Chief Auto Parts Announces Q1 1998 Results
13 May 1998
Chief Auto Parts Announces First Quarter 1998 Results
DALLAS, May 12 -- Chief Auto Parts Inc., one of the nation's
largest auto parts and accessories retail chains, today announced results for
the first quarter ended March 29, 1998. Net income decreased to a loss of
$2.2 million in the quarter compared to a profit of $170,000 in the same
period in 1997. Sales for the quarter increased approximately 0.5% in 1998
from 1997, to $110.4 million.
Chief Auto Parts Inc.
Unaudited Interim Financial Results for
The Three Months Ended March 29, 1998
Three Months Ended
March 29, March 30,
1998 1997
% %
Net sales $110,438 100.0 $109,854 100.0
Cost of goods sold, warehousing
and distribution 65,310 59.1 63,281 57.6
Gross profit 45,128 40.9 46,573 42.4
Selling, general and administrative 40,081 36.3 41,017 37.3
Depreciation and amortization 3,574 3.3 3,251 3.0
Operating income 1,473 1.3 2,305 2.1
Interest expense, net 5,244 4.7 1,784 1.6
Other (income) expense, net (52) --- 10 ---
(Loss) income before income taxes (3,719) (3.4) 511 0.5
Income tax (benefit) expense (1,559) (1.4) 341 0.3
Net (loss) income $(2,160) (2.0) $170 0.2
EBITDA $5,099 4.6 $5,546 5.0
Three Months Ended March 29, 1998 vs. Three Months Ended March 30, 1997
Net sales increased by $584,000, or 0.5%, to $110.4 million in 1998 from
$109.9 million in 1997. The increase was due primarily to growth in the
Company's store base. Comparable store sales decreased by 1.6%, due in part
to weather factors in California (the El Nino rains), where a substantial
portion of the Company's stores are located. There were 556 stores open at
March 29, 1998 compared to 547 at March 30, 1997. During 1998, the Company
opened 14 new stores (including the relocation of 8 stores) and closed
10 stores (including the relocations). Gross profit decreased by
$1.4 million, or 3.1%, to $45.1 million in 1998 from $46.6 million in 1997,
due primarily to a decrease in the gross profit margin. Gross profit margin
decreased in 1998 compared to 1997 as a result of a planned move towards more
competitive pricing in several markets, as well as lower purchasing incentives
provided by vendors relating to store remodeling.
Selling, general and administrative expenses decreased by $936,000, or
2.3%, to $40.1 million in 1998 from $41.0 million in 1997, and as a percentage
of sales decreased to 36.3% in 1998 from 37.3% in 1997. The decreases were
due primarily to a 1997 program ("The All New Chief" program) that had no
equivalent in 1998, resulting in lower store labor costs and net advertising
expense in 1998 than in 1997. The program was comprised of an institutional
advertising program broadcast in the Los Angeles market and additional
staffing at stores in that market. The pro-gram was designed to emphasize the
extensive remodeling of stores in that market, and the related additional
inventory and additional store staffing to better serve customers.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
decreased by $447,000, or 8.1%, to $5.1 million in 1998 from $5.5 million in
1997, due to the factors discussed above. EBITDA is used by the Company for
the purpose of analyzing operating performance, leverage and liquidity.
Depreciation and amortization expense increased by $323,000, or 9.9%, to
$3.6 million in 1998 from $3.3 million in 1997. This increase was primarily
due to an increase in the depreciable asset base, including leasehold
improvements and furniture and equipment, resulting from an extensive store
remodeling program that was ongoing throughout fiscal 1996 and which was
completed early in 1997, as well as to an increase in the number of stores
open.
Interest expense increased by $3.5 million, or 194.0%, to $5.2 million in
1998 from $1.8 million in 1997. This increase was due primarily to the sale
of $130 million of 10.5% Senior Notes in May 1997, in conjunction with a
recapitalization of the Company, which resulted in an increase to long-term
debt. Total debt was $203.8 million at March 29, 1998 (including
$16.7 million of capitalized lease obligations).
Net income decreased by $2.3 million, to a loss of $2.2 million in 1998
from $170,000 in 1997, due to the factors discussed above.
Chief Auto Parts Inc. is engaged in the sale and distribution of
automotive parts to the retail and wholesale aftermarket through a chain of
556 stores (located primarily in California and Texas) at March 29, 1998.
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. The Company undertakes no obligation and does not intend to update,
revise or otherwise publicly release the result of any revisions to these
forward-looking statements that may be made to reflect future events or
circumstances.
SOURCE Chief Auto Parts Inc.