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): November 30, 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 November 30, 2016, Gordmans Stores, Inc. (the “Company”) issued a press release providing information regarding earnings for the thirteen and thirty-nine week periods ended October 29, 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 November 30, 2016.

 

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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: November 30, 2016     By:  

/s/ James B. Brown

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

 

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EXHIBIT INDEX

 

99.1 Press Release of Gordmans Stores, Inc. dated November 30, 2016.

 

4

Exhibit 99.1

Gordmans Stores, Inc. Announces Third Quarter 2016 Results

Diluted Loss per Share Near High-End of Guidance

Omaha, Nebraska (November 30, 2016) – Gordmans Stores, Inc. (NASDAQ: GMAN), an Omaha-based apparel and home décor retailer, announced results for its third quarter and nine months ended October 29, 2016.

Third Quarter Review

 

    Diluted loss per share of ($0.25) was in-line with guidance range of ($0.24) to ($0.29).

 

    Selling, general and administrative expenses decreased $2.0 million, or 2.8%.

 

    Brick and mortar comparable store inventory decreased 5% compared to a year ago.

 

    Three new stores opened in three existing markets.

“We experienced a modest 160 basis point improvement in our sales trend versus the second quarter and delivered a diluted loss per share near the high-end of our guidance range,” commented Andy Hall, President and Chief Executive Officer. “While the declines in our top line have moderated, our overall business continues to underperform versus our long-term expectations. Therefore, we continue to manage our expense structure to better align with the challenging environment. Third quarter operating expenses were down $2 million as we started to benefit from certain cost savings initiatives implemented following our comprehensive expense review.”

“As the holiday selling season gets underway, we are optimistic that our merchandise offerings and marketing programs position us to improve upon our third quarter comparable store sales trend. We are pleased with our inventory content, aging and marking,” continued Hall. “Following a slow start to the fourth quarter, sales picked up midway through November with the onset of colder weather. We are pleased with our Thanksgiving and Black Friday weekend sales performance, during which we achieved a meaningful positive sales comp, and the momentum it has provided heading into December.”

Third Quarter Financial Results

Net sales for the third quarter ended October 29, 2016 decreased 6.7%, to $143.5 million as compared to $153.9 million for the third quarter last year. Comparable store sales on an owned basis decreased 9.5%. On an owned plus licensed basis, comparable store sales declined 9.3%.

Gross profit decreased to $62.9 million, or 43.8% of net sales, from $68.4 million, or 44.4% of net sales, in the third quarter of fiscal 2016. The 60 basis point decrease in gross margin was primarily due to higher markdowns as a percent of sales, even though the total dollars were less than last year.

Selling, general and administrative expenses decreased $2.0 million to $69.9 million, or 48.7% of net sales, compared to $71.9 million, or 46.7% of net sales, in the third quarter last year. The decrease was primarily due to lower advertising and lower store expenses during the third quarter, partially offset by higher professional fees related to the comprehensive expense review, eCommerce operations which were launched in mid-2015 and higher depreciation expense.

The net loss for the third quarter of fiscal 2016 was $4.8 million, or ($0.25) per diluted share, compared to a net loss of $2.8 million, or ($0.14) per diluted share, in the third quarter of fiscal 2015.

 

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Nine Month Financial Results

Net sales for the first nine months of fiscal 2016 decreased 5.7%, to $417.8 million as compared to $443.2 million for the first nine months last year. Comparable store sales on an owned basis decreased 8.5%. On an owned plus licensed basis, comparable store sales declined 8.3%. Gross profit decreased 7.2%, to $181.9 million, and represented 43.6% of net sales, compared to $196.1 million and 44.3% of net sales last year, which represents a 70 basis point decrease.

The net loss for the first nine months of fiscal 2016 was $12.5 million, or ($0.64) per diluted share, compared to a net loss of $2.8 million, or ($0.28) per diluted share in the first nine months of fiscal 2015.

New Stores

During the third quarter, the Company opened three new stores: Liberty, Missouri; Colorado Springs, Colorado; and Parma, Ohio. The Company has opened four net new stores year-to-date and has no store openings or closings planned for the fourth quarter of 2016. Additionally, there are no planned store openings in fiscal 2017.

Fourth Quarter Outlook

For the 2016 fourth quarter, the Company expects net sales to be between $197 and $203 million, which reflects a comparable store sales decrease on an owned plus licensed basis in the range of (8.5%) to (5.5%). 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 due to lower store and distribution center expenses, partially offset by higher eCommerce related expenses and higher depreciation. The Company projects diluted earnings per share in the range of $0.01 to $0.06 for the fourth quarter. The weighted average diluted share count is expected to be approximately 19.5 million.

Conference Call Information

A conference call to discuss third quarter financial results is scheduled for today, November 30, 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 106 stores in 22 states or at gordmans.com . For more information about Gordmans, please visit www.gordmans.com .

 

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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; (7) our successful implementation of advertising, marketing and promotional strategies; (8) factor credit availability and (9) increased reliance on bank borrowings to fund operations.

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.

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands Except Per Share Data)

 

     13 Weeks
Ended
October 29,
2016

(Unaudited)
    13 Weeks
Ended
October 31,
2015

(Unaudited)
    39 Weeks
Ended
October 29,
2016

(Unaudited)
    39 Weeks
Ended
October 31,
2015

(Unaudited)
 

Net sales

   $ 143,483      $ 153,856      $ 417,791      $ 443,230   

License fees from leased departments

     1,944        2,196        5,941        6,615   

Cost of sales

     (82,553     (87,700     (241,784     (253,698
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     62,874        68,352        181,948        196,147   

Selling, general and administrative expenses

     (69,906     (71,915     (199,048     (200,052
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (7,032     (3,563     (17,100     (3,905

Interest expense, net

     (874     (892     (2,539     (2,966

Loss on extinguishment of debt

     —          —          —          (2,014
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before taxes

     (7,906     (4,455     (19,639     (8,885

Income tax benefit

     3,083        1,692        7,114        3,465   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (4,823   $ (2,763   $ (12,525   $ (5,420
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic loss per share

   $ (0.25   $ (0.14   $ (0.64   $ (0.28

Diluted loss per share

   $ (0.25   $ (0.14   $ (0.64   $ (0.28

Basic weighted average shares outstanding

     19,482        19,424        19,457        19,397   

Diluted weighted average shares outstanding

     19,482        19,424        19,457        19,397   
Ratios as a percent of sales:         

Gross profit

     43.8     44.4     43.6     44.3

Selling, general and administrative expenses

     48.7     46.7     47.6     45.1

Loss from operations

     (4.9 %)      (2.3 %)      (4.1 %)      (0.9 %) 

Effective tax rate

     39.0     38.0     36.2     39.0

Net loss

     (3.4 %)      (1.8 %)      (3.0 %)      (1.2 %) 

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

     October 29,
2016

(Unaudited)
    January 30,
2015

(Unaudited)
    October 31,
2015

(Unaudited)
 

ASSETS

      

CURRENT ASSETS:

      

Cash and cash equivalents

   $ 8,437      $ 6,969      $ 8,860   

Accounts receivable

     4,513        3,896        3,814   

Landlord receivable

     3,643        3,805        2,290   

Income taxes receivable

     —          2,746        4,140   

Merchandise inventories

     153,602        106,566        165,082   

Deferred income taxes

     4,959        5,077        2,896   

Prepaid expenses and other current assets

     8,938        8,096        9,301   
  

 

 

   

 

 

   

 

 

 

Total current assets

     184,092        137,155        196,383   

PROPERTY AND EQUIPMENT, net

     85,193        86,375        86,443   

INTANGIBLE ASSETS, net

     1,820        1,820        1,820   

OTHER ASSETS, net

     3,700        3,822        3,586   
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 274,805      $ 229,172      $ 288,232   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

CURRENT LIABILITIES:

      

Accounts payable

   $ 94,680      $ 66,393      $ 111,215   

Accrued expenses

     29,346        30,151        30,256   

Current portion of long-term debt, net

     59,397        18,390        37,247   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     183,423        114,934        178,718   
  

 

 

   

 

 

   

 

 

 

NONCURRENT LIABILITIES:

      

Long-term debt, less current portion, net

     26,074        27,345        27,744   

Deferred rent

     32,225        33,522        31,147   

Deferred income taxes

     10,062        18,130        16,344   

Other liabilities

     311        347        188   
  

 

 

   

 

 

   

 

 

 

Total noncurrent liabilities

     68,672        79,344        75,423   
  

 

 

   

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

      

STOCKHOLDERS’ EQUITY:

      

Preferred stock

     —          —          —     

Common stock

     20        20        20   

Additional paid-in capital

     54,898        54,601        54,887   

Accumulated deficit

     (32,208     (19,727     (20,816
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     22,710        34,894        34,091   
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 274,805      $ 229,172      $ 288,232   
  

 

 

   

 

 

   

 

 

 

 

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GORDMANS STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

 

     39 Weeks
Ended
October 29,
2016

(Unaudited)
    39 Weeks
Ended
October 31,
2015

(Unaudited)
 

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net loss

   $ (12,525   $ (5,420

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

    

Depreciation and amortization expense

     13,520        12,368   

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

     527        1,011   

Loss on property disposals and impairment charges

     399        708   

Amortization of deferred financing fees

     200        414   

Deferred income taxes

     (8,495     707   

Deferred tax asset shortfall related to share-based compensation expense

     (230     (26

Net changes in operating assets and liabilities:

    

Accounts, landlord and income taxes receivable

     2,291        3,770   

Merchandise inventories

     (47,036     (70,612

Prepaid expenses and other current assets

     (842     (766

Other assets

     122        166   

Accounts payable

     28,287        46,866   

Deferred rent

     (1,297     (4,234

Accrued expenses and other liabilities

     (329     1,539   
  

 

 

   

 

 

 

Net cash used in operating activities

     (24,863     (11,787
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchase of property and equipment

     (22,847     (14,283

Proceeds from sale-leaseback transactions

     9,601        3,556   

Cash received on sale of property and equipment

     44        —     

Proceeds from insurance settlement

     —          21   
  

 

 

   

 

 

 

Net cash used in investing activities

     (13,202     (10,706
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Borrowings on revolving line of credit

     179,547        169,350   

Repayments on revolving line of credit

     (138,576     (144,493

Proceeds from secured term loan

     —          30,000   

Payment of long-term debt

     (1,387     (29,980

Payment of debt financing fees

     (48     (863

Payment penalty on early extinguishment of debt

     —          (292

Dividends paid

     (3     (34

Proceeds from the exercise of stock options

     —          31   
  

 

 

   

 

 

 

Net cash provided by financing activities

     39,533        23,719   
  

 

 

   

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     1,468        1,226   

CASH AND CASH EQUIVALENTS, Beginning of period

     6,969        7,634   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, End of period

   $ 8,437      $ 8,860   
  

 

 

   

 

 

 

 

Company Contact :    Investor Relations :      
James Brown    ICR, Inc.      
Chief Financial Officer    Brendon Frey      
(402) 691-4126    (203) 682-8200      

 

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