Finlay reports Q3 & 9-monhts results

05 Dec '08

3 min read

Finlay Enterprises Inc announced its financial results for the third quarter and first nine months of fiscal 2008. Results from the prior year period ended November 3, 2007 exclude from continuing operations the results from Parisian stores that closed in fiscal 2007, which have been classified as discontinued operations in accordance with generally accepted accounting principles (GAAP).

Sales for the third quarter increased 12.9% to $160.3 million compared to $141.9 million in the comparable period of 2007. Specialty jewelry stores consisting of Carlyle, Congress, and Bailey Banks & Biddle, which was acquired in November 2007, contributed sales of $58.0 million for the third quarter, as compared to $23.6 million for the same period last year.

Comparable store sales (stores open for the same months during the comparable period) for the third quarter, excluding the Macy's and Lord & Taylor stores scheduled to close at year-end, decreased 13.5%. Including these stores, comparable store sales decreased 14.9%.

For the thirteen weeks ended November 1, 2008, the Company reported a loss from continuing operations of $20.8 million, or $2.23 per share, compared to a loss of $7.5 million, or $0.82 per share, in the third quarter of fiscal 2007. Loss from operations before depreciation and amortization expenses (EBITDA) for the third quarter totaled $21.2 million, compared to a loss of $5.2 million in the prior year period. See Reconciliation of EBITDA in the attached tables.

The current quarter and nine month period loss from continuing operations and EBITDA reflect the expected interim loss associated with the Bailey Banks & Biddle division, which was not included in the prior year results. As is the case with most jewelry retailers, the fourth quarter for Bailey Banks & Biddle is expected to account for the majority of its sales and EBITDA for the fiscal year.

On a continuing operations basis, sales for the nine months ended November 1, 2008 increased 22.8% to $556.0 million compared to $452.8 million in the first nine months of fiscal 2007. Specialty jewelry stores contributed sales of $210.6 million for the nine month period as compared to $77.9 million in 2007. Comparable store sales for the nine months, excluding the Macy's and Lord & Taylor stores, decreased 7.0%. Including these stores, comparable store sales decreased 7.9%.

For the thirty-nine weeks ended November 1, 2008, the Company reported a loss from continuing operations of $44.1 million, or $4.75 per share, compared to a loss of $23.7 million, or $2.61 per share, for the thirty-nine weeks ended November 3, 2007. EBITDA for the nine months totaled a loss of $32.2 million compared to a loss of $8.5 million in the prior year period.

Arthur E. Reiner, Chairman and Chief Executive Officer of Finlay Enterprises, Inc. commented, "Our results for the third quarter were significantly impacted by an increasingly challenging macro economy and ongoing weakness in consumer confidence. In taking these difficult conditions into account, we are continuing to manage our business conservatively and are approaching our planned expenditures in a disciplined manner. We are carefully monitoring our inventory levels and remain highly focused on maximizing our liquidity position."

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