Item 1. Business
General
Claire's Stores, Inc. (the "Company"), operating through its wholly-owned subsidiaries, Claire's Boutiques, Inc. ("Claire's"), Claire's Puerto Rico Corp. ("CPRC"), Claire's Canada Corp. ("CCC") and Claire's Accessories UK Ltd. ("CUK") and its 50%-owned subsidiary Claire's Nippon Co., Ltd. ("Nippon"), is a leading mall-based retailer of popular-priced teens' fashion accessories. As of March 31, 1998, the Company operated a total of 1,752 such stores in 49 states, Canada, the Caribbean, the United Kingdom and Japan. The stores are operated under the trade names "Claire's Boutiques" or "Claire's Accessories" stores, "Topkapi" stores, "The Icing" stores, "Claire's Etc." stores, "Accessory Place" stores, "Bow Bangles" stores, "Dara Michelle" stores and "L'ccessory" stores (collectively the "Fashion Accessory Stores").
The Fashion Accessory Stores specialize in selling popular-priced fashion accessories designed to predominantly appeal to teenage females. Merchandise in the Fashion Accessory Stores ranges in price between $2 and $20, with the average product priced at about $4. The stores average 960 square feet and are primarily located in enclosed shopping malls. The Fashion Accessory Stores are similar in size and format and give the Company the ability to have multiple store locations in malls. Although the Company's stores are operated under several different trademarks, the Company considers that its registered trademark "Claire's" is the only one of material significance to its business. Although the Company faces competition from a number of small specialty store chains and others selling fashion accessories, in addition to one chain of approximately 700 stores, the Company believes that its Fashion Accessory Stores comprise the largest and most successful chain of specialty retail stores in the World devoted to the sale of popular-priced teens' fashion accessories.
The Company's fashion accessory operations are divided into two principal product categories. The Jewelry Division, which consists of costume jewelry, including pierced earrings and ear piercing services, accounted for 48.4%, 53.1% and 59.0% of sales for Fiscal years ending 1998, 1997 and 1996, respectively. The Accessories Division consists of other fashion accessories, hair ornaments, totebags, apparel and trend gifts. The following table compares sales of each division of merchandise sold by the Company for the last three fiscal years (in thousands):
Sales of each category of merchandise vary from period to period depending on current fashion trends. The Company experiences the traditional retail pattern of peak sales during the Christmas, Easter and back-to-school periods. Sales, as a percentage of total sales in each of the four quarters of the fiscal year ended January 31, 1998 ("Fiscal 1998") were 22%, 23%, 23% and 32% in the first, second, third and fourth quarters, respectively.
At March 31, 1998, the Company had approximately 8,500 employees, 52% of whom were part-time. Part-time employees typically work up to 20 hours per week. The Company has no collective bargaining agreements with any labor unions and considers its employee relations to be good.
Fashion Accessory Stores
The Fashion Accessory Stores, averaging approximately 960 square feet, are located primarily in enclosed shopping malls. Each store uses Company-designed displays which permit the presentation of a wide variety of items in a relatively small space.
The stores are distinctively designed for customer identification, ease of shopping and quantity of selection. Store hours are dictated by the mall operators and the stores are typically open from 10:00 A.M. to 9:00 P.M., Monday through Saturday, and, where permitted by law, from Noon to 5:00 P.M. on Sunday.
Virtually all sales are made in cash, although the stores also accept credit cards. The Company permits, with restrictions on certain items, returns for exchange or refund.
The Company purchases its merchandise from approximately 300 suppliers. Substantially all of the costume jewelry and fashion accessories sold are purchased from importers or imported directly. All merchandise is shipped from the suppliers to the Company's distribution facility in Hoffman Estates, Illinois, a suburb of Chicago, or the distribution facility in Birmingham, England. After inspection, merchandise is shipped via common carrier to the individual stores. Stores typically receive three to five shipments a week.
Except as stated below, responsibility for managing the Fashion Accessory Stores rests with the President and Chief Operating Officer of Claire's, who reports to the President of the Company. The Company currently employs a total of 166 District Managers, each of whom oversees approximately ten stores in his or her respective geographic area and reports to one of 16 Regional Managers. Each Regional Manager reports to one of five Territorial Vice Presidents, who in turn report to the Senior Vice President of store operations. Each store is staffed by a Manager, an Assistant Manager and one or more part-time employees. A majority of the District Managers have been promoted from within the organization, while a majority of the Regional Managers were hired externally. All of the Territorial Vice Presidents were promoted from within the organization.
In Fiscal 1998, the Company continued to expand its international operations. In addition to the operation of the 101 Bow Bangles stores in the United Kingdom, 12 stores were opened in Canada. The Company now operates 102 stores in Canada. The Company plans to open an additional 15 to 25 stores in Canada in the fiscal year ending January 30, 1999 ("Fiscal 1999"). Store expansion continued in Japan as the Company, with its joint venture partner, Jusco Co., Ltd., a Japanese Company, opened a net 14 stores in Fiscal 1998, bringing the total number of stores operating in Japan to 54. Current plans call for opening approximately 15 to 20 additional stores in Japan in Fiscal 1999.
Recent Developments
In March, 1998, the Company entered into a definitive agreement and plan of merger (as amended, the "Merger Agreement") with Lux Corporation ("Lux"), a closely held unisex teenage apparel chain operating under the trade name "Mr. Rags". The Company expects to issue approximately 2 million shares of Common Stock in the merger, which is expected to be accounted for as a pooling of interests business combination. Consummation of the merger is subject to customary conditions, including governmental approval. The Company anticipates consummating the merger sometime during the second quarter of Fiscal 1999, at which time Lux will become a wholly-owned subsidiary of the Company. See Note 11 to the Company's Consolidated Financial Statements accompanying this report.
The foregoing description of the merger is qualified in its entirety by reference to the Merger Agreement and the annexes thereto, copies of which are filed as Exhibit 2 to this report and incorporated herein by reference.
On January 30, 1998, the Company, through its wholly-owned subsidiary, Just Nikki, Inc. ("Nikki"), distributed its first catalog under the "just nikki :)" trade name. The catalog offers apparel and accessories targeted to female teenagers. Nikki plans to distribute six catalog editions in its first year of operations with a total circulation of approximately 10 million. Distribution of the catalogs will be made through direct mail marketing and through the Company's stores. During the first year of operation, Nikki plans to test numerous mailing lists purchased and rented from Claire's and third parties.
The catalog business is highly competitive. Recent years have seen various catalog start-ups catering to female teenagers. Nikki believes its marketing plan and catalog design, its direct access to appropriate customer lists and its ability to distribute catalogs through the Company's stores will enable Nikki to compete effectively.
Item 2.
Item 2. Properties
The Company's 1,752 stores operating as of March 31, 1998 are located in 49 states, Canada, the United Kingdom, the Caribbean and Japan. The Company leases all of its store locations, generally for terms of seven to ten years (up to 25 years in the United Kingdom). Under the leases, the Company pays a fixed minimum rent and/or rentals based on gross sales in excess of specified amounts. The Company also pays certain other expenses (e.g., common area maintenance charges and real estate taxes) under the leases. The internal layout and fixtures of each store are designed by management and constructed under contracts with third parties.
Most of the Company's stores are located in enclosed shopping malls, while some stores are located within central business districts and others are located in "open-air" outlet malls. The Company actively seeks locations that meet its criteria and opens new stores when opportunities are found within its budget for expansion. Criteria include geographic location and demographic aspects of communities surrounding the mall, acceptable anchor tenants, suitable location within a mall, appropriate space availability and proposed rental rates. In choosing new locations, the Company generally attempts to cluster stores geographically, thus affording economies of scale in supervision. The Company believes that sufficient desirable locations are available to accommodate its expansion plans. The Company refurbishes its existing stores on a regular basis.
The Company has closed 111 stores in the last three fiscal years, primarily because of a lack of profit potential or the unwillingness of the landlord to renew the lease on terms acceptable to the Company. The Company has not experienced any substantial difficulty in renewing desired store leases and has no reason to expect any such difficulty in the future. For each of the last three years, no individual store accounted for more than one percent of total sales.
The Company opened 221 stores during Fiscal 1998 and has opened, as of March 31, 1998, 38 stores in the first two months of Fiscal 1999. The Company plans to continue opening Fashion Accessory Stores when suitable locations are found and satisfactory lease negotiations are concluded. The Company's initial investment in new stores opened during the last fiscal year, including leasehold improvements and fixtures, but excluding inventories, averaged approximately $116,000 per store.
The offices of Claire's and the distribution center for the Company's stores in North America and Japan are located in Hoffman Estates, Illinois. This Company-owned facility is located on 24.8 acres and consists of 247,000 total square feet with 201,000 square feet devoted to receiving and distribution and 46,000 square feet for office space. Unused acreage at this site will allow Claire's to expand its facility in the future by an additional 275,000 square feet.
The Company has a distribution facility in Birmingham, England which services those stores located in the United Kingdom. This facility is leased and consists of 26,000 square feet of office and distribution space. This lease expires on March 25, 2012, with an option on the part of the Company to terminate as of March 7, 2007.
In August 1990, Claire's entered into a lease which expires on July 31, 2001 for 40,000 square feet of office space in Wood Dale, Illinois. Under the terms of the lease, Claire's is required to pay taxes, utilities, insurance costs and maintenance costs. Due to a downsizing of the corporate staff, it was decided that the additional space would not be needed, and therefore the space has been subleased to unrelated third parties. The subleases' terms run parallel to the original lease.
The Company leases from Rowland Schaefer & Associates (formerly Two Centrum Plaza Associates) approximately 31,000 square feet in Pembroke Pines, Florida, where it maintains its executive, accounting and finance offices. Rowland Schaefer & Associates is a general partnership of two corporate general partners which are owned by immediate family members of the Chairman of the Board and President of the Company, two of whom are Vice Presidents of Claire's. The lease provides for the payment by the Company of annual base
rent of approximately $518,000, which is subject to annual cost-of-living increases, and a proportionate share of all taxes and operating expenses of the building. The lease expires on July 31, 2000 and may be extended, at the option of the Company, for an additional five-year term.
The Company also owns 10,000 square feet of office/warehouse space in Miami, Florida. The property is being utilized as a storage facility for the Company. The Company also leases executive office space in New York City under a lease which expires on October 31, 1998, and is the beneficial owner of a cooperative apartment in New York City.
Item 3.
Item 3. Legal Proceedings
There are no material legal proceedings pending to which the Company or any of its subsidiaries is a party or of which any of their property is subject.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter of Fiscal 1998.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company has two classes of Common Stock, par value $.05 per share, outstanding: Common Stock having one vote per share and Class A Common Stock having ten votes per share. The Common Stock is traded on the New York Stock Exchange, Inc. ("NYSE") under the symbol CLE. The Class A Common Stock has only limited transferability and is not traded on any stock exchange or in any organized market. However, the Class A Common Stock is convertible on a share-for-share basis into Common Stock and may be sold, as Common Stock, in open market transactions. The following table sets forth, for the fiscal quarters indicated, the high and low closing prices of the Common Stock on the NYSE Composite Tape and the per share dividends declared on the Common Stock and the Class A Common Stock (as adjusted to give effect to the three-for-two stock splits effective February 21, 1996 and August 29, 1996). At March 31, 1998, the approximate number of record holders of shares of Common Stock and Class A Common Stock was 2,052 and 799, respectively.
In 1985, the Board of Directors instituted a quarterly dividend on the Common Stock of $.011 per share. In February 1994, the Board of Directors increased the quarterly dividend to $.013 per share and in July 1994 declared a quarterly dividend of $.007 per share on the Class A Common Stock. In January 1996, the Board of Directors increased the quarterly dividend to $.02 per share on the Common Stock and $.01 per share on the Class A Common Stock. The Board of Directors again increased the quarterly dividend to $.03 per share on the Common Stock and $.015 per share on the Class A Common Stock in October 1996. The Board expects to continue this policy; however, there is no assurance that dividends will continue to be paid since they are dependent upon earnings, the financial condition of the Company and other factors.
Item 6.
Item 6. Selected Financial Data
(1) Consists of 53 weeks. (2) Adjusted to give effect to the three-for-two Stock splits effective February 21, 1996 and August 29, 1996. (3) In Fiscal 1998, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" which establishes new guidelines for the calculation of earnings per share. Basic earnings per share have been computed by dividing net income by the weighted average number of shares outstanding during the year. Diluted earnings per share have been computed assuming the exercise of stock options, as well as their related income tax effects. Earnings per share for all periods have been restated to reflect the provisions of this Statement.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following table sets forth, for the periods indicated, percentages which certain items reflected in the financial data bear to net sales of the Company:
Results of Operations
From the fiscal year ended February 3, 1996("Fiscal 1996") to January 31, 1998 ("Fiscal 1998"), the Company's net sales increased at a compounded annual rate of 20%. Net income increased from $30,915,000 in Fiscal 1996 to $58,189,000 in Fiscal 1998. The operating results of Claire's Nippon Co., Ltd., which are accounted for under the equity method, are not part of the consolidated group of Claire's Stores, Inc. and therefore not included in the following analysis.
Fiscal 1998 Compared to Fiscal 1997
Net sales increased by $59,968,000, or 14%, to $500,152,000 in Fiscal 1998 compared to $440,184,000 for the year ended February 1, 1997 ("Fiscal 1997"). The increase for the period resulted primarily from the addition of a net 165 stores and same-store sales increases of 3%. The same-store sales increases were mainly attributable to an increase in the average transaction of 3.7% to $8.68 in Fiscal 1998 from $8.37 in Fiscal 1997. This increase was realized due to a 7.2% increase in the average unit retail price to $3.41 in Fiscal 1998 from Fiscal 1997's average unit retail price of $3.18. The increase in the average unit retail was offset by a decrease of 3.3% in the average units per transaction. In Fiscal 1998, the average units per transaction was 2.54 compared to 2.62 in Fiscal 1997.
Cost of sales, occupancy and buying expenses increased by $25,435,000, or 12%, to $233,451,000 in Fiscal 1998 compared to $208,016,000 in Fiscal 1997. Principal reasons for this increase were the rise in the number of stores and the volume of merchandise sold. As a percentage of net sales, these expenses decreased to 46.7% for Fiscal 1998 compared to 47.3% for Fiscal 1997. The decrease as a percentage of sales was due to the Company increasing the total merchandise purchased directly from manufacturers overseas and utilizing the Company's ever increasing buying power to negotiate lower prices from vendors which resulted in higher maintained markups. These efforts resulted in a merchandise margin gain of approximately 70 basis points. This increase would have been more acute except for the effects of the employee strike at UPS, the Company's primary carrier used to ship merchandise from the Company's distribution center in Hoffman Estates, Illinois to our stores in the United States. Estimating the total cost of the strike to the Company is not possible, as lost sales cannot be quantified. However, the Company estimates the additional cost of transporting merchandise via other common carriers was approximately $1,000,000. Rent, rent support and the cost of the merchandising department, which are included in cost of sales and are relatively fixed in nature, increased 10 basis points as a percentage of sales from Fiscal 1998 compared to Fiscal 1997.
Selling, general and administrative ("SG&A") expenses increased by $16,365,000, or 11%, to $163,452,000 in Fiscal 1998 from the Fiscal 1997 level of $147,087,000. The increase noted was due to the increase in the cost of operating the additional stores. As a percentage of net sales, these expenses decreased to approximately 32.7% in Fiscal 1998 compared to 33.4% in Fiscal 1997. The decrease in SG&A as a percentage of sales is primarily attributable to the increase in same-store sales as previously discussed and the leveraging of fixed expenses with the addition of 165 net stores.
Depreciation and amortization increased by $1,457,000, or 9%, to $17,216,000 in Fiscal 1998 from the Fiscal 1997 level of $15,759,000. The increase was primarily due to the investment in 221 new stores, and the remodeling of approximately 150 stores.
Due to the increase in cash levels and the absence of long-term debt, interest income exceeded interest expense in Fiscal 1998. In addition, the Company realized gains on certain investments. As a percentage of sales, interest income, net and other income, was 1.4% for Fiscal 1998 compared to .7% in Fiscal 1997. The Company had no debt in Fiscal 1998 and Fiscal 1997. The cash and cash equivalents, and short-term investments balance during Fiscal 1998 averaged approximately $103,117,000 compared to approximately $67,000,000 in Fiscal 1997.
Income taxes increased by $7,761,000 to $34,914,000 in Fiscal 1998 compared to $27,153,000 in Fiscal 1997. The Company's effective tax rates remained relatively constant from fiscal year to fiscal year.
Fiscal 1997 Compared to Fiscal 1996
Net sales increased by $95,303,000, or 28%, to $440,184,000 in Fiscal 1997 compared to $344,881,000 for Fiscal 1996. The increase for the period resulted primarily from the addition of a net 212 stores and same-store sales increases of 10%. The same-store sales increases were primarily due to the Company continuing to focus its merchandising strategy to its core customer - female teenagers. In addition, inventories were increased to offer a larger assortment of merchandise for sale and to meet the anticipated increase in customer demand.
Cost of sales, occupancy and buying expenses increased by $50,159,000, or 32%, to $208,016,000 in Fiscal 1997 compared to $157,857,000 in Fiscal 1996. Principal reasons for this increase were the rise in the number of stores and the volume of merchandise sold. As a percentage of net sales, these expenses increased to 47% for Fiscal 1997 compared to 46% for Fiscal 1996. The increase as a percentage of sales was due to a shift in merchandise sold and acquisitions made during the first half of Fiscal 1997. During Fiscal 1997, the Company reacted to changes in customer demand for its product. These changes included a shift in merchandise focus to accessories, which carries a lower gross margin, from jewelry. In Fiscal 1997, accessories were approximately 47% of total sales compared to 41% in Fiscal 1996. The remaining gross margin decline is attributable to store acquisitions. These acquisitions included 95 stores in the United States which operate under the trade names "The Icing", "Claire's Etc." and "Accessory Place" and 55 stores in the United Kingdom which operate under the trade name "Bow Bangles". The merchandise offered for sale by some of the stores operating in the United States includes approximately 25% apparel compared to the typical merchandise mix of an historical company-owned store that does not offer apparel for sale. Apparel is maintained in inventory at a lower initial markup and therefore typically realizes a lower gross margin. Also, the costs of rent and common area maintenance are higher in these stores. In addition, rent paid for our stores acquired in the United Kingdom is typically higher than rent paid per square foot in the United States. Cost of merchandise has also been higher in stores operating in the United Kingdom during the period. This was due to the fact that at the time of acquisition, these stores were extremely low on inventory. Management decided to initially purchase merchandise locally which incurred a higher cost compared to purchasing directly from vendors overseas. However, the merchandise was available immediately for shipment compared to 60 days for purchases overseas. The merchandise orders that were made from vendors overseas were brought into the United Kingdom by air freight, greatly increasing the cost of merchandise. The increase in cost of sales would have been more acute except for the same-store sales increase during the period which partially offset the effect of the lower margins realized in the acquired stores.
Selling, general and administrative ("SG&A") expenses increased by $22,626,000, or 18%, to $147,087,000 in Fiscal 1997 from the Fiscal 1996 level of $124,461,000. The increase noted was due to the increase in the cost of operating the additional stores. As a percentage of net sales, these expenses decreased to approximately 33% in Fiscal 1997 compared to 36% in Fiscal 1996. The decrease in SG&A as a percentage of sales is primarily attributable to the increase in same-store sales as previously discussed and the leverage of fixed expenses with the addition of 212 net stores.
Depreciation and amortization increased by $790,000, or 5%, to $15,759,000 in Fiscal 1997 from the Fiscal 1996 level of $14,969,000. The increase was primarily due to the investment in 246 new stores, and the remodeling of approximately 100 stores. In addition, the Company continued to invest in management information systems. This included a new computerized "Pick-To-Light" inventory distribution system, merchandising software development which enhances our ability to focus on our customers' needs via micro marketing, development of an Internet web-site and upgrading the Company's AS/400 central computers.
Due to the increase in cash and cash equivalents, and short-term investment levels and the absence of long-term debt, interest income exceeded interest expense in Fiscal 1997. As a percentage of sales, interest income, net of interest expense, was .7% for Fiscal 1997 compared to .6% in Fiscal 1996. The Company had no debt in Fiscal 1997 compared to $3,000,000 in Fiscal 1996. The cash and cash equivalents, and short-term investments balance during Fiscal 1997 averaged approximately $67,000,000 compared to approximately $44,400,000 in Fiscal 1996.
The weighted average interest rate paid by the Company during Fiscal 1996 was 8.9%. This rate was directly related to the bank's prime rate.
Income taxes increased by $8,459,000 to $27,153,000 in Fiscal 1997 compared to $18,694,000 in Fiscal 1996. The Company's effective tax rates remained relatively constant from fiscal year to fiscal year.
Impact of Inflation
Inflation has not affected the Company, as it has generally been able to pass along inflationary increases in its costs through increased sales prices.
Year 2000
In prior years, certain computer programs were written using two digits rather than four to define the applicable year. These programs were written without considering the impact of the upcoming change in the century and may experience problems handling dates beyond the year 1999. This could cause certain computer applications to fail or to create erroneous results unless corrective measures are taken. Incomplete or untimely resolution of the Year 2000 issue could have a material adverse impact on the Company's business, operations or financial condition in the future.
The Company has, however, been assessing the impact that the Year 2000 issue will have on its computer systems since 1996, and in response to these assessments, which are ongoing, the Company has developed a plan to inventory critical systems and develop solutions to those systems that are found to have date-related deficiencies. Project plans call for the completion of the solution implementation phase and testing of those solutions prior to any anticipated impact on our systems.
Based on our work to date, and assuming that our project plans, which continue to evolve, can be implemented as planned, we believe future costs relating to the Year 2000 issue will not have a material impact on the Company's consolidated financial position, results of operations or cash flows.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 ("the Act") provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or verbal forward-looking statements, including statements contained in this and other Company filings with the Securities and Exchange Commission and in our reports to shareholders. All statements which address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to sales growth and earnings per share growth or statements expressing general optimism about future operating results, are forward-looking statements within the meaning of the Act. The forward-looking statements are and will be based on management's then current views and assumptions regarding future events and operating performance.
The following are some of the factors that could cause actual results to differ materially from estimates contained in the Company's forward-looking statements:
The ability to generate sufficient cash flows to support capital expansion plans and general operating activities. Competitive product and pricing pressures. While we believe our opportunities for sustained, profitable growth are considerable, unanticipated actions of competitors could impact our earnings and sales growth. Changes in laws and regulations, including changes in accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax law interpretation) and environmental laws in domestic or foreign jurisdictions. Fluctuations in the cost and availability of raw materials to the Company's vendors and the ability to maintain favorable supplier arrangements and relationships. The ability to achieve earnings forecasts, which are generated based on projected sales of many product types, some of which are more profitable than others. There can be no assurance that we will achieve the projected level or mix of product sales. The ability to penetrate new markets, which also depends on economic and political conditions. The effectiveness of our marketing and promotional programs. The uncertainties of litigation, as well as other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. Adverse weather conditions, which could affect customer shopping patterns. The ability of the Company and its suppliers to replace, modify or upgrade computer programs in ways that adequately address the Year 2000 issue. Changes in consumer preferences for teen apparel and fashion accessories.
The foregoing list of important factors is not exclusive.
Liquidity and Capital Resources
Company operations have historically provided a strong, positive cash flow which, together with the Company's credit facilities, provides adequate liquidity to meet the Company's operational needs. Cash and cash equivalents, including short-term investments, totaled $132,435,000 at the end of Fiscal 1998.
Net cash provided by operating activities amounted to $77,320,000 in Fiscal 1998 compared to $58,323,000 in Fiscal 1997 and $28,749,000 in Fiscal 1996. The Company's current ratio (current assets over current liabilities) was 4.3:1.0 for Fiscal 1998 and 3.5:1.0 for Fiscal 1997.
At the end of Fiscal 1998, the Company had available a $10 million credit line with a bank to finance the Company's letters of credit and working capital requirements. This facility matures on July 31, 1999.
At the end of Fiscal 1998, the Company increased its investment in inventories to $47,436,000, or 10%, from the Fiscal 1997 balance of $43,149,000. During this period inventory turnover remained constant at 3.0x consistent with Fiscal 1997. The increase in inventories is due to the Company operating 165 additional stores at the end of Fiscal 1998 compared to Fiscal 1997 - a 10% increase. Management believes inventories are appropriate given the increase in the number of stores and the level of sales currently being achieved.
During Fiscal 1998, the Company continued to expand and remodel its store base. Significant capital projects included the opening of 221 new stores and remodeling approximately 150 stores. Funds expended for capital improvements in Fiscal 1998 totaled $33,747,000 compared to $20,558,000 in Fiscal 1997 and $15,083,000 in Fiscal 1996. In the year ending January 30, 1999, capital expenditures are expected to be approximately $34,000,000 as the Company continues to invest in its store base, technology and plans to expand its distribution facility located in Hoffman Estates, Illinois to approximately 525,000 square feet from its present size of 247,000 square feet.
The Company has significant cash balances, a consistent ability to generate cash flow from operations and available funds under its credit line. The Company foresees no difficulty in maintaining its present financial condition and liquidity and the ability to finance its capital expenditure plans and other foreseeable future needs.
Earnings Per Share
In Fiscal 1998, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" which establishes new guidelines for the calculation of earnings per share. Basic earnings per share have been computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share have been computed assuming the exercise of stock options, as well as their related income tax effects. Earnings per share for all periods have been restated to reflect the provisions of this Statement.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 130 - "Reporting Comprehensive Income". SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements and is effective for fiscal years beginning after December 31, 1997. Management does not anticipate a significant impact of the adoption of SFAS No. 130 on the Company's consolidated financial position, results of operations or cash flows.
In 1997, the FASB issued SFAS No.131 - "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that these enterprises report selected information about operating segments in interim financial reports to shareholders. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997. Management does not anticipate a significant impact of the adoption of SFAS No. 131 on the Company's consolidated financial position, results of operations or cash flows.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Inapplicable
Item 8.
Item 8. Financial Statements and Supplementary Data Page No.
Independent Auditors' Report 16
Consolidated Balance Sheets as of January 31, 1998 and February 1, 1997 17
Consolidated Statements of Income for the three fiscal years ended January 31, 1998 18
Consolidated Statements of Changes in Stockholders' Equity for the three fiscal years ended January 31, 1998 19
Consolidated Statements of Cash Flows for the three fiscal years ended January 31, 1998 20
Notes to Consolidated Financial Statements 21-28
Selected Quarterly Financial Data (Unaudited) 29
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders Claire's Stores, Inc.
We have audited the accompanying consolidated balance sheets of Claire's Stores, Inc. and subsidiaries as of January 31, 1998 and February 1, 1997, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three year period ended January 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Claire's Stores, Inc. and subsidiaries as of January 31, 1998 and February 1, 1997, and the results of their operations and their cash flows for each of the years in the three year period ended January 31, 1998 in conformity with generally accepted accounting principles.
/S/KPMG PEAT MARWICK LLP Fort Lauderdale, Florida March 27, 1998
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
CLAIRE'S STORES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year - The Company's fiscal year ends on the Saturday closest to January 31. Fiscal years 1998 and 1997 each consisted of 52 weeks. Fiscal year 1996 consisted of 53 weeks.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Short-term Investments - These investments consist of highly liquid debt instruments purchased with a maturity greater than three months but less than one year.
Inventories - Merchandise inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out basis on the retail method.
Property and Equipment - Property and equipment are recorded at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the building and the furniture, fixtures and equipment, which range from three to twenty-five years. Amortization of leasehold improvements is computed on the straight-line method based upon the shorter of the estimated useful lives of the assets or the terms of the respective leases.
Net Income Per Share - Basic net income per share is based on the weighted average number of shares of Class A Common Stock and Common Stock outstanding during the period (48,152,000 shares in Fiscal 1998, 47,591,000 shares in Fiscal 1997 and 47,025,000 shares in Fiscal 1996). Diluted net income per share includes the dilutive effect of stock options (49,062,000 shares in Fiscal 1998, 48,840,000 shares in Fiscal 1997 and 47,600,000 shares in Fiscal 1996). Options to purchase 105,000 and 562,500 shares of common stock, at prices ranging from $21.25 to $22.375 per share and $17.00 to $21.25 per share, respectively, were outstanding for the years ended January 31, 1998 and February 1, 1997, respectively, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares for the respective fiscal year.
Income Taxes - The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109 which generally requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. In addition, SFAS No. 109 requires the adjustment of previously deferred income taxes for changes in tax rates under the liability method.
Foreign Currency Translation - The financial statements of the Company's foreign operations are translated into U.S. dollars. Assets and liabilities are translated at current exchange rates while income and expense accounts are translated at the average rates in effect during the year. Resulting translation adjustments are accumulated as a component of stockholders' equity.
Fair Value of Financial Instruments - The Company's financial instruments consist primarily of current assets and current liabilities. Current assets and liabilities are stated at fair market value.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Impairment of Long-Lived Assets - In March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which became effective for fiscal years beginning after December 15, 1995. This standard establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain intangibles to be disposed of. Adoption of this statement did not have a material impact on the Company's financial position, results of operations or liquidity.
New Accounting Standards - In 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income", and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". These statements, which are effective for fiscal years beginning after December 15, 1997, expand or modify disclosures and will not have a material impact on our consolidated financial position, results of operations or cash flows.
The Company adopted SFAS No. 128, "Earning Per Share", in the fiscal year ending January 31, 1998. In accordance with SFAS No. 128, we have presented both basic net income per share and diluted net income per share in our financial statements. Earnings per share for all periods have been restated to reflect the provisions of this statement.
Reclassifications - Certain items in the prior year financial statements have been reclassified to conform with the Fiscal 1998 presentation.
2. CREDIT FACILITIES
The Company has an unsecured revolving line of credit of $10 million with a bank for letters of credit and working capital needs. Interest on the outstanding balance is at the bank's prime rate. The credit agreement matures on July 31, 1999. At January 31, 1998 and February 1, 1997, no borrowings were outstanding under this line of credit.
The bank credit agreement contains various restrictive covenants which include, among other things, the requirement to maintain minimum tangible net worth, restrictions on fixed asset additions, restrictions on certain additional indebtedness and requirements to maintain certain financial ratios.
3. INCOME TAXES
The approximate tax effect on each type of significant temporary difference for which the asset is included in prepaid expenses and other current assets and other assets on the accompanying balance sheets is as follows:
The provision for income taxes differs from an amount computed at the statutory rates as follows:
4. STOCKHOLDERS' EQUITY
Stock Splits - In January 1996 and August 1996, the Company's Board of Directors declared 3-for-2 stock splits of its Common stock and Class A common stock in the form of 50% stock dividend distributions.
On February 21, 1996 and September 12, 1996, 14,860,020 and 14,954,616 shares, respectively, of Common stock and 980,711 and 975,933 shares, respectively, of Class A common stock were distributed to stockholders of record as of February 7, 1996 and August 29, 1996. Stockholders' equity has been adjusted to give recognition of the stock splits by reclassifying from retained earnings to the Common stock and Class A common stock accounts the par value of the additional shares arising from the splits. All references in the financial statements to number of shares, per share amounts, stock option data and market prices of the Company's stock have been restated.
Preferred Stock - The Company has authorized 1,000,000 shares of $1 par value preferred stock, none of which has been issued. The rights and preferences of such stock may be designated in the future by the Board of Directors.
Class A Common Stock - The Class A common stock has only limited transferability and is not traded on any stock exchange or any organized market. However, the Class A common stock is convertible on a share-for-share basis into Common stock and may be sold, as Common stock, in open market transactions. The Class A common stock has ten votes per share. Dividends declared on the Class A common stock are limited to 50% of the dividends declared on the Common stock.
Treasury Stock - Treasury stock acquired is recorded at cost. Occasionally, the Company uses treasury stock to fulfill its obligations under its stock option plans. When stock is issued pursuant to the stock option plans, the difference between the cost of treasury stock issued and the option price is charged or credited to additional paid-in capital.
5. STOCK OPTIONS
In August 1996, the Board of Directors of the Company adopted, and on June 16, 1997 the Company's stockholders approved, the Claire's Stores, Inc. 1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan replaced the Company's 1991 Stock Option Plan (the "1991 Plan"), which had replaced the Company's 1982 Incentive Stock Option Plan (the "1982 Plan") and the Company's 1985 Non-Qualified Stock Option Plan (the "1985 Plan"), although options granted under such plans remain outstanding. Under the 1996 Plan, the Company may grant either incentive stock options or non-qualified stock options to purchase up to 3,000,000 shares of Common Stock, plus any shares unused or recaptured under the 1982 Plan, the 1985 Plan or the 1991 Plan. Incentive stock options granted under the 1996 Plan are exercisable at prices equal to the fair market value of shares at the date of grant, except that incentive stock options granted to any person holding 10% or more of the total combined voting power or value of all classes of capital stock of the Company, or any subsidiary of the Company, carry an exercise price equal to 110% of the fair market value at the date of grant. The aggregate number of shares granted to any one person may not exceed 500,000, and no stock option may be exercised less than one year after the date granted. Each incentive stock option or non-qualified stock option will terminate ten years after the date of grant (or such shorter period as specified in the grant) and may not be exercised thereafter.
Incentive stock options currently outstanding are exercisable at various rates beginning one year from the date of grant, and expire five to ten years after the date of grant. Non-qualified stock options currently outstanding are exercisable at prices equal to the fair market value of the shares, or one dollar below the fair market value, at the date of grant and expire five to ten years after the date of grant.
At January 31, 1998, options to purchase 43,750, 63,000 and 461,025 shares of Common Stock were exercisable under the 1982 Plan, 1985 Plan and 1991 Plan, respectively. No options were exercisable under the 1996 Plan as of January 31, 1998. Options to purchase an additional 6,250, 7,875, 819,242 and 65,000 shares were outstanding, but not yet exercisable, at January 31, 1998 under the 1982 Plan, 1985 Plan, 1991 Plan and 1996 Plan, respectively. There were 3,494,966 shares of Common stock available for future option grants under the 1996 Plan at January 31, 1998.
The weighted average exercise price of options under the 1982 Plan, 1985 Plan and 1991 Plan as of January 31, 1998 was $6.11, $5.70 and $10.73, respectively, compared to $6.11, $5.70 and $9.86 under the 1982 Plan, 1985 Plan and 1991 Plan, respectively as of February 1, 1997. The weighted average exercise price of options under the 1996 Plan was $21.64. No options were outstanding under the 1996 Plan as of February 1, 1997.
The per share weighted average fair value of stock options granted during the fiscal years ended January 31, 1998, February 1, 1997 and February 3, 1996 was $21.64, $8.74 and $3.63, respectively.
Transactions and other information relating to the 1982 Plan, 1985 Plan, 1991 Plan and the 1996 Plan are summarized as follows:
At January 31, 1998, the weighted-average remaining contractual life of outstanding options was 2.17 years, 2.12 years, 6.34 years and 8.80 years for the 1982 Plan, 1985 Plan, 1991 Plan and 1996 Plan, respectively.
The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation", issued in October 1995. In accordance with the provisions of SFAS No. 123, the Company applies APB Opinion 25 and related Interpretations in accounting for its stock option plans and, accordingly, does not recognize compensation cost. If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, net income and earnings per share would have been reduced to the pro forma amounts indicated in the table below (in thousands except per share amounts):
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
6. EMPLOYEE BENEFIT PLAN
The Company has adopted a Profit Sharing Plan under Section 401(k) of the Internal Revenue Code. This plan allows employees who serve more than 1,000 hours per year to defer up to 18% of their income through contributions to the plan. In line with the provisions of the plan, for every dollar the employee contributes the Company will contribute an additional $.50, up to 2% of the employee's salary. In Fiscal 1998, Fiscal 1997 and Fiscal 1996, the cost of Company matching contributions was $381,000, $378,000 and $295,000, respectively. The Company does not have any post-employment or post-retirement benefit plans other than above.
7. COMMITMENTS
The Company leases retail stores, offices and warehouse space and certain equipment under operating leases which expire at various dates through the year 2025 with options to renew certain of such leases for additional periods. The lease agreements covering retail store space provide for minimum rentals and/or rentals based on a percentage of net sales. Rental expense for each of the three fiscal years ended January 31, 1998 was as follows:
Minimum aggregate rental commitments under non-cancelable operating leases are summarized by fiscal year ending as follows:
Certain leases provide for payment of real estate taxes, insurance and other operating expenses of the properties. In other leases, some of these costs are included in the basic contractual rental payments.
In November 1997, the Company entered into commitments for capital expenditures of approximately $6,000,000 for the manufacture of store fixtures and furnishings. The fixtures and furnishings are to be used for new stores and the refurbishment of existing stores. It is expected that such improvements will be completed during Fiscal 1999.
8. STATEMENTS OF CASH FLOWS
Payments of income taxes were $30,441,000 in Fiscal 1998, $24,022,000 in Fiscal 1997 and $20,883,000 in Fiscal 1996. Payments of interest were $201,000 in Fiscal 1998, $89,000 in Fiscal 1997 and $340,000 in Fiscal 1996.
9. RELATED PARTY TRANSACTIONS
The Company leases from Rowland Schaefer & Associates (formerly Two Centrum Plaza Associates) approximately 31,000 square feet of office space in a building where it maintains its executive and accounting and finance offices. The lease for this space expires on July 31, 2000 and may be extended at the option of the Company for an additional five-year term. Rowland Schaefer & Associates is a general partnership of two corporate general partnerships which are owned by immediate family members of the Chairman of the Board and President of the Company, two of whom are Vice Presidents of Claire's. The lease provides for the payment by the Company of annual base rent of approximately $518,000, which is subject to annual cost-of-living increases, and a proportionate share of all taxes and operating expenses of the building.
Identifiable assets are those assets that are identified with the operations in each geographic area. Corporate assets consist mainly of cash and cash equivalents, investments in affiliated companies and other assets.
11. SUBSEQUENT EVENT
In October 1997, the Company announced the signing of a letter of intent, and in March 1998, the Company signed a merger agreement with Lux Corporation, a closely held specialty apparel chain operating under the name of "Mr. Rags". The stores specialize in selling teen unisex clothing and accessories. The transaction is structured as a merger under which the Company will issue approximately 2,000,000 shares of common stock in exchange for the common stock of Lux Corporation. It is expected that the acquisition will be accounted for as a pooling of interests business combination. As a result of the acquisition, Lux Corporation will become a subsidiary of the Company. Completion of the acquisition, which is expected to occur during the second quarter of the fiscal year ending January 30, 1999, is contingent on customary conditions, including governmental approval.
(1) In Fiscal 1998, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" which establishes new guidelines for the calculation of earnings per share. Basic earnings per share have been computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share have been computed assuming the exercise of stock options, as well as their related income tax effects. Earnings per share for all periods have been restated to reflect the provisions of this Statement.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Inapplicable.
PART III
Items 10,11,12 and 13. Directors and Executive Officers of the Registrant; Executive Compensation ; Security Ownership of Certain Beneficial Owners and Management; and Certain Relationships and Related Transactions.
The information called for by Items 10, 11, 12 and 13 will be contained in the Company's definitive Proxy Statement for its 1998 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Company's fiscal year covered by this report pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, and incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) List of documents filed as part of this report. Page No.
1. Financial Statements
Independent Auditors' Report 16 Consolidated Balance Sheets as of January 31, 1998 and February 1, 1997 17 Consolidated Statements of Income for the three fiscal years ended January 31, 1998 18 Consolidated Statements of Changes in Stockholders' Equity for the three fiscal years ended January 31, 1998 19 Consolidated Statements of Cash Flows for the three fiscal years ended January 31, 1998 20 Notes to Consolidated Financial Statements 21-28
2. Financial Statement Schedules
All schedules have been omitted since the required information is included in the consolidated financial statements or the notes thereto, or the omitted schedules are not applicable.
3. Exhibits
(2) Agreement and Plan of Merger dated as of March 9, 1998 among the Company, CSI Acquisition Corp., Lux Corporation, and David Shih, Eva Shih, Daniel Shih, Douglas Shih, the Shih Irrevocable Trust and Crestwood Partners LLC, as amended by letter amendment dated March 23, 1998 and addendum thereto dated March 24, 1998.
(3)(a) Restated Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to the Company's Annual Report on form 10-K for the fiscal year ended February 1, 1992).
(3)(b) Amended By-laws of the Company (incorporated by reference to Exhibit 3(b) to the Company's Annual Report on form 10-K for the fiscal year ended January 28, 1995).
(4)(a) Revolving Credit Agreement dated as of August 19, 1996 between the Company and its subsidiaries and Bank Leumi Trust Company.
(10)(a) Incentive Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1986).
(10)(b) Non-Qualified Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1986).
(10)(c) 1991 Stock Option Plan of the Company (incorporated by reference to Appendix A to the Company's Proxy Statement relating to the 1991 Annual Meeting of Stockholders, Commission File No. 1-8899).
(10)(d) 1996 Stock Option Plan of the Company (incorporated by reference to Appendix A to the Company's Proxy Statement relating to the 1997 Annual meeting of stockholders, Commission File No. 1-8899).
(10)(e) 401(k) Profit Sharing Plan, as amended (incorporated by reference to Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1992).
(10)(f) Office Lease Agreement dated September 8, 1989 between the Company and Two Centrum Plaza Associates (incorporated by reference to Exhibit 10(h) to the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 1991).
(10)(g) Amendment of Office Lease Agreement dated July 31, 1990 between the Company and Two Centrum Plaza Associates (incorporated by reference to Exhibit 10(I) to the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 1991).
(10)(h) Addendum to Office Lease dated September 8, 1989 between the Company and Two Centrum Plaza Associates (incorporated by reference to Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 1991).
(10)(i) Second addendum to office lease dated January 30, 1997 between the Company and Two Centrum Plaza Associates (incorporated by reference to Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(j) Lease between Chancellory Commons I Limited Partnership and Claire's Boutiques, Inc. dated August 31, 1990 (incorporated by reference to Exhibit 10(i) to the Company's Annual Report on form 10-K for the fiscal year ended February 1, 1992).
(21) Subsidiaries of the Company.
(23) Consent of KPMG Peat Marwick LLP relating to the Company's Registration Statement on Form S-8 (Commission File No. 333-42027).
(27) Financial Data Schedule of the Company
Each management contract or compensatory plan or arrangement to be filed as an exhibit to this report pursuant to Item 14(c) is listed in exhibits nos. 10(a), 10(b), 10(c), 10(d) and 10(e).
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CLAIRE'S STORES, INC.
By /S/Rowland Schaefer Rowland Schaefer President and Chairman of the Board of Directors
April 8, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 8, 1998.
/S/ Rowland Schaefer President and Rowland Schaefer Chairman of the Board of Directors (Principal Executive Officer)
/S/ Marla Schaefer Vice Chairman of the Board of Directors Marla Schaefer
/S/ Ira D. Kaplan Senior Vice President, Chief Financial Ira D. Kaplan Officer and Treasurer (Principal Financial and Accounting Officer)
/S/ Harold E. Berritt Director Harold E. Berritt
/S/ Fred D. Hirt Director Fred D. Hirt
/S/ Bruce G. Miller Director Bruce G. Miller
/S/ Sylvia Schaefer Director Sylvia Schaefer
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CLAIRE'S STORES, INC.
By Rowland Schaefer President and Chairman of the Board of Directors
April 8, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 8, 1998.
President and Rowland Schaefer Chairman of the Board of Directors (Principal Executive Officer)
Vice Chairman of the Board of Directors Marla Schaefer
Senior Vice President, Chief Financial Ira D. Kaplan Officer and Treasurer (Principal Financial and Accounting Officer)
Director Harold E. Berritt
Director Fred D. Hirt
Director Bruce G. Miller
Director Sylvia Schaefer