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Finlay Enterprises reports Q2 & H1 2008 results
27
Aug '08
Finlay Enterprises Inc announced its financial results for the second quarter and first six months of fiscal 2008. Results from the prior year period ended August 4, 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).

Second Quarter Results:
Sales for the second quarter increased 28.8% to $190.6 million compared to $148.0 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 $74.9 million for the second quarter, as compared to $27.0 million for the same period last year. Comparable store sales (stores open for the same months during the comparable period) for the second quarter decreased 4.8%.

For the thirteen weeks ended August 2, 2008, the Company reported a loss from continuing operations of $12.3 million, or $1.32 per share, compared to a loss of $8.5 million, or $0.93 per share, in the second quarter of fiscal 2007. Loss from operations before depreciation and amortization expenses (EBITDA) for the second quarter totaled $7.1 million, compared to a loss of $1.9 million in the prior year period. See Reconciliation of EBITDA in the attached tables.

The current quarter and six 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 profitability for the fiscal year.

First Half Results:
On a continuing operations basis, sales for the six months ended August 2, 2008 increased 27.3% to $395.7 million compared to $310.9 million in the first six months of fiscal 2007. Specialty jewelry stores contributed sales of $152.6 million for the six month period as compared to $54.3 million in 2007. Comparable store sales for the six months decreased 4.6%.

For the twenty-six weeks ended August 2, 2008, the Company reported a loss from continuing operations of $23.3 million, or $2.51 per share, compared to a loss of $16.2 million, or $1.79 per share, for the twenty-six weeks ended August 4, 2007. EBITDA for the six months totaled a loss of $10.9 million compared to a loss of $3.3 million in the prior year period.

Arthur E. Reiner, Chairman and Chief Executive Officer of Finlay Enterprises, Inc. commented, "The second quarter was impacted by ongoing weakness in consumer confidence as well as a challenging retail environment. It is largely for these reasons that we continue to maintain strong discipline in managing our operating expenses and inventory levels in order to maximize our liquidity position.

Our conservativeapproach to managing cash enabled us to end the second quarter with availability under our credit facility very close to our original plan. Moving forward, we will continue to intensify our focus on brand building within the Bailey Banks & Biddle and Carlyle businesses, as we transition our Company from a 100% leased business to a more diversified business with a focus on expanding the specialty store division."

Company Outlook:
Given the uncertainty of the macroeconomic environment in which the Company is currently operating, management has decided not to comment on the Company's guidance for the full year.

Finlay Enterprises Inc


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