“From an operational standpoint, we strengthened our executive management team with the addition of Steve Lawrence, our Chief Merchandising Officer, and Bill Gentner, our Chief Marketing Officer, and with the promotion of Russ Lundy to EVP, Stores,” stated Mr. Glazer. “Through their guidance and leadership, and in collaboration with the other members of the executive management team, we continue to make improvements to our merchandise, marketing and stores.

“As we enter 2013, we have great momentum and our inventory is well positioned for growth. We have strategically increased our inventory investment to take advantage of several opportunities. We clearly expect to see meaningful sales and earnings growth in 2013 and beyond,” Mr. Glazer concluded.

Financial highlights for FY 2012:
  • Total sales increased 8.9% to $1,646 million. FY 2012 had 53 weeks while FY 2011 had 52 weeks. The 53 rd week in FY 2012 added $16 million to total sales. On a 52 week basis, comparable store sales increased 5.7%.
  • Direct-To-Consumer sales increased 65% versus the prior year. Direct-To-Consumer sales positively impacted the Company’s same store sales by 0.5% in FY 2012.
  • Adjusted gross profit, as a percentage of net sales, improved by 90 basis points compared with FY 2011. The adjusted merchandise margin rate improved 20 basis points due to lower markdowns, while buying, occupancy and distribution costs improved 70 basis points due to leverage from higher sales.
  • Adjusted selling, general and administrative expenses, as a percentage of net sales, increased by 20 basis points over FY 2011. Leverage in store expenses and an improved benefit from the Company’s private label credit card program were offset by an increase in incentive compensation costs.
  • Adjusted earnings per diluted share increased 45% to $1.33 over last year. Including the one-time items, EPS was $1.19. Adjusted net income was $42.6 million, a 37% increase compared to $31.0 million for last year. Including the one-time items, net income was $38.2 million. Diluted average shares outstanding for FY 2012 were 31.6 million compared to 33.3 million for FY 2011.

Fiscal 2013 Outlook

The Company expects that comparable store sales for the year will increase 2% to 4% and that EPS, excluding one-time items, will be in a range of $1.45 to $1.55. The one-time items are associated with the consolidation of the Company’s South Hill operations into its Houston headquarters and are estimated to be approximately $16 million, or $0.30 per diluted share, for the year.
FY 2013 OUTLOOK FY 2012
Sales ($mm) $ 1,689   -   $ 1,721 $ 1,646
Adjusted EPS $ 1.45 - $ 1.55 $ 1.33
Diluted Shares (m) 33,200 31,600

The Company added that it plans to open approximately 40 stores during the year, and expects net capital expenditures of approximately $57 million, compared to $45 million in FY 2012. The increase in net capital expenditures is due to additional investments in existing stores for the upgrading of store fixtures and visual merchandising, the installation of additional cosmetics counters and IT initiatives.

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