A.C. Moore Reports Third Quarter 2009 Results

November 6, 2009 7:45 AM EST

BERLIN, N.J.--(BUSINESS WIRE)-- A.C. Moore Arts & Crafts, Inc. (NASDAQ: ACMR) (the "Company" or "A.C. Moore") today announced results for the three and nine month periods ended October 3, 2009.

Sales for the third quarter of fiscal 2009 were $106.1 million, compared to sales of $116.7 million during the third quarter of fiscal 2008. Sales were impacted by operating two fewer stores than during the same period in 2008 and by a decrease in comparable store sales of 7.7%. Pre-tax loss for the quarter was $12.9 million, compared to a pre-tax loss of $4.4 million for the quarter last year. In the third quarter of 2008, the Company recorded a valuation allowance against the net deferred tax asset which resulted in income tax expense of $3.1 million, or $0.15 per share. Net loss for the quarter was $12.9 million, or $0.53 cents per share, compared to a net loss of $7.5 million, or $0.37 per share, for the comparable period last year.

Sales for the nine months ended October 3, 2009 were $319.2 million, compared to sales of $369.6 million during the comparable period of 2008. Sales were impacted by operating fewer stores than during the first nine months in 2008 and by a decrease in comparable store sales of 11.7%. Net loss for the nine months ended October 3, 2009 was $25.4 million, or $1.16 per share, compared to a net loss of $13.6 million, or $0.67 per share, for the same period last year. Prior year results include charges related to the non-cash fixed asset impairment of $0.07 per share.

Rick Lepley, Chief Executive Officer, said, "We were highly promotional in the quarter which adversely affected our margins. However, we are encouraged with the customer count increase from the second quarter, suggesting that shoppers were pleased with our advertising message and promotions."

The Company will host a conference call beginning at 8:30 a.m., Eastern Time, on Friday, November 6, 2009 to discuss third quarter 2009 results. To participate in the conference call, please dial (888) 503-8163 and provide the operator with passcode #7326849. If you are unable to access the live call, please dial (888) 203-1112 and enter pin #7326849 to access the taped digital replay. The replay will be available at approximately 9:30 a.m. ET on November 6, 2009 and will remain available until November 13, 2009 at 11:59 p.m.

A simultaneous webcast of the conference call may be accessed at www.acmoore.com. Go to "About Us" and click on "Corporate Profile." To listen to the live call via webcast, please go to the Company's website at least 15 minutes early to register, download and install any necessary audio software. An archive of the conference call will be available approximately two hours after the conference call ends on the Company's website.

About A.C. Moore:

A.C. Moore is a specialty retailer of arts, crafts and floral merchandise for a wide range of customers. The Company currently serves customers through its 134 stores located in the Eastern United States from Maine to Florida and nationally via its e-commerce site, www.acmoore.com. For more information about A.C. Moore, visit our website at www.acmoore.com.

This press release contains statements that are forward-looking within the meaning of applicable federal securities laws and are based on A.C. Moore's current expectations and assumptions as of this date. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ from those anticipated include, but are not limited to, the failure to consummate our identified strategic objectives, the effect of economic conditions and fuel prices, our ability to implement our business and operating initiatives to improve sales and profitability, our ability to comply with the terms of our credit facility, our ability to comply with NASDAQ listing requirements, changes in the labor market and our ability to hire and retain associates and members of senior management, the impact of existing or future government regulation, our ability to increase the number of stores we operate and the profitability of existing stores, how well we manage our growth, execution and results of our real estate strategy, competitive pressures, customer demand and trends in the arts and crafts industry, inventory risks, the impact of unfavorable weather conditions, disruption in our operations or supply chain, changes in our relationships with suppliers, difficulties with respect to new system technologies, difficulties in implementing measures to reduce costs and expenses and improve margins, supply constraints or difficulties, the effectiveness of and changes to advertising strategies and other risks detailed in the Company's Securities and Exchange Commission ("SEC") filings. A.C. Moore undertakes no obligation to update or revise any forward-looking statement whether as the result of new developments or otherwise.

[Tables Follow]

A.C. MOORE ARTS & CRAFTS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

(unaudited)

                                           October 3,  January 3,  September 30,

                                           2009        2009        2008

ASSETS

Current assets:

Cash and cash equivalents                  $ 31,326    $ 74,437    $ 46,756

Inventories                                  138,151     109,365     142,004

Prepaid expenses and other current assets    5,964       14,851      8,907

                                             175,441     198,653     197,667

Non-current assets:

Property and equipment, net                  88,069      92,403      98,510

Other assets                                 2,485       2,690       2,544

                                           $ 265,995   $ 293,746   $ 298,721

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term debt                            $ 19,000    $ 29,071    $ 12,571

Trade accounts payable                       44,187      39,274      42,346

Other current liabilities                    22,666      28,234      17,707

                                             85,852      96,579      72,624

Non-current liabilities:

Long-term debt                               -           -           17,143

Deferred tax liability and other             2,722       4,560       3,742

Accrued lease liability                      17,242      18,307      19,087

                                             19,964      22,867      39,972

                                             105,816     119,446     112,596

Shareholders' equity                         160,179     174,300     186,125

                                           $ 265,995   $ 293,746   $ 298,721

A.C. MOORE ARTS & CRAFTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)

                  Quarter Ended                   Nine Months ended

                  October 3,      September 30,   October 3,      September 30,

                  2009            2008            2009            2008

Net sales         $ 106,083       $ 116,661       $ 319,172       $ 369,635

Cost of sales
(including
buying and          65,350          66,228          188,428         212,728
distribution
costs)

Gross margin        40,733          50,433          130,744         156,907

Selling, general
and                 53,177          53,390          154,221         166,657
administrative
expenses

Store
pre-opening and     250             1,328           932             3,284
closing expenses

Loss from           (12,694    )    (4,285     )    (24,409    )    (13,034    )
operations

Net interest        191             158             885             529
expense

Loss before         (12,885    )    (4,443     )    (25,294    )    (13,563    )
income taxes

Provisions for      24              3,096           72              8
income taxes

Net loss          $ (12,909    )  $ (7,539     )  $ (25,366    )  $ (13,571    )

Basic net loss    $ (0.53      )  $ (0.37      )  $ (1.16      )  $ (0.67      )
per share

Diluted net loss  $ (0.53      )  $ (0.37      )  $ (1.16      )  $ (0.67      )
per share

Basic weighted
average shares      24,324,860      20,299,501      21,913,991      20,298,961
outstanding

Diluted weighted
average shares      24,324,860      20,299,501      21,913,991      20,298,961
outstanding

    Source: A.C. Moore Arts & Crafts, Inc.

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