Item 1. BUSINESS
Edison Brothers Stores, Inc. (the "Company") owns and operates chains of specialty stores in all fifty of the United States, Puerto Rico, the Virgin Islands, and Mexico. The Company conducts its operations through subsidiaries and divisions in two principal business segments: apparel and footwear. See Note 4 of Notes to Consolidated Financial Statements in the 1993 Annual Report for information with respect to the total assets and the contribution to net sales and earnings from operations of the Company's principal business segments. Both the apparel and the footwear segments feature primarily private label merchandise in the moderate price range. The stores operated by the Company are located primarily in shopping malls. During 1993 the Company opened 207 stores including 96 acquired by purchase, and closed 128 stores. A brief description of the Company's chains follows.
Apparel Segment
Edison Brothers' men's apparel chains and other operations include J. Riggings, JW/Jeans West, Zeidler & Zeidler/Webster, Oaktree, Coda, Repp, Ltd. Big & Tall, and Phoenix catalog operations. The women's-wear chains include 5-7-9 Shops and Spirale.
J. Riggings, the Company's profit leader over the past four years, focuses on providing updated traditional apparel to a broad age group of 16 to 40 year-old men. Its mainstream merchandise and classic store design are targeted at a more conservative customer. J. Riggings operated 476 stores at the end of fiscal 1993.
The JW/Jeans West (JW) chain had 450 stores at the end of fiscal 1993. JW stores are generally smaller than stores in the Company's other menswear chains and are designed to maximize the amount of apparel displayed on the sales floor. This chain targets young men in the 14 to 25 year-old age group.
The Zeidler & Zeidler/Webster (Zeidler & Zeidler) store group markets upscale contemporary clothing for men. New stores being opened by this group are using the Zeidler & Zeidler name. Zeidler & Zeidler had 164 stores at the end of fiscal 1993.
Oaktree offers a mix of sportswear for 18 to 29 year-old men. Its larger store size accommodates Oaktree's presentation on custom fixtures in a modern setting. Oaktree operated 306 stores at the end of fiscal 1993.
Coda presents branded and private label current fashion to 18 to 29 year- old men. Coda's larger stores utilize a variety of merchandising techniques, including visual displays and advanced sound systems. At the end of fiscal 1993 Coda operated 42 stores.
Repp, Ltd. Big & Tall (Repp) is a chain of 147 big and tall mens stores. Repp markets sportswear and clothing to men who are 6 foot 3 inches or taller or have a 44 inch or larger waist.
Phoenix Big & Tall is a catalog operation that markets sportswear and clothing to big and tall men.
5-7-9 Shops primarily markets sportswear, dresses and coordinates to the small size junior customer. 5-7-9 Shops operated 388 stores at the end of fiscal 1993.
Spirale offers adaptations of teen fashion looks in sizes 6 to 14 for girls. Spirale operated 5 stores at the end of fiscal 1993.
Footwear Segment
The Company's footwear chains include Bakers/Leeds, Precis, The Wild Pair, and Sacha London.
The Bakers/Leeds stores, which are operated as a single chain, form the company's second largest chain with 457 stores at the end of fiscal 1993. Bakers/Leeds offers popularly-priced fashion shoes to women and teenage girls.
Precis offers fashion footwear and accessories at reasonable prices in a very high-style setting. Precis operated 28 stores at the end of fiscal 1993.
The Wild Pair offers advanced shoe fashion for young women and men and a selection of trend setting accessories. The Wild Pair operated 252 stores at the end of fiscal 1993.
Sacha London markets advanced shoe fashion to customers in urban areas. This chain operated 14 stores at the end of fiscal 1993.
Entertainment
Edison Brothers Entertainment (EBE) includes Time-Out, Space Port, Party Zone and Exhilarama family entertainment centers, Dave & Buster's restaurant/entertainment complexes and Horizon, which is involved with the development of new entertainment technologies, including VirtualityTM, a virtual reality entertainment system. Horizon markets high tech interactive attractions to the corporate event market and other chains in the Entertainment division.
Edison Brothers Mall Entertainment operated 128 primarily mall-based Time- Out, Space Port, and Party Zone family amusement centers and 5 larger mall- based family entertainment centers at the end of fiscal 1993. The centers are located throughout the United States and Puerto Rico. Dave & Buster's operated 4 restaurant/entertainment complexes located in Texas and Georgia at the end of fiscal 1993 and has recently opened a new unit in Philadelphia, Pennsylvania.
Additional information related to this item is set forth under the captions "To Our Shareholders" and under "Note 4: Business Segments" of the Notes to Consolidated Financial Statements in the 1993 Annual Report. Such information is incorporated herein by reference.
Operations and Data Processing
The specialty retailing business is subject to fluctuations resulting from changes in customer preferences dictated by fashion and season. This is especially true for stores emphasizing fashion over classic basics. In addition, merchandise usually must be ordered a significant time in advance of the season and sometimes before fashion trends are evidenced by customer purchases. It has been the general practice of the Company and other apparel retailers to build up inventory levels prior to peak selling seasons, which further increases the vulnerability of the Company to demand and pricing shifts and to errors in selection and timing of the purchases of merchandise. However, the Company found that the rate of change in fashion trends slowed in late 1991 and during 1992. As a result, the Company began ordering and receiving subsequent-season merchandise earlier in 1992 than had been the case in previous years. In 1993, a lack of fashion direction in a weak retail environment led the Company to lower inventory levels.
Substantially all of the Company's merchandise information, accounting, and financial control systems are operated centrally from the Company's headquarters in St. Louis, Missouri. Daily polling of activity from the point-of-sale registers in each store provides current data for updated sales, merchandise, and bank activity reporting. Integration of this data with the Company's merchandise system enables each chain's team of merchandise controllers and distributors to monitor performance and replenish and control inventory.
The Company must carry large amounts of inventory to meet the rapid delivery requirements of its stores. The Company operates four main distribution centers located in St. Louis and Washington, Missouri; Rialto, California; and Rome, Georgia. The centers are receiving points for merchandise from foreign and domestic suppliers and coordinate distribution of individual shipments via common carrier to the stores serviced by the center.
Purchasing
The Company purchases merchandise from many foreign and domestic suppliers. The Company has no long-term purchase commitments with any of its suppliers, and is not dependent on any one supplier. The Company's importing operations are subject to the contingencies generally associated with foreign operations, including fluctuations in currency values, customs duty increases, quota limitations and any other foreign development that could cause a disruption of supply. The Company opened international buying offices in Taiwan in 1987; in Hong Kong in 1989; in Shanghai and Dalian, China and Indonesia in 1991; and in Korea, Honduras, and the Philippines in 1993, giving it improved control over overseas sourcing.
The Company does not manufacture any merchandise, but it markets most of its merchandise under private labels. Each chain of stores maintains a staff of buyers, and buying decisions are made at the chain level.
Competition
The apparel and footwear retailing industries are highly competitive. The Company's stores are in competition with numerous other independent retailers, department stores, mail order companies and discount and manufacturer's outlets, many of which have greater sales, assets and financial resources than the Company. Because the Company's stores are primarily in regional shopping malls, each faces several nearby competitors. In competing for customers, the Company emphasizes the fashion orientation of its merchandise, customer service, store appearance and price.
Employees
During fiscal 1993, the Company employed an average of 24,200 persons with approximately 22,200 of them engaged in retail operations at the store level (approximately 30% full-time and 70% part-time). In addition, a substantial number of temporary employees are hired during peak selling seasons. The Company believes its employee benefits package is competitive with those offered in the industry.
Seasonal Business
The Company experiences a significant peak in sales during the Christmas selling season. Sales during that season accounted for 17.3% of total sales during 1993.
The Company's inventory is generally increased significantly prior to this peak selling period. The increase may be financed in part by short-term bank loans and commercial paper borrowings.
Trademarks
The Company holds a number of trademarks covering its products. The Company believes that the loss of any of these trademarks would not have a material effect on the Company's business.
Item 2.
Item 2. PROPERTIES
Stores are located nationwide, and most are leased with initial terms generally from ten to twenty years. The rentals under most leases are based upon a percentage of sales with a provision for a minimum annual rental. Many of the leases provide for additional payments for real estate taxes and other items. The stores generally range in size from 1,300 to 3,000 square feet. The Company owns three locations containing its Dave & Buster's restaurant/entertainment complexes located in Texas and Georgia and leases one location in Texas and one location in Pennsylvania. The complexes range in size from 25,000 to 70,300 square feet.
The company-owned headquarters building in St. Louis, Missouri, was completed in 1985 and is the home office for all divisions. The building contains approximately 500,000 square feet, a portion of which the company leases to others. The Rialto, California distribution center is owned by the Company. The distribution centers in St. Louis and Washington, Missouri and in Rome, Georgia are operated under long term lease arrangements. The Rialto, Washington, and Rome centers service primarily the apparel segment while St. Louis services primarily the footwear segment. The company also operates a small distribution center in Georgia to service its catalog operations.
Item 3.
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
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.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Information required by Item 5 is contained in "Note 5: Common Stock" of the Notes to Consolidated Financial Statements and under the caption "Quarterly Information" in the 1993 Annual Report. Such information is incorporated herein by reference.
Item 6.
Item 6. SELECTED FINANCIAL DATA
Information required by Item 6 is contained under the caption "Five-Year Financial Summary" in the 1993 Annual Report. Such information is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information required by Item 7 is presented under the captions "To Our Shareholders" and "Management's Discussion and Analysis" in the 1993 Annual Report. Such information is incorporated herein by reference. In addition, the Company reported a comparable store sales decrease of 8.4% in 1993 and increases of 3.8% and .3% in 1992 and 1991, respectively.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by Item 8, as listed below, is included in the 1993 Annual Report. Such information is incorporated herein by reference.
Consolidated Statements of Income - 1993, 1992, and 1991
Consolidated Balance Sheets - 1993 and 1992 year-ends
Consolidated Statements of Cash Flows - 1993, 1992, and 1991
Consolidated Statements of Common Stockholders' Equity - 1993, 1992, and 1991
Notes to Consolidated Financial Statements
Quarterly Information
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding nominees for director as set forth under the caption "Election of Directors" in the proxy statement for the 1994 annual stockholders' meeting is incorporated by reference.
Information regarding executive officers is included as Item 4a hereof.
Information regarding the filing of reports required by Section 16(a) of the Securities Exchange Act as set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the proxy statement for the 1994 annual stockholders' meeting is incorporated by reference.
Item 11.
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation, except for the sections titled "Reports of the Compensation Committees" and "Stock Price Performance" as set forth under the caption "Executive Compensation", and information regarding compensation of directors under the caption "Election of Directors" in the proxy statement for the 1994 annual stockholders meeting is incorporated by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and management as set forth under the captions "Election of Directors" and "Security Ownership of Certain Beneficial Owners and Management" in the proxy statement for the 1994 annual stockholders meeting is incorporated by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions to be reported under this item.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report.
(a) (3) Listing of exhibits:
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)
(b) There were no reports on Form 8-K filed during the quarter.
(c) Exhibits:
The response to this portion of Item 14 is submitted as a separate section of this report.
(d) Financial statement schedules:
The response to this portion of Item 14 is submitted as a separate section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 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.
EDISON BROTHERS STORES, INC. (Registrant)
By /s/ Andrew E. Newman 4/15/94 By /s/ Martin Sneider 4/15/94 Chairman of the Board (date) President (date)
By /s/Norman Gold 4/19/94 By /s/Lee G. Weeks 4/18/94 Vice President and (date) Executive Vice President and (date) Corporate Controller Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following directors on behalf of the registrant on the dates indicated.
By /s/ Julian I. Edison 4/19/94 By /s/ Peter A. Edison 4/15/94 (date) (date)
By Jane Evans (date) By /s/ Michael H. Freund 4/15/94 See Page 14a (date)
By /s/ Karl W. Michner 4/15/94 By /s/ Alan D. Miller 4/15/94 (date) (date)
By /s/ Andrew E. Newman 4/15/94 By /s/ Eric P. Newman 4/15/94 (date) (date)
By /s/ Alan A. Sachs 4/15/94 By Craig D. Schnuck (date) (date) See page 14b
By /s/ Martin Sneider 4/15/94 By Robert W. Staley (date) (date) See page 14c
By /s/ Lee G. Weeks 4/18/94 (date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following director on behalf of the registrant and on the date indicated.
By /s/ Jane Evans 4/16/94 (date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following director on behalf of the registrant and on the date indicated.
By /s/ Craig D. Schnuck 4/16/94 (date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following director on behalf of the registrant and on the date indicated.
4/18/94 By /s/ Robert W. Staley (date)
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) and (2) and ITEM 14(d)
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED JANUARY 29, 1994
EDISON BROTHERS STORES, INC.
ST. LOUIS, MISSOURI
FORM 10-K - ITEM 14(a) (1) and (2)
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of Edison Brothers Stores, Inc. and subsidiaries, included in the 1993 annual report of the registrant to its stockholders, are incorporated by reference in Item 8:
Consolidated Statements of Income - 1993, 1992, and 1991
Consolidated Balance Sheets - 1993 and 1992 year-ends
Consolidated Statements of Cash Flows - 1993, 1992, and 1991
Consolidated Statements of Common Stockholders' Equity - 1993, 1992, and 1991
Notes to consolidated financial statements
The following consolidated financial statement schedules of Edison Brothers Stores, Inc. and subsidiaries are included in Item 14(d):
Schedule II - Amounts receivable from related parties and underwriters, promoters, and employees other than related parties
Schedule V - Property, plant, and equipment
Schedule VI - Accumulated depreciation and amortization of property, plant, and equipment
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
Schedule X - Supplementary income statement information
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, or are inapplicable, and therefore have been omitted.
Individual financial statements of the registrant have been omitted as the registrant is primarily an operating company and all subsidiaries included in the consolidated financial statements filed, in the aggregate, do not have minority equity interests and/or indebtedness to any person other than the registrant or its consolidated subsidiaries in amounts which together (excepting indebtedness incurred in the ordinary course of business which is not overdue and matures within one year from the date of its creation, whether or not evidenced by securities, and indebtedness of subsidiaries which is collateralized by the registrant by guarantee, pledge, assignment, or otherwise) exceed five percent of the total assets as shown by the most recent year-end consolidated balance sheet.
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES