Body Central Corp. Announces Third Quarter 2013 Financial Results

JACKSONVILLE, Fla., Oct. 31, 2013 (GLOBE NEWSWIRE) -- Body Central Corp. (Nasdaq:BODY) today announced financial results for the third quarter of 2013.

Highlights for the thirteen weeks ended September 28, 2013:
  • Net revenues for the quarter decreased 10.4% to $60.8 million, compared to $67.9 million for the third quarter of 2012.
  • Store sales decreased 10.1% to $55.7 million due to a comparable-store sales decrease of 18.3%, partially offset by a net increase of 28 stores from the same quarter last year.
  • Direct sales decreased by 13.6% to $5.1 million from $5.9 million in the same quarter last year.
  • The loss from operations was $15.5 million, as compared to income from operations of $196,000 for the third quarter in 2012.
  • The net loss was $9.0 million, or $(0.55) per diluted share based on 16.4 million weighted average shares outstanding. Net income for the third quarter of 2012 was $153,000, or $0.01 per diluted share based on 16.3 million weighted average shares outstanding.
  • The Company opened 5 new stores during the third quarter and operated 291 stores as of September 28, 2013.

Brian Woolf, Body Central's CEO, stated: "Our third quarter results reflect the continued difficulty of driving traffic into our stores and the overall traffic slowdown within our segment. While our comparable sales decreased 18% for the quarter, we realized positive comp sales performance in our bottoms and shoe businesses. In addition, the eCommerce component of our direct business continues to grow rapidly as we shift our marketing spend to online traffic drivers such as email campaigns, display ads, and affiliate programs. During the third quarter, we saw direct business revenue attributed to eCommerce increase approximately threefold from prior year levels. We are also confident that our focus on nightlife and club wear will resonate with our customers this holiday season. The introduction of our Sexy Stretch line performed well and we have plans to expand the offering. Our priorities continue to be to improve merchandise assortments, customer messaging and store traffic. We are initiating several key marketing actions during the holiday season to expand our customer base and reactivate former customers."

Mr. Woolf further stated: "Due to the longer transition period, we have reduced our corporate staff by 11% effective immediately, and have initiated other cost cutting measures that will be fully deployed by year end with the expectation that these initiatives will reduce our annualized SG&A exposure by $5 million."

In closing, Mr. Woolf said: "We believe our strategic direction and initiatives will support the re-engagement of our customer base while driving long-term sales growth and profitability."

Balance Sheet highlights as of September 28, 2013:

Cash, cash equivalents and short-term investments were $20.0 million at the end of the third quarter of 2013 compared to $36.9 million at the end of the third quarter in the prior year.

Average per store inventory at cost decreased 12.4% and average per store inventory units increased 4.0% from one year ago.

The Company had no long-term debt as of the end of the third quarter 2013 and 2012.

Reported results are preliminary and remain subject to adjustment until the filing of our Form 10-Q with the SEC.

Conference Call Information

A conference call to discuss third quarter financial results is scheduled for today October 31, 2013 at 4:30 PM Eastern Time. The conference call will also be webcast live at www.bodycentral.com. To access the replay of this call, please dial (877) 870-5176 and enter pin number 1108801. The replay is available until November 14, 2013. A replay of this web cast will also be available on the Investor Relations section of the Company's website, www.bodycentral.com, within two hours of the conclusion of the call and will remain on the website for ninety days.

About Body Central

Founded in 1972, Body Central Corp. is a growing, multi-channel, specialty retailer offering on trend, quality apparel and accessories at value prices. As of October 31, 2013 the Company operated 292 specialty apparel stores in 28 states under the Body Central and Body Shop banners, as well as a direct business comprised of a Body Central catalog and an e-commerce website at www.bodycentral.com. The Company targets women in their late teens to early thirties from diverse cultural backgrounds who seek the latest fashions and a flattering fit. The Company's stores feature an assortment of tops, dresses, bottoms, jewelry, accessories and shoes sold primarily under the Company's exclusive Body Central® and Lipstick® labels.

Safe Harbor Language

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. 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) our ability to identify and respond to new and changing fashion trends, customer preferences and other related factors; (2) our ability to execute successfully our growth strategy; (3) changes in consumer spending and general economic conditions; (4) changes in the competitive environment in our industry and the markets we serve, including increased competition from other retailers; (5) our new stores or existing stores achieving sales and operating levels consistent with our expectations; (6) our ability to obtain financing or to generate sufficient cash flow to support operations; (7) the success of the malls and shopping centers in which our stores are located; (8) our dependence on a strong brand image; (9) our direct business growing consistently with our growth strategy; (10) our information technology systems supporting our current and growing business, before and after our planned upgrades; (11) disruptions to our information systems in the ordinary course or as a result of systems upgrades; (12) our dependence upon key executive management or our inability to hire or retain additional personnel; (13) disruptions in our supply chain and distribution facility; (14) our lease obligations; (15) our reliance upon independent third-party transportation providers for all of our product shipments; (16) hurricanes, natural disasters, unusually adverse weather conditions, boycotts and unanticipated events; (17) the seasonality of our business; (18) increases in costs of fuel, or other energy, transportation or utilities costs and in the costs of labor and employment; (19) the impact of governmental laws and regulations and the outcomes of legal proceedings; (20) our maintaining effective internal controls; and (21) our ability to protect our trademarks or other intellectual property rights.
 
 
BODY CENTRAL CORP.
NON-GAAP CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)
     
(ADJUSTED FOR SECOND QUARTER DIRECT BUSINESS GOODWILL IMPAIRMENT LOSS)
     
  Thirty-Nine Weeks Ended
  September 28, September 29,
  2013 2012
  (In thousands, except share data)
Net (loss) income, as reported  $ (19,053)  $ 9,541 
Direct business impairment  10,358   —
Net (loss) income, as adjusted  $ (8,695)  $ 9,541
Net (loss) income per common share, as reported:    
Basic  $ (1.17)  $ 0.59 
Diluted  $ (1.17)  $ 0.58 
Net (loss) income per common share, as adjusted:    
Basic  $ (0.53)  $ 0.59 
Diluted  $ (0.53)  $ 0.58 
Weighted-average common shares outstanding:    
Basic  16,318,046  16,169,953
Diluted  16,318,046  16,350,690
 
 
BODY CENTRAL CORP.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)
         
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 28, 2013 September 29, 2012 September 28, 2013 September 29, 2012
  In Thousands Except Per Share Data
Net revenues  $ 60,833   $ 67,920   $ 217,383   $ 229,956 
Cost of goods sold, including occupancy, buying, distribution center and catalog costs  49,692   46,399   157,977   154,440 
Gross profit  11,141   21,521   59,406   75,516 
Selling, general and administrative expenses  24,480   19,718   69,406   55,820 
Depreciation  2,154   1,607   6,438   4,469 
Impairment of long-lived assets  —  —  10,358   —
(Loss) income from operations  (15,493)  196   (26,796)  15,227 
Interest income, net  2   3   11   10 
Other (loss) income, net  (259)  45   747   104 
(Loss) income before income taxes  (15,750)  244   (26,038)  15,341 
Benefit (provision) for income taxes  6,769   (91)  6,985   (5,800)
Net (loss) income  $ (8,981)  $ 153   $ (19,053)  $ 9,541 
         
Net (loss) income per common share:        
Basic  $ (0.55)  $ 0.01   $ (1.17)  $ 0.59 
Diluted  $ (0.55)  $ 0.01   $ (1.17)  $ 0.58 
Weighted-average common shares outstanding:        
Basic  16,363,633  16,205,845  16,318,046  16,169,953
Diluted  16,363,633  16,305,557  16,318,046  16,350,690
 
 
BODY CENTRAL CORP.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     
  September 28, 2013 September 29, 2012
  In Thousands
Assets  
Current assets    
Cash and cash equivalents  $ 15,597  $ 22,679 
Short-term investments 4,356  14,265 
Accounts receivable  1,479  1,536 
Inventories  24,464  20,860 
Prepaid expenses and other current assets  12,221  7,516 
Deferred tax asset  3,289  2,168 
Total current assets  61,406  69,024 
Property and equipment, net of accumulated depreciation  40,479  30,860 
Goodwill  11,150  21,508 
Intangible assets, net of accumulated amortization  16,574  16,574 
Other assets  333  108 
Total assets  $ 129,942  $ 138,074 
Liabilities and Stockholders' Equity    
Current liabilities    
Merchandise accounts payable  $ 10,585  $ 8,547 
Accrued expenses and other current liabilities  21,155  19,674 
Total current liabilities  31,740  28,221 
Other liabilities  10,167  7,900 
Deferred tax liability  4,392  4,577 
Total liabilities  46,299  40,698 
Commitments and contingencies    
Stockholders' equity    
Total stockholders' equity  83,643  97,376 
Total liabilities and stockholders' equity  $ 129,942  $ 138,074 
 
 
BODY CENTRAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
     
  Thirty-Nine Weeks Ended
  September 28, 2013 September 29, 2012
  In Thousands
Cash flows from operating activities    
Net (loss) income  $ (19,053)  $ 9,541 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation  6,438   4,469 
Deferred income taxes  (2,236)  137 
Excess tax benefits from stock-based compensation  (39)  (751)
Stock-based compensation  2,061   1,473 
Amortization of premiums and discounts on investments, net  147   263 
Loss on disposal of property and equipment  422   82 
Impairment of long-lived assets  10,358   —
Changes in assets and liabilities:    
Accounts receivable  3,231   1,071 
Inventories  (1,493)  281 
Prepaid expenses and other assets  (5,342)  (490)
Merchandise accounts payable  (3,130)  (7,951)
Accrued expenses and other current liabilities  362   (1,626)
Other liabilities  (380)  732 
Net cash (used in) provided by operating activities  (8,654)  7,231 
Cash flows from investing activities    
Proceeds from sale of property and equipment --  29 
Purchases of property and equipment  (12,709)  (13,158)
Purchases of intangible assets  —  (179)
Purchases of short-term investments  (12,786)  (24,582)
Proceeds from sales of short-term investments  2,310   1,051 
Proceeds from maturities of short-term investments  5,973   9,000 
Net cash used in investing activities  (17,212)  (27,839)
Cash flows from financing activities    
Proceeds from exercise of stock options  327   543 
Excess tax benefits from stock-based compensation  —  751 
Net cash provided by financing activities  327   1,294 
Net decrease in cash and cash equivalents  (25,539)  (19,314)
Cash and cash equivalents    
Beginning of year  41,136   41,993 
End of period  $ 15,597   $ 22,679 
CONTACT: Tom Stoltz         Chief Operating Officer and Chief Financial Officer         904-207-6720         tstoltz@bodyc.com