Chief Auto Parts Inc. Announces 1997 Financial Results
31 March 1998
Chief Auto Parts Inc. Announces 1997 Financial Results
DALLAS, March 31 -- CHIEF AUTO PARTS Inc. today announced
financial results for the year ended December 28, 1997. The company's revenue
totaled $464.7 million, a 6% increase from 1996, and earnings before interest,
taxes, depreciation and amortization (EBITDA) totaled $34.4 million, an
increase of 3.3% from the prior year. A summary of financial results for the
three-month and 12-month periods ended December 28, 1997 and December 29,
1996, respectively, follows:
(Amounts in thousands)
Three months ended Year ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
Net sales $111,719 $107,687 $464,665 $438,182
Cost of goods
sold 64,001 60,658 270,150 251,764
Gross profit 47,718 47,029 194,515 186,418
SG&A 36,129 40,550 160,086 167,064
Depr. &
amortization 4,106 3,179 14,259 11,622
Operating income 7,483 3,300 20,170 7,732
Interest expense 4,992 1,704 15,357 6,203
Other income/
(expense) (17) (5) 18 66
Pre-tax income 2,508 1,601 4,795 1,463
Tax 972 (341) 1,935 359
Net income $ 1,536 $ 1,942 $ 2,860 $ 1,104
EBITDA $ 11,606 $ 13,484 $ 34,411 $ 33,288
Capital
expenditures $ 4,753 $ 7,677 $ 17,009 $ 23,275
"Our financial results reflect management's strategy to relocate and
remodel existing Chief stores to better serve our customers, as well as
Chief's expansion into the commercial segment of the aftermarket parts
industry," said David Eisenberg, president, chief executive officer and
chairman of the board. "At the end of 1997, Chief had 552 stores in
operation, and 79% of Chief stores are new or remodeled since July of 1994 to
accommodate a significantly higher assortment of SKU's. The strategy for 1998
is to relocate smaller stores, focus on new stores in underserved markets, and
expand the commercial segment."
Net sales for 1997 increased by $26.5 million, or 6%, to $464.7 million
from $438.2 million in 1996. The increase was primarily attributable to
growth in the company's store base, as 38 stores were opened in 1997, as well
as comparable store sales growth. Comparable store sales increased during
1997 by $7.7 million, or 1.8%, to 430.6 million from $422.9 million. The
comparable store sales growth resulted from a higher average customer
transaction (as measured in dollars), which was partially offset by a lower
average number of customer transactions per store.
Gross profit increased by $8.1 million, or 4.3%, to $194.5 million in 1997
from $186.4 million in 1996 principally due to increased sales volume, the
effect of which was partially offset by a lower gross profit margin (41.9% in
1997 compared to 42.5% in 1996). The gross profit decrease resulted from
being more price competitive, and from fewer purchasing incentives provided by
vendors in 1997 over 1996.
Selling, general and administrative expenses (SG&A) decreased by
$7.0 million, or 4.2%, to $160.1 million in 1997 from $167.1 million in 1996.
The decrease was primarily due to an unusual $14.0 million non-cash provision
in 1996 for legal reserves and for store closings related to the company's
exit from the Little Rock, AR market. Excluding the non-cash charge, SG&A
rose by $7.0 million, or 4.6%, in 1997 due principally to higher store labor
and occupancy costs associated with the company's increased sales and larger
stores. As a percentage of sales, SG&A declined from 34.9% in 1996 to 34.5%
in 1997 due to lower net advertising expenses and the negotiation of favorable
lease terminations related to several closed stores, as well as lower store
labor related to remerchandising remodeled stores.
Depreciation and amortization expense increased by $2.6 million, or 22.7%,
to $14.3 million in 1997 from $11.6 million in 1996. The increase was
primarily the result of a higher depreciable asset base in 1997 compared to
1996, most notably in leasehold improvements and furniture and equipment.
Net income increased by $1.8 million, or 159.1%, to $2.9 million in 1997
from $1.1 million in 1996, due to the factors discussed above.
Financial results for the fourth quarters ended December 28, 1997 and
December 29, 1996, respectively, are shown in previous chart and reflect many
of the same trends that affected the full-year financial results.
Dallas-based Chief Auto Parts Inc. is a leading auto parts and accessories
retail chain, both in number of stores and annual revenue, with approximately
5,600 employees and 552 retail stores in five states at year-end 1997. A
consumer-oriented specialty aftermarket retailer, Chief features a product mix
of approximately 17,000 stock keeping units including nationally known brands,
as well as private label automotive parts, including new and remanufactured
hard parts, accessories and maintenance items.
Certain statements contained in this release which are not historical
facts are forward-looking statements that involve risks, uncertainties, and
assumptions including, but not limited to, the activities of our competitors,
demand for our products, the success of the do-it-yourself (DIY) and
commercial programs, the demand for auto parts, the economy in general and
weather. In light of these risks, uncertainties and assumptions, there can be
no assurance that any forward-looking statement made herein will in fact be
realized.
SOURCE Chief Auto Parts Inc.