UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 2006
BLAIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 001-00878 25-0691670
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(State or other (Commission File Number) (IRS Employer File Number)
jurisdiction of
incorporation)
220 Hickory Street, Warren, Pennsylvania 16366-0001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (814) 723-3600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 24, 2006 Blair Corporation (the "Company") issued a press
release announcing its earnings for the second quarter and the six months
ended June 30, 2006. The information contained in the press release, which
is attached to this report as Exhibit 99.1 is incorporated herein by
reference.
Item 7.01 Regulation FD Disclosure.
The information contained in the press released attached to this
report as Exhibit 99.1 is furnished pursuant to Item 7.01, "Regulation FD
Disclosure."
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Shell company transactions.
Not applicable.
(d) Exhibits.
Exhibit 99.1 press release dated July 24, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: July 24, 2006 BLAIR CORPORATION
By: /S/ JOHN E. ZAWACKI
---------------------------------
John E. Zawacki
President and Chief Executive Officer
By: /S/ LARRY J. PITORAK
-------------------------------
Larry J. Pitorak
Interim Chief Financial Officer
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
CONTACTS:
Blair Corporation Carl Hymans
Larry Pitorak, Chief Financial Officer G.S. Schwartz & Co
814-723-3600 212-725-4500
carlh@schwartz.com
BLAIR CORPORATION REPORTS SECOND QUARTER RESULTS
WARREN, Pa., (July 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 second quarter and six months ended
June 30, 2006.
Net sales for the second quarter ended June 30, 2006 were $115.0 million, a
decrease of 4.8%, compared to $120.8 million reported for the second quarter
ended June 30, 2005. Second quarter 2005 net sales included $1.3 million from
the Crossing Pointe catalog and the Allegheny Trail businesses which were closed
in 2005. Higher unit sales volume was offset by lower average selling prices as
a result of ongoing price point repositioning. We continue to monitor our
merchandise and pricing programs to maximize results.
The traditional letter mailing channel, which has been in decline for some time,
was replaced with a newly designed, item focused catalog featuring a collection
of best selling products. The new catalog's first mailing occurred in July 2006.
The Company reported net income for the second quarter ended June 30, 2006 of
$233,000, or $.06 per basic and diluted share, compared to net income of $6.1
million, or $0.74 per basic share and $0.73 per diluted share, reported for the
second quarter of 2005. The per share results for the second quarter of 2006
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. The Company had 3.9 million shares of common stock outstanding
at June 30, 2006, compared to 8.2 million shares at June 30, 2005. Without the
reduction in outstanding shares for the second quarter of 2006, basic and
diluted per share results would have been $0.03.
In November, 2005, Blair sold its credit portfolio to a third party provider.
Net income and earnings per share results for the second quarter and first six
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 administration of the
credit portfolio. We continue to work closely with our credit partner to develop
and define marketing initiatives that will provide additional customer benefits
and improve Blair Credit usage when buying our products. During the second
quarter of 2006 we began to see improved acceptance for the new Blair Credit
card. The Company anticipates a return over time of Blair Credit activity to
approach historical proprietary credit program levels.
Excluding the net results generated by the credit portfolio in the second
quarter of 2005, Blair would have realized net income of $4.4 million or $0.54
per basic share and $.53 per diluted share compared to the reported net income
of $6.1 million, or $0.74 per basic share and $0.73 per diluted share for the
second quarter of 2005.
Reported results for the second quarter of 2006 include the continued
improvement in our product procurement area. Cost of goods sold as a percentage
of net sales for the second quarter of 2006 was 44.4%, a significant improvement
from 45.3% for the second quarter of 2005. This improvement can be attributed to
increased direct sourcing by the Company, continued partnering with all of our
venders, and better efficiencies in our inventory liquidation program.
Results for the second quarter of 2006 were adversely impacted by higher
advertising expenses of $5.1 million over second quarter 2005 levels reflecting
increased catalog circulation and higher customer acquisitions costs.
Advertising expense increases also include the effects of higher paper and
postage costs incurred in the creation and distribution of the catalogs. General
and administrative expenses for the second quarter 2006 were $3.9 million lower
than the comparable period a year ago. The reduction is primarily attributable
to the elimination of costs associated with Blair's in-house credit program, as
well as adjustments to several compensation plans that were based on reported
results. Offsetting the lower general administrative expenses for the quarter
was a pre-tax severance charge of $2.0 million associated with restructuring
efforts.
The Company acquired 89,500 shares of its common stock through open market
purchases during the second quarter of 2006 and has remaining authorization as
of June 30, 2006 to purchase 310,500 shares.
Net sales for the six months ended June 30, 2006 were $217.7 million, a decrease
of 4.7%, compared to $228.4 million reported for the six months ended June 30,
2005. Reported sales for 2005 include $1.9 million attributable to sales from
our Allegheny Trail and Crossing Pointe businesses which were closed in 2005.
Higher unit sales volume was offset by lower average selling prices as a result
of continued price point repositioning.
Results for the first six months of 2006 included sustained improvements in
procurement practices which partially offset higher operational expenses. Cost
of goods sold continued to reflect solid improvements as a result of our direct
sourcing strategy for product. Advertising expenses for the six months ended
June 2006 were $66.4 million, an increase of $7.2 million or 12.1% over the
comparable period in 2005. This increase is primarily attributable to greater
circulation volume along with higher expenses associated with postage and paper
costs. General and administrative expenses for the first six months of 2006 were
$3.4 million lower than the prior year, primarily as a result of continued
restructuring efforts to generate operational efficiencies along with savings
associated with the sale of our in house credit program. Included in the six
month general and administrative expenses were severance costs of $3.5 million
and $425,000 for the 2006 and 2005 periods, respectively.
The Company reported a net loss for the six months ended June 30, 2006 of $4.6
million, or $1.17 per basic share, compared to net income of $6.7 million, or
$0.82 per basic share and $0.81 per diluted share, reported for the first six
months ended June 30, 2005. The per share results for the six months ended June
30, 2006 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. Without the reduction in
outstanding shares for the first six months of 2006, basic per share results
would have been a loss of $0.55.
Results for the six month period ending June 2005, excluding the impact of
credit would have shown net income of $2.7 million or $0.33 per basic share and
$0.32 per diluted share compared to the reported net income of $6.7 million or
$0.82 per basic share and $0.81 per diluted share.
Blair's e-commerce channel generated $27.0 million and $53.5 million in net
sales for the second quarter and first six months of 2006 respectively, compared
to $22.8 million and $46.0 million for the second quarter and first six months
of 2005.
During the second quarter of 2006, web site traffic increased 22% over second
quarter 2005 levels. Purchase conversion rates also increased 6%, demonstrating
our customers' increased willingness to buy online. In addition, the revenue
resulting from investments in keyword searches rose 84%.
The year-over-year increase reflects our customer's interest in migrating to
Blair.com and the impact of internal initiatives designed to encourage customers
to purchase online. Improved site search and enhanced navigation capabilities
were also implemented during the second quarter of 2006 to facilitate the
customer's shopping experience.
John E. Zawacki, President and Chief Executive Officer of Blair said, "Blair
actually realized an increase in customer demand for our products in the second
quarter of 2006. This increase is particularly gratifying given the impact of
high energy and fuel costs which continued to impact customer discretionary
income. Blair is addressing these challenging times within the retail market
segment it serves by continuing to implement a series of initiatives geared to
enhance the customer's buying experience and to improve product demand. 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 Six Months Ended
June 30 June 30
2006 2005 2006 2005
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Net sales $115,021,551 $120,834,539 $217,704,542 $228,392,458
Other revenue 1,631,159 10,860,582 3,142,439 21,576,154
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116,652,710 131,695,121 220,846,981 249,968,612
Cost and expenses:
Cost of goods sold 51,017,467 54,704,494 98,937,597 107,479,255
Advertising 34,888,118 29,798,990 66,431,833 59,257,695
General and administrative 30,517,057 34,444,325 62,938,901 66,304,143
Provision for doubtful accounts 32,445 3,414,333 83,322 6,906,965
Interest (income) expense, net (301,585) (308,761) (617,746) (433,990)
Other expense (income), net 130,937 2,666 178,533 (206,853)
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116,284,439 122,056,047 227,952,440 239,307,215
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Income (loss) before income taxes 368,271 9,639,074 (7,105,459) 10,661,397
Income taxes (benefit) provision 135,000 3,575,000 (2,544,000) 3,947,000
-------------- -------------- -------------- --------------
Net income (loss) $ 233,271 $ 6,064,074 $ (4,561,459) $ 6,714,397
============== ============== ============== ==============
Basic earnings (loss) per share based on
weighted average shares outstanding* $0.06 $0.74 ($1.17) $0.82
Diluted earnings (loss) per share based on
weighted average shares outstanding
and assumed conversions* $0.06 $0.73 ($1.17) $0.81
Weighted average basic shares outstanding* 3,900,698 8,191,942 3,903,550 8,184,428
Weighted average diluted shares outstanding* 3,995,796 8,324,925 4,002,576 8,317,667
*The per share results for the second quarter of 2006 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. The Company had
3.9 million shares of common stock outstanding at June 30, 2006, compared to 8.2
million shares at June 30, 2005. Without the reduction in outstanding shares for
the three months and six months ended June 30, 2006, basic and diluted per share
results would have been $0.03 and a loss of $0.55, respectively.
Blair Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
June 30 December 31
2006 2005
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Assets
Current Assets:
Cash and cash equivalents $ 27,184,331 $ 53,099,129
Receivables, less allowances for doubtful
accounts of $130,833 in 2006 and $158,471 in 2005 3,982,540 2,987,832
Inventories:
Merchandise 67,432,934 71,217,282
Advertising and shipping supplies 7,612,469 12,146,732
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75,045,403 83,364,014
Deferred income taxes 3,185,000 731,000
Prepaid expenses 2,695,691 2,781,777
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Total current assets 112,092,965 142,963,752
Property, plant and equipment:
Land 1,142,144 1,142,144
Buildings and leasehold improvements 66,977,336 66,609,565
Equipment 76,358,532 75,320,297
Construction in progress 5,536,155 3,961,206
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150,014,167 147,033,212
Less allowances for depreciation 101,218,477 98,350,258
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48,795,690 48,682,954
Trademark 307,556 343,678
Other long-term assets 1,186,374 1,103,903
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Total assets $162,382,585 $193,094,287
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Blair Corporation and Subsidiaries
Consolidated Balance Sheets - Continued
(Unaudited)
June 30 December 31
2006 2005
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Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 16,070,411 $ 29,137,285
Advance payments from customers 2,742,464 1,873,803
Reserve for sales returns 4,475,000 4,602,000
Accrued expenses 17,234,195 20,994,747
Accrued federal and state taxes 1,086,761 6,782,444
Current portion of capital lease obligations 16,272 19,198
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Total current liabilities 41,625,103 63,409,477
Capital lease obligations, less current portion 18,594 14,695
Deferred income taxes 2,056,000 2,582,000
Other long-term liability 239,856 679,720
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 13,510,848 13,553,937
Retained earnings 327,182,053 334,023,925
Accumulated other comprehensive loss (24,141) (48,579)
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341,088,570 347,949,093
Less 6,174,955 shares in 2006 and 6,124,818
shares in 2005 of common stock
in treasury -- at cost 222,826,482 221,381,619
Less receivable and deferred compensation
from stock plans (180,944) 159,079
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Total stockholders' equity 118,443,032 126,408,395
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Total liabilities and stockholders' equity $162,382,585 $193,094,287
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