A.C. Moore Arts & Crafts, Inc. (NASDAQ: ACMR) (the “Company” or “A.C. Moore”) today announced results for the three and nine month periods ended October 2, 2010.

Sales for the third quarter of 2010 were $99.7 million, a decrease of 6.0% compared to sales of $106.1 million during the third quarter of 2009. This decline was primarily due to a decrease in comparable store sales of 7.0% partially offset by the operation of two additional stores compared to the third quarter of last year. Net loss for the quarter was $8.1 million, or $0.33 per share, compared to a net loss of $12.9 million, or $0.53 per share in the third quarter of last year.

Sales for the nine months ended October 2, 2010 were $304.9 million, a decrease of 4.5% compared to sales of $319.2 million during the comparable period of 2009. This decline is primarily attributable a 5.9% decrease in comparable store sales partially offset by the operation of two additional stores compared to the same period of last year. Net loss was $25.4 million, or $1.04 per share, for the nine months ended October 2, 2010, compared to a net loss of $25.4 million, or $1.16 for the comparable period last year.

Joseph A. Jeffries, Chief Executive Officer, stated, “We achieved year over year improvements in several important metrics including gross margin, expense control, and inventory management. However, until we achieve sustained profitability, we will not consider our turnaround efforts to be successful. The entire organization is focused on driving the merchandising plan, improving execution and delivering improved operating results as we move forward.”

The Company will host a conference call beginning at 8:30 a.m., Eastern Time, on Tuesday, November 9, 2010 to discuss third quarter 2010 results. To participate in the conference call, please dial 877-440-5807 and provide the operator with passcode #1418410. If you are unable to access the live call, please dial 888-203-1112 and enter #1418410 to access the taped digital replay. The replay will be available at approximately 9:30 a.m. ET on Tuesday, November 9, 2010 and will remain available until Tuesday, November 23, 2010 at 11:59 p.m. ET.

A simultaneous webcast of the conference call may be accessed at www.acmoore.com. Go to “About Us” and click on “Corporate Profile.” To listen to the live call via webcast, please go to the Company’s website at least 15 minutes early to register, download and install any necessary audio software. An archive of the conference call will be available approximately two hours after the conference call ends on the Company’s website.

About A.C. Moore:

A.C. Moore is a specialty retailer of arts, crafts and floral merchandise for a wide range of customers. The Company currently serves customers through its 135 stores located in the Eastern United States and nationally via its e-commerce site, www.acmoore.com. For more information about A.C. Moore, visit our website at www.acmoore.com.

This press release contains statements that are forward-looking within the meaning of applicable federal securities laws and are based on A.C. Moore’s current expectations and assumptions as of this date. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ from those anticipated include, but are not limited to, the failure to consummate our identified strategic objectives, the effect of economic conditions, our ability to implement our business and operating initiatives to improve sales and profitability, our ability to maintain liquidity and preserve cash, our ability to comply with the terms of our credit facility, changes in the labor market and our ability to hire and retain associates and members of senior management, the impact of existing or future government regulation, execution and results of our real estate strategy, competitive pressures, customer demand and trends in the arts and crafts industry, our failure to accurately respond to inventory and merchandise requirements, the impact of unfavorable weather conditions, disruption in our operations or supply chain, changes in our relationships with suppliers, difficulties with respect to new system technologies, difficulties in implementing measures to reduce costs and expenses and improve margins, supply constraints or difficulties, the effectiveness of and changes to advertising and marketing strategies and other risks detailed in the Company’s Securities and Exchange Commission (“SEC”) filings. A.C. Moore undertakes no obligation to update or revise any forward-looking statement whether as the result of new developments or otherwise.
 
A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except shares)
(unaudited)
     
October 2, January 2, October 3,
2010 2010 2009
ASSETS
 
Current assets:
Cash and cash equivalents $ 25,394 $ 45,952 $ 31,326
Inventories 122,233 122,058 138,151
Prepaid expenses and other current assets   10,798   13,288   10,425
  158,425   181,298   179,902
Non-current assets:
Property and equipment, net 78,236 81,938 88,069
Other assets   1,442   2,233   2,485
$ 238,103 $ 265,469 $ 270,456
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Short-term debt $ 19,000 $ 19,000 $ 19,000
Trade accounts payable 38,586 37,047 48,648
Other current liabilities   28,008   28,624   22,666
  85,594   84,671   90,313
Non-current liabilities:
Deferred tax liability and other 2,102 3,344 2,722
Accrued lease liability   14,620   17,380   17,242
  16,722   20,724   19,964
  102,316   105,395   110,277
 
Shareholders' equity   135,787   160,074   160,179
$ 238,103 $ 265,469 $ 270,456
 
A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(unaudited)
       
Quarter Ended Nine Months ended
October 2, October 3, October 2, October 3,
  2010     2009     2010     2009  
 
Net sales $ 99,669 $ 106,083 $ 304,888 $ 319,172
Cost of sales (including buying and distribution costs)   57,435     65,350     173,632     188,428  
Gross margin 42,234 40,733 131,256 130,744
Selling, general and administrative expenses 49,589 53,177 153,798 154,221
Store pre-opening and closing expenses   562     250     1,645     932  
Loss from operations (7,916 ) (12,694 ) (24,186 ) (24,409 )
Net interest expense   231     191     677     885  
Loss before income taxes (8,147 ) (12,885 ) (24,863 ) (25,294 )
Provisions for income taxes   -     24     509     72  
Net loss $ (8,147 ) $ (12,909 ) $ (25,372 ) $ (25,366 )
 
Basic net loss per share $ (0.33 ) $ (0.53 ) $ (1.04 ) $ (1.16 )
 
Diluted net loss per share $ (0.33 ) $ (0.53 ) $ (1.04 ) $ (1.16 )
 
Basic weighted average shares outstanding   24,494     24,325     24,413     21,914  
 
 
Diluted weighted average shares outstanding   24,494     24,325     24,413     21,914  

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