WESTLAKE VILLAGE, Calif., April 30, 2001 (PRIMEZONE) -- The Right Start, Inc. (Nasdaq:RTST), today announced results for the fourth quarter and fiscal year ended February 3, 2001.
Jerry R. Welch, Chairman and CEO, said, "In a difficult retailing environment, our fourth quarter operating results improved significantly over last year. Total retail store sales increased 24%, same store sales were up 6% and EBITDA improved 13%. In addition to our improved operating results, we also opened six new street stores during the quarter in Detroit, San Francisco, Chicago, Houston and San Antonio."
On October 10, 2000, RightStart.com Inc., the company's direct-to-consumer affiliate, issued 2.0 million shares of common stock representing 18% of the shares outstanding after the transaction. The percentage of common stock ownership of RightStart.com by the Company was reduced from 60.2% to 49.4%. Consequently, the results of RightStart.com are now accounted for under the equity method of accounting. Accordingly, the Company's financial statements as of and for the year ended February 3, 2001 are presented on an unconsolidated basis retroactive to the beginning of the current fiscal year.
Like most retailers, the Company has a fiscal year consisting of fifty-two or fifty-three weeks ending on the Saturday closest to the last day of January. The year and quarter ended February 3, 2001 were fifty-three and fourteen week periods, respectively, while the year and quarter ended January 29, 2000 were fifty-two and thirteen week periods, respectively.
Retail store sales for the quarter ended February 3, 2001 were $13.3 million, an increase of 23.7% over retail store sales of $10.7 million for the quarter ended January 29, 2000. For the fiscal year, retail store sales increased 16.2%, to $44.2 million from $38.0 million for last fiscal year. Same store sales, or sales for stores only open for comparable periods, increased 5.8% for the quarter and .9% for the fiscal year, after adjusting for the effect of one additional week this fiscal year.
For the quarter, the Company's retail store earnings, before interest, taxes, depreciation and amortization, and before new store pre-opening costs, non-cash compensation and non-recurring charges (EBITDA) improved 12.8% to $660,000 compared to $585,000 for the fourth quarter last year. For the year, the Company achieved EBITDA of $111,000, compared to $786,000 last year. Prior year EBITDA was positively affected by $307,000 of income from The Right Start Catalog prior to its contribution to RightStart.com. The current year EBITDA was adversely affected during the first three quarters by higher distribution expenses and by slightly higher operating expenses for new stores opened at the end of fiscal 1999.
Due to the deconsolidation of RightStart.com, the Company recorded a gain on its investment on RightStart.com of $2,554,000 in the third quarter. This gain partially offset year-to-date losses for RightStart.com, resulting in a net loss of $3,406,000 on the Company's investment for the year. Accordingly, the Company reported a net loss of $7,704,000, or $1.46 a share, for the year and $461,000, or $.11 a share, for the quarter. For the previous year, which includes the consolidated operations of RightStart.com, the Company incurred a consolidated net loss of $10,842,000, or $2.14 a share, and a consolidated net loss for the quarter of $4,132,000, or $.78 a share.
Mr. Welch continued, "Due to our solid same store sales performance in the important fourth quarter, we were able to achieve our third consecutive year of positive same store sales comparisons. In light of the slowing economy and the intense competition in retailing, we feel pleased about our fourth quarter sales results." Mr. Welch also noted that the Company ended the fiscal year with 61 stores in operation including 26 enclosed regional mall locations and 35 neighborhood street locations. "In late 1997, we opened our first street stores and it has been our exclusive new store format since then. We are very excited about the operating results of our street stores and we intend to accelerate their rollout over the next several years," concluded Mr. Welch.
About Right Start
The Right Start, Inc. is the largest national specialty retailer of high quality developmental, educational and care products for infants and children through age four. The Right Start brand originated in 1985 through the creation of the award-winning Right Start Catalog(tm). The Right Start now operates 64 retail stores nationwide.
About RightStart.com
RightStart.com is a leading online specialty retailer for infants and children and currently operates the Right Start Catalog(tm). RightStart.com is dedicated to providing customers with a unique online shopping experience by offering an assortment of trusted products carefully selected with regard to quality and developmental and educational value.
The companies are based in Westlake Village, Calif.
This press release may contain certain forward-looking statements with respect to the financial condition, results of operations and expansion projects of The Right Start that may be impacted by factors including, but not limited to, the availability of capital, competition from other retailers and potential product liability claims and other risks included in The Right Start's filings with the Securities and Exchange Commission including, but not limited to, The Right Start's Registration Statement on Form S-3 (File No. 333-84319), its Annual Report of Form 10-K/A for the fiscal year ended January 29, 2000 and its quarterly reports.
THE RIGHT START, INC.
STATEMENTS OF OPERATIONS
(unaudited)
The Right Start, Inc.
(consolidating)
---------------
The Right Start, Inc.(a) Retail Stores
53 weeks ended 52 weeks ended
Feb. 3, 2001 Jan. 29, 2000
------------ ------------
Retail store sales $13,250,000 $10,715,000
Sales to RightStart.com 2,356,000
Internet sales
Catalog sales
Shipping and handling revenues
----------- -----------
Net sales 15,606,000 10,715,000
Costs and expenses:
Cost of goods sold - merchandise 6,524,000 5,243,000
Cost of goods sold to RightStart.com 2,356,000
Cost of goods sold -
shipping and handling
Operating expense 4,692,000 3,890,000
Non-cash compensation expense 8,000
Marketing and advertising expense 221,000 204,000
General and administrative expense 1,153,000 793,000
Pre-opening costs 138,000 95,000
Depreciation and amortization expense 594,000 539,000
Store closing expense 14,000
----------- -----------
Operating income (loss) (94,000) (49,000)
Minority interest in
consolidated subsidiary
Gain on investment in RightStart.com
Interest (income) expense 347,000 133,000
----------- -----------
Pre-tax income (loss) (441,000) (182,000)
Income tax provision 20,000 20,000
----------- -----------
Net income (loss) $ (461,000) $ (202,000)
=========== ===========
Basic income (loss) per share $ (0.11) $ (0.05)
Basic weighted average
number of shares outstanding 5,617,275 5,411,700
The Right Start, Inc.
(consolidating)
-----------------------------------------
Rightstart.com Inc. Consolidated
52 weeks ended 52 weeks ended
Jan. 29, 2000 Eliminations Jan. 29, 2000
------------- ------------ -------------
Retail store sales $10,715,000
Sales to RightStart.com
Internet sales $4,938,000 4,938,000
Catalog sales
Shipping and 595,000 595,000
handling revenues 145,000 145,000
----------- -----------
Net sales 5,678,000 16,393,000
Costs and expenses:
Cost of goods sold -
merchandise 3,451,000 8,694,000
Cost of goods sold
to RightStart.com
Cost of goods sold -
shipping and handling 1,565,000 1,565,000
Operating expense 1,918,000 5,808,000
Non-cash
compensation expense 41,000 41,000
Marketing and
advertising expense 3,760,000 3,964,000
General and
administrative expense 1,359,000 2,152,000
Pre-opening costs 95,000
Depreciation and
amortization expense 197,000 736,000
Store closing expense
----------- ----------- -----------
Operating income (loss) (6,613,000) (6,662,000)
Minority interest in
consolidated subsidiary $(2,599,000) (2,599,000)
Gain on investment
in RightStart.com
Interest (income) expense (84,000) 49,000
----------- ----------- -----------
Pre-tax income (loss) (6,529,000) 2,599,000 (4,112,000)
Income tax provision 20,000
----------- ----------- -----------
Net income (loss) $(6,529,000) $ 2,599,000 $(4,132,000)
=========== =========== ===========
Basic income (loss) per share $ (0.78)
Basic weighted average
number of shares outstanding 5,411,700
The Right Start, Inc.
(consolidating)
---------------
The Right Start, Inc.(a) Retail Stores
53 weeks ended 52 weeks ended
Feb. 3, 2001 Jan. 29, 2000
------------ ------------
Retail store sales $ 44,201,000 $ 38,043,000
Sales to RightStart.com 9,408,000
Internet sales
Catalog sales 1,686,000
Shipping and handling revenues 494,000
------------ ------------
Net sales 53,609,000 40,223,000
Costs and expenses:
Cost of goods sold
- merchandise 21,952,000 19,576,000
Cost of goods sold to
RightStart.com 9,408,000
Cost of goods sold
- shipping and handling 483,000
Operating expense 17,121,000 15,112,000
Non-cash compensation
expense 93,000 1,794,000
Marketing and advertising
expense 1,000,000 830,000
General and administrative
expense 4,017,000 3,436,000
Pre-opening costs 456,000 323,000
Depreciation and amortization
expense 2,184,000 1,672,000
Store closing expense 401,000 151,000
------------ ------------
Operating income (loss) (3,023,000) (3,154,000)
Minority interest in
consolidated subsidiary
Loss on investment in
RightStart.com 3,406,000
Interest (income) expense 1,197,000 465,000
------------ ------------
Pre-tax income (loss) (7,626,000) (3,619,000)
Income tax provision 78,000 68,000
------------ ------------
Net income (loss) $ (7,704,000) $ (3,687,000)
============ ============
Basic and diluted income
(loss) per share $ (1.46) $ (0.74)
Basic and diluted weighted
average number of shares
outstanding 5,597,809 5,355,756
The Right Start, Inc.
(consolidating)
-----------------------------------------
Rightstart.com Inc. Consolidated
52 weeks ended 52 weeks ended
Jan. 29, 2000 Eliminations Jan. 29, 2000
------------- ------------ -------------
Retail store sales $ 38,043,000
Sales to RightStart.com
Internet sales 7,391,000 7,391,000
Catalog sales 1,959,000 3,645,000
Shipping and handling
revenues 271,000 765,000
------------ ----------- ------------
Net sales 9,621,000 49,844,000
Costs and expenses:
Cost of goods sold
- merchandise
Cost of goods sold to 5,703,000 25,279,000
RightStart.com
Cost of goods sold
- shipping and handling 2,195,000 2,678,000
Operating expense
Non-cash compensation 3,345,000 18,457,000
expense
Marketing and advertising 220,000 2,014,000
expense
General and administrative 6,403,000 7,233,000
expense 1,870,000 5,306,000
Pre-opening costs
Depreciation and 323,000
amortization expense 278,000 1,950,000
Store closing expense 151,000
------------ ----------- ------------
Operating income (loss) (10,393,000) (13,547,000)
Minority interest in
consolidated subsidiary
Loss on investment in $(3,000,000) $ (3,000,000)
RightStart.com
Interest (income) expense (238,000) 227,000
------------ ----------- ------------
Pre-tax income (loss) (10,155,000) 3,000,000 (10,774,000)
Income tax provision 68,000
------------ ----------- ------------
Net income (loss) $(10,155,000) $ 3,000,000 $(10,842,000)
============ =========== ============
Basic and diluted
income (loss) per share $ (2.14)
Basic and diluted weighted
average number of shares
outstanding 5,355,756
(a) On October 10, 2000 RightStart.com Inc. issued shares of
common stock which reduced Right Start, Inc. ownership in
the company to less than 50%. Accordingly, Right Start, Inc.
has revised its current year financial statements to reflect
results on an unconsolidated basis.