our sales and profitability on a seasonal basis; (4) intense competition from other retailers; (5) our ability to maintain or improve levels of comparable store sales; (6) our ability to attract and retain talent and (7) our successful implementation of advertising, marketing and promotional strategies .

 

-2-


Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

-3-


GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands Except Share and Per Share Data)

 

     13 Weeks
Ended
July 30,
2016

(Unaudited)
    13 Weeks
Ended
August 1,
2015

(Unaudited)
    26 Weeks
Ended
July 30,
2016

(Unaudited)
    26 Weeks
Ended
August 1,
2015

(Unaudited)
 

Net sales

   $ 132,128      $ 143,434      $ 274,308      $ 289,374   

License fees from leased departments

     1,769        1,986        3,997        4,419   

Cost of sales

     (76,839     (82,593     (159,231     (165,998
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     57,058        62,827        119,074        127,795   

Selling, general and administrative expenses

     (65,255     (64,819     (129,142     (128,137
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (8,197     (1,992     (10,068     (342

Interest expense, net

     (880     (1,038     (1,665     (2,074

Loss on extinguishment of debt

     —          (2,014     —          (2,014
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before taxes

     (9,077     (5,044     (11,733     (4,430

Income tax benefit

     2,995        2,013        4,031        1,773   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (6,082   $ (3,031   $ (7,702   $ (2,657
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic loss per share

   $ (0.31   $ (0.16   $ (0.40   $ (0.14

Diluted loss per share

   $ (0.31   $ (0.16   $ (0.40   $ (0.14

Basic weighted average shares outstanding

     19,459        19,396        19,444        19,381   

Diluted weighted average shares outstanding

     19,459        19,396        19,444        19,381   

Ratios as a percent of sales:

        

Gross profit

     43.2     43.8     43.4     44.2

Selling, general and administrative expenses

     49.4     45.2     47.1     44.3

Loss from operations

     (6.2 %)      (1.4 %)      (3.7 %)      (0.1 %) 

Effective tax rate

     33.0     39.9     34.4     40.0

Net loss

     (4.6 %)      (2.1 %)      (2.8 %)      (0.9 %) 

 

-4-


GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

     July 30,
2016

(Unaudited)
    January 30,
2016
    August 1,
2015

(Unaudited)
 

ASSETS

      

CURRENT ASSETS:

      

Cash and cash equivalents

   $ 9,426      $ 6,969      $ 9,946   

Accounts receivable

     4,368        3,896        3,608   

Landlord receivable

     5,751        3,805        2,561   

Income taxes receivable

     5,920        2,746        11,001   

Merchandise inventories

     110,472        106,566        118,889   

Deferred income taxes

     4,965        5,077        2,896   

Prepaid expenses and other current assets

     9,470        8,096        9,985   
  

 

 

   

 

 

   

 

 

 

Total current assets

     150,372        137,155        158,886   

PROPERTY AND EQUIPMENT, net

     92,421        86,375        86,955   

INTANGIBLE ASSETS, net

     1,820        1,820        1,820   

OTHER ASSETS, net

     3,711        3,822        3,563   
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 248,324      $ 229,172      $ 251,224   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

CURRENT LIABILITIES:

      

Accounts payable

   $ 73,387      $ 66,393      $ 79,436   

Accrued expenses

     29,990        30,151        27,235   

Current portion of long-term debt, net

     36,921        18,390        31,711   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     140,298        114,934        138,382   
  

 

 

   

 

 

   

 

 

 

NONCURRENT LIABILITIES:

      

Long-term debt, less current portion, net

     26,484        27,345        28,145   

Deferred rent

     36,582        33,522        31,640   

Deferred income taxes

     17,296        18,130        16,318   

Other liabilities

     318        347        237   
  

 

 

   

 

 

   

 

 

 

Total noncurrent liabilities

     80,680        79,344        76,340   
  

 

 

   

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

      

STOCKHOLDERS’ EQUITY:

      

Preferred stock

     —         —         —    

Common stock

     20        20        20   

Additional paid-in capital

     54,711        54,601        54,542   

Accumulated deficit

     (27,385     (19,727     (18,060
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     27,346        34,894        36,502   
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 248,324      $ 229,172      $ 251,224   
  

 

 

   

 

 

   

 

 

 

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

 

     26 Weeks
Ended
July 30,
2016

(Unaudited)
    26 Weeks
Ended
August 1,
2015

(Unaudited)
 

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net loss

   $ (7,702   $ (2,657

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization expense

     8,807        8,083   

Write-off of deferred financing fees related to extinguishment of debt

     —          1,722   

Deferred tax valuation allowance

     545        —     

Share-based compensation expense, net of forfeitures

     302        640   

Amortization of deferred financing fees

     132        355   

Loss on retirement / sale of property and equipment

     101        23   

Deferred tax asset shortfall related to share-based compensation expense

     (192     —     

Deferred income taxes

     (1,267     681   

Net changes in operating assets and liabilities:

    

Accounts, landlord and income taxes receivable

     (5,592     (3,156

Merchandise inventories

     (3,906     (24,419

Prepaid expenses and other current assets

     (1,373     (1,450

Other assets

     111        80   

Accounts payable

     6,994        15,087   

Deferred rent

     3,060        (3,741

Accrued expenses and other liabilities

     (1,002     (2,109
  

 

 

   

 

 

 

Net cash used in operating activities

     (982     (10,861
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchase of property and equipment

     (17,895     (8,038

Proceeds from sale-leaseback transactions

     3,752        2,412   

Cash received on sale of property and equipment

     44        —     

Proceeds from insurance settlement

     —          21   
  

 

 

   

 

 

 

Net cash used in investing activities

     (14,099     (5,605
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Borrowings on revolving line of credit

     116,500        111,850   

Repayments on revolving line of credit

     (98,038     (92,502

Proceeds from secured term loan

     —          30,000   

Payment of long-term debt

     (924     (29,518

Payment of debt issuance costs

     —          (783

Payment penalty on early extinguishment of debt

     —          (292

Dividends paid

     —          (8

Proceeds from the exercise of stock options

     —          31   
  

 

 

   

 

 

 

Net cash provided by financing activities

     17,538        18,778   
  

 

 

   

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     2,457        2,312   

CASH AND CASH EQUIVALENTS, Beginning of period

     6,969        7,634   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, End of period

   $ 9,426      $ 9,946   
  

 

 

   

 

 

 

 

 

-6-


GORDMANS STORES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED FINANCIAL MEASURES

(Unaudited)

To supplement our condensed consolidated statements of operations presented in accordance with generally accepted accounting principles (“GAAP”), we are providing non-GAAP adjusted financial measures of operating results that exclude certain items. Loss on extinguishment of debt, loss before taxes, income tax benefit, net loss, and both basic and diluted earnings per share are presented below both as reported on a GAAP and non-GAAP adjusted basis related to the valuation allowance recorded in the second quarter of fiscal year 2016 related to certain long term leases and the loss on extinguishment of debt associated with refinancing our term debt in the second quarter on fiscal year 2015. We believe these items should be presented separately to enhance a reader’s overall understanding of the Company’s ongoing operations. These non-GAAP adjusted financial measures should be considered in conjunction with the GAAP financial measures. We believe these non-GAAP adjusted financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. In addition, we evaluate results using GAAP and non-GAAP adjusted financial measures. These non-GAAP adjusted financial measures should not be considered in isolation or as a substitute for GAAP financial measures. The following tables reconcile the GAAP to non-GAAP adjusted financial measures for the periods presented.

 

     13 Weeks Ended
July 30, 2016
GAAP Basis

as Reported
(Unaudited)
     Non-GAAP
Adjustments

(Unaudited)
     13 Weeks Ended
July 30, 2016

Non-GAAP
as Adjusted
(Unaudited)
 

Loss from operations

   $ (8,197    $ —         $ (8,197

Interest expense, net

     (880      —           (880

Loss on extinguishment of debt

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Loss before taxes

     (9,077      —           (9,077

Income tax benefit

     2,995         545         3,540   
  

 

 

    

 

 

    

 

 

 

Net loss

   $ (6,082    $ 545       $ (5,537
  

 

 

    

 

 

    

 

 

 

Basic loss per share (1)

   $ (0.31    $ 0.03       $ (0.28

Diluted loss per share (1)

   $ (0.31    $ 0.03       $ (0.28
     13 Weeks Ended
August 1, 2015
GAAP Basis

as Reported
(Unaudited)
     Non-GAAP
Adjustments

(Unaudited)
     13 Weeks Ended
August 1, 2015
Non-GAAP

as Adjusted
(Unaudited)
 

Loss from operations

   $ (1,992    $ —         $ (1,992

Interest expense, net

     (1,038      —           (1,038

Loss on extinguishment of debt

     (2,014      2,014         —     
  

 

 

    

 

 

    

 

 

 

Loss before taxes

     (5,044      2,014         (3,030

Income tax benefit

     2,013         (809      1,204   
  

 

 

    

 

 

    

 

 

 

Net loss

   $ (3,031    $ 1,205       $ (1,826
  

 

 

    

 

 

    

 

 

 

Basic loss per share (1)

   $ (0.16    $ 0.06       $ (0.09

Diluted loss per share (1)

   $ (0.16    $ 0.06       $ (0.09

 

(1) Amounts per share may not sum for the periods presented due to rounding.

 

-7-


     26 Weeks Ended
July 30, 2016
GAAP Basis

as Reported
(Unaudited)
     Non-GAAP
Adjustments

(Unaudited)
     26 Weeks Ended
July 30, 2016
Non-GAAP

as Adjusted
(Unaudited)
 

Loss from operations

   $ (10,068    $ —         $ (10,068

Interest expense, net

     (1,665      —           (1,665

Loss on extinguishment of debt

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Loss before taxes

     (11,733      —           (11,733

Income tax benefit

     4,031         545         4,576   
  

 

 

    

 

 

    

 

 

 

Net loss

   $ (7,702    $ 545       $ (7,157
  

 

 

    

 

 

    

 

 

 

Basic loss per share (1)

   $ (0.40    $ 0.03       $ (0.37

Diluted loss per share (1)

   $ (0.40    $ 0.03       $ (0.37
     26 Weeks Ended
August 1, 2015
GAAP Basis

as Reported
(Unaudited)
     Non-GAAP
Adjustments

(Unaudited)
     26 Weeks Ended
August 1, 2015
Non-GAAP

as Adjusted
(Unaudited)
 

Loss from operations

   $ (342    $ —         $ (342

Interest expense, net

     (2,074      —           (2,074

Loss on extinguishment of debt

     (2,014      2,014         —     
  

 

 

    

 

 

    

 

 

 

Loss before taxes

     (4,430      2,014         (2,416

Income tax benefit

     1,773         (809      964   
  

 

 

    

 

 

    

 

 

 

Net loss

   $ (2,657    $ 1,205       $ (1,452
  

 

 

    

 

 

    

 

 

 

Basic loss per share (1)

   $ (0.14    $ 0.06       $ (0.07

Diluted loss per share (1)

   $ (0.14    $ 0.06       $ (0.07

 

(1) Amounts per share may not sum for the periods presented due to rounding.

 

Company Contact :

   Investor Relations :

James Brown

   ICR, Inc.

Chief Financial Officer

   Brendon Frey

(402) 691-4126

   (203) 682-8200

 

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