EX-99 3 exhibit99-1.htm

                                                                                                                                 EXHIBIT 99.1

 


FOR IMMEDIATE RELEASE:

CONTACTS:

Blair Corporation

Carl Hymans

Al Lopez, Sr. Vice President, COO & CFO

G.S. Schwartz & Co

814-723-3600

212-725-4500

carlh@schwartz.com

 

BLAIR CORPORATION REPORTS THIRD QUARTER RESULTS

 

WARREN, Pa., (October 24, 2006) -- Blair Corporation (Amex: BL), (www.blair.com), a national multi-channel direct marketer of women's and men's apparel and home products, today announced results for the third quarter and nine months ended September 30, 2006.

 

Net sales for the third quarter ended September 30, 2006 were $89.5 million, a decrease of $8.6 million or 8.7%, compared to the $98.1 million recorded for the third quarter of 2005. Decreases in average selling prices accounted for $5.9 million of the $8.6 million decline in net sales. Average selling prices declined as the Company experienced higher than normal sales of products at lower price points and corresponding margins.

 

The Company reported a net loss of $1.1 million, or $0.30 per basic and diluted share, for the third quarter of 2006, compared to net income of $1.4 million or $.23 per basic and diluted share reported for the third quarter of 2005. Third quarter 2005 per share results reflect the reduction of weighted average shares outstanding as a result of the Company’s tender offer of 4.4 million outstanding shares on August 16, 2005.

 

Third quarter 2006 results reflect a decrease in general and administrative expenses of $7.9 million compared to third quarter 2005 levels. The reduction is primarily attributable to operational efficiencies, the elimination of prior year costs associated with Blair’s in-house credit program and costs incurred in August of 2005 for the tender offer. Also contributing to the lower reported expenses in 2006 are adjustments to several compensation plans that are based on reported results.

 

In November, 2005, Blair sold its credit portfolio to a third party provider. Net income and earnings per share results for the third quarter and first nine months of 2006 reflect the impact of the transition from the Company managing its proprietary credit program to having a third party administer the Blair Credit program. As a result of the sale of the credit portfolio, the Company no longer receives finance charge revenue, does not incur bad debts and has lower general and administrative costs associated with the credit portfolio.

 

Excluding the net results generated by the credit portfolio in the third quarter of 2005, Blair would have realized a net loss of $819,000, or $0.14 per basic share compared to the reported net income of $1.4 million, or $0.23 per basic and diluted share for the third quarter of 2005.

 

 

 

 

 

Third quarter 2006 results realized a 2% increase in cost of goods sold as a percentage of net sales over third quarter 2005 levels. A first quarter postal rate increase and loss of a key freight consolidator, who filed bankruptcy, has resulted in ongoing higher outbound freight expenses. Cost of goods sold has continued to benefit from our direct sourcing program that has generally resulted in lower costs of merchandise.

 

Third quarter 2006 advertising costs as a percent of net sales rose by approximately 3% over third quarter 2005 levels as a result of the postal rate increase and changes in our circulation program.

 

Results for the third quarter of 2006 also reflect a favorable reduction of $811,000 in interest expense compared to the third quarter of 2005 that was associated with the tender offer in August, 2005.

 

Net sales for the nine months ended September 30, 2006 were $307.2 million, a decrease of 5.9%, compared to $326.5 million reported for the nine months ended September 30, 2005. Units sold rose by approximately 2.2%, offset by lower average selling prices of approximately 6.8% as a result of continued price point repositioning.

 

Reported results for the first nine months of 2006 continued to benefit from the Company’s strategic efforts to increase direct sourcing. This improvement is reflected in the cost of goods sold as a percentage of net sales decreasing from approximately 46.0% to 45.5%.

 

General and administrative expenses for the first nine months of 2006 decreased 11% compared to the first nine months of 2005. This reduction is primarily due to restructuring efforts to generate operational efficiencies, elimination of prior year costs associated with Blair’s in-house credit program, costs incurred in August of 2005 for the tender offer, and adjustments to several compensation plans that are based on reported results.

 

Results were also affected by an increase in advertising costs of $7.6 million or 9.1% for the first nine months of 2006 compared to like period of 2005. The increase in these costs reflects higher levels of circulation and higher paper and postage costs associated with the delivery of catalogs to customers.

 

Blair's e-commerce channel generated $20.2 million and $73.8 million in net sales for the third quarter and first nine months of 2006 respectively, compared to $18.2 million and $64.2 million for the third quarter and first nine months of 2005.

 

During the third quarter of 2006, web site traffic increased 19% over third quarter 2005 levels, while website conversion rates and average order values remained steady. Revenue resulting from investments in keyword searches rose 62%, and revenue from natural search has nearly doubled following an intensive website optimization project.

 

The year-over-year increase reflects our customer’s interest in migrating to Blair.com and the impact of user experience and technology initiatives designed to improve site functionality and increase conversion rates. In addition, an advanced web analytics package was installed during the third quarter of 2006 to provide the Company with more detailed insight into web customer behavior.

 

 

 

 

 

 

The Company reported a net loss for the nine months ended September 30, 2006, of $5.7 million, or $1.47 per basic share, compared to net income of $8.1 million, or $1.09 per basic share and $1.07 per diluted share, reported for the first nine months ended September 30, 2005. The per share results for the nine months ended September 30, 2005, reflect the aforementioned reduction of weighted average shares outstanding resulting from Blair's tender offer for the repurchase of 4.4 million outstanding shares on August 16, 2005.

 

Excluding the net results generated by the credit portfolio in the nine month period ending

September, 2005, Blair would have realized net income of $1.7 million, or $0.23 per basic share and $.022 per diluted share compared to the reported net income of $8.1 million, or $1.09 per basic and $1.07 per diluted share for the nine months ended September, 2005.

 

Under the Company’s share repurchase program, 68,000 shares of its common stock were acquired through open market purchases during the third quarter of 2006, bringing total purchases under the existing authorization to 157,500 shares. The average purchase price was $29.40 per share. The Company has remaining authorization as of September 30, 2006 to purchase 242,500 shares. Under the terms of the Company’s revolving credit agreement, annual purchases may total $5 million.

 

John E. Zawacki, President and Chief Executive Officer of Blair, said, "We are addressing the challenging times within the retail catalog market by continuing to implement initiatives geared to promoting the customer’s buying experience, improving product demand and increasing our operational efficiencies. As a result of ongoing strategic efforts, we continue to recognize growth in the area of e-commerce. We are dedicated to reinforcing our position as the premier direct marketer to value-conscious consumers and increasing long-term shareholder value."

 

ABOUT BLAIR

 

Headquartered in Warren, Pennsylvania, Blair Corporation sells a broad range of women’s and men’s apparel and home products through direct mail marketing and its Web site www.blair.com. Blair Corporation employs approximately 1,900 associates (worldwide) and operates facilities and retail outlets in Northwestern Pennsylvania as well as a catalog outlet in Wilmington, Delaware. The Company, which has annual sales of approximately $450 million, is publicly traded on the American Stock Exchange (Amex: BL). For additional information, please visit http://www.blair.com.

 

This release contains certain statements, including without limitation, statements containing the words "believe," "plan," "expect," "anticipate," "strive," and words of similar import relating to future results of the Company (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, demand for and market acceptance of new and existing products, as well as other risks and uncertainties detailed in the most recent periodic filings of the Company with the Securities and Exchange Commission.

 

--Financial table follows--

 

 

 

Blair Corporation and Subsidiaries

 

Consolidated Statements of Income

 

 

(Unaudited)

(Unaudited)

 

Three Months Ended

Nine Months Ended

 

September 30

September 30

 

2006

2005

2006

2005

 

 

 

 

 

Net sales

$ 89,542,291 

$ 98,106,952 

$ 307,246,833 

$ 326,499,410 

Other revenue

1,550,591 

10,237,923 

4,693,030 

31,814,077 

 

91,092,882 

108,344,875 

311,939,863 

358,313,487 

 

 

 

 

 

Cost and expenses:

 

 

 

 

Cost of goods sold

40,691,637 

42,634,240 

139,629,234 

150,113,495 

Advertising

25,762,260 

25,265,481 

92,194,093 

84,523,176 

General and administrative

26,410,512 

34,352,624 

89,349,413 

100,656,767 

Provision for doubtful accounts

273,494 

3,289,124 

356,816 

10,196,089 

Interest (income) expense, net

(248,481)

538,469 

(866,227)

104,479 

Other expense (income), net

(8,829)

17,453 

169,704 

(189,400)

 

92,880,593 

106,097,391 

320,833,033 

345,404,606 

Income (loss) before income taxes

(1,787,711)

2,247,484 

(8,893,170)

12,908,881 

 

 

 

 

 

Income taxes (benefit) provision

(640,000)

832,000 

(3,184,000)

4,779,000  (640,000)

 

 

 

 

 

Net income (loss)

$ (1,147,711)

$ 1,415,484 

$ (5,709,170)

$ 8,129,881 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share based on

 

 

 

 

weighted average shares outstanding*

($0.30)

$0.23 

($1.47)

$1.09 

 

 

 

 

 

Diluted earnings (loss) per share based on

 

 

 

 

weighted average shares outstanding

 

 

 

 

and assumed conversions*

($0.30)

$0.23 

($1.47)

$1.07 

 

 

 

 

 

Weighted average basic shares outstanding*

3,820,116 

6,059,508 

3,875,738 

7,476,121 

 

 

 

 

 

Weighted average diluted shares outstanding*

3,887,199 

6,169,972 

3,964,117 

7,601,769 

 

 

 

 

 

 

*The per share results for the third quarter and nine months ended September, 2005 reflect

 the reduction of weighted average shares outstanding resulting from Blair’s tender offer for the

 repurchase of 4.4 million outstanding shares on August 16, 2005.

 

 

 

 

 

 

 

 

 

 

Blair Corporation and Subsidiaries

 

Consolidated Balance Sheets

 

 

 

 

(Unaudited)        

 

 

September 30      

December 31     

 

2006             

2005          

Assets

 

 

Current Assets:

 

 

Cash and cash equivalents

$ 16,209,846 

$ 53,099,129 

Receivables, less allowances for doubtful accounts of $363,333

 

 

in 2006 and $158,471 in 2005

6,066,555 

2,987,832 

Inventories:

 

 

Merchandise

74,097,571 

71,217,282 

Advertising and shipping supplies

14,879,659 

12,146,732 

 

88,977,230 

83,364,014 

Deferred income taxes

216,000 

731,000 

Prepaid and refundable federal and state taxes

1,712,617 

-0- 

Prepaid expenses

2,720,305 

2,781,777 

Total current assets

115,902,553 

142,963,752 

 

 

 

 

 

 

Property, plant and equipment:

 

 

Land

692,144 

1,142,144 

Buildings and leasehold improvements

66,052,080 

66,609,565 

Equipment

77,417,320 

75,320,297 

Construction in progress

5,268,333 

3,961,206 

 

149,429,877 

147,033,212 

Less allowances for depreciation

102,179,873 

98,350,258 

 

47,250,004 

48,682,954 

 

 

 

Trademark

289,495 

343,678 

Other long-term assets

1,143,542 

1,103,903 

Total assets

$164,585,594 

$193,094,287 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blair Corporation and Subsidiaries

 

Consolidated Balance Sheets – Continued

 

 

 

(Unaudited)

 

 

September 30

December 31

 

2006

2005

Liabilities and Stockholders’ Equity

 

 

Current liabilities:

 

 

Trade accounts payable

$ 21,614,135 

$ 29,137,285 

Advance payments from customers

4,117,000 

1,873,803 

Reserve for sales returns

4,953,000 

4,602,000 

Accrued expenses

16,160,566 

20,994,747 

Accrued federal and state taxes

-0-

6,782,444 

Current portion of capital lease obligations

13,848 

19,198 

Total current liabilities

46,858,549 

63,409,477 

 

 

 

Capital lease obligations, less current portion

6,709 

14,695 

 

 

 

Deferred income taxes

2,509,000 

2,582,000 

 

 

 

Other long-term liability

297,762 

679,720 

 

 

 

Stockholders’ equity:

 

 

Common stock without par value:

 

 

Authorized 12,000,000 shares

 

 

issued 10,075,440 shares (including shares

 

 

held in treasury) -- stated value

419,810 

419,810 

Additional paid-in capital

13,414,474 

13,553,937 

Retained earnings

324,925,681 

334,023,925 

Accumulated other comprehensive loss

(4,839)

(48,579)

 

338,755,126 

347,949,093 

Less 6,238,999 shares in 2006 and 6,124,818

 

 

shares in 2005 of common stock

 

 

in treasury -- at cost

224,217,345 

221,381,619 

Less receivable and deferred compensation

 

 

from stock plans

(375,793)

159,079 

Total stockholders’ equity

114,913,574 

126,408,395 

Total liabilities and stockholders’ equity

$164,585,594 

$193,094,287