Established in 1932, Deb Shops was originally known as Joy Hosiery, a leading retailer of foundation garments in and around Philadelphia. Today, the company has evolved to become a nationwide leading junior apparel retailer under the brand names DEB, CSO, and Tops 'N Bottoms. There are over 330 stores in 41 states. 

Deb Shops also Reports February Sales
PHILADELPHIA, March 8, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Deb Shops, Inc. (Nasdaq: DEBS), a leading teen apparel retailer, today reported financial results for the fourth quarter ended January 31, 2007. 
For the fourth quarter of fiscal 2007, net sales decreased 3.7% to $85.1 million compared to $88.4 million in the fourth quarter a year ago. Gross profit, which is net of buying and occupancy costs, was $36.7 million resulting in a gross margin of 43.1% for the period. This compares to gross profit of $39.0 million and a 44.2% gross margin in the fourth quarter of fiscal 2006. Fourth quarter net income was $10.4 million compared to $12.8 million in the fourth quarter of fiscal 2006, while diluted earnings per share were $0.73 versus $0.89 in last year's fourth quarter. 

As of January 31, 2007, the Company had $127.7 million in cash and marketable securities, shareholders' equity of $146.0 million, and no debt. 

Net sales for the year ended January 31, 2007 were $324.7 million compared to $325.0 million for the comparable prior year period. Gross profit, which is net of buying and occupancy costs, was $110.8 million resulting in a gross margin of 34.1% for fiscal 2007 versus gross profit of $113.3 million and a 34.9% gross margin in fiscal 2006. Net income was $21.4 million, or $1.49 per diluted share, versus $25.3 million, or $1.78 per diluted share, for the year ended January 31, 2006. 

Marvin Rounick, President and CEO of Deb Shops, stated, "Despite a difficult selling environment in our core markets, we finished the year with earnings per share near the high-end of our revised guidance range. Throughout fiscal 2007 we did experience some softness in certain merchandise categories which we believe was driven by a combination of our product assortment and at times, difficult economic conditions for our value focused consumers. We also incurred higher operating costs, primarily related to payroll and store expenses, which also impacted our bottom line. Despite these challenges we begin the new year committed to reestablishing our momentum in order to improve our financial performance and increase our share of the market." 

During the fourth quarter of fiscal 2007, Deb Shops opened three new stores and remodeled two existing locations. The Company also closed four locations at year-end. As of January 31, 2007, the Company operated plus-size departments in 181 Deb stores. 

Barry Susson, CFO of Deb Shops, added, "Although we reported sales and earnings that were below our original projections from the beginning of the year, fiscal 2007 was marked by the execution of several key objectives. Operationally, we opened 18 new stores of which five were in the under penetrated western portion of the country. Strategically, we increased the number of plus size departments throughout our store base, a key differentiator and important growth vehicle for our Company. Financially, we maintained our commitment to shareholders, returning $0.50 per share through our quarterly dividend payout. We also ended the year with over $127 million in cash and marketable securities. We move forward with a sound business plan and an experienced management team focused on delivering long-term growth and increased profitability." 

Based on current information, Deb Shops has established fiscal 2008 sales guidance in the range of $343 million to $348 million and fully diluted earnings guidance of between $1.55 and $1.60 per share. The amounts are based on a projected low- to mid-single-digit comparable store sales increase and by net store growth of approximately 15 locations. 

Deb Shops also today reported that comparable store sales decreased 2.0% for the month ended February 28, 2007. Total sales increased 1.1% to $25.6 million from $25.3 million for the month ended February 28, 2006.