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Tatyana Designs Reports Third Quarter 2014 Results

LAS VEGAS, Nov. 26, 2014 (GLOBE NEWSWIRE) -- Tatyana Designs, Inc. (the "Company") (OTC Pink:TATD), a designer, manufacturer and retailer of retro inspired contemporary designs, today posted financial results for the third quarter of 2014.

For the nine months ended September 30, 2014:

  • The Company reported net sales of $9.6 million, a 13.6% decline from $11.1 million for the first nine months of 2013.
  • Adjusted EBITDA for the first nine months of 2014 was a loss of $1.37 million (see discussion below and accompanying table for non-GAAP measures) compared to an $0.8 million adjusted EBITDA profit for the same period of the prior year.
  • While margins for the nine months improved from the prior year they are subject to significant variability from period to period. The 2014 nine-month loss resulted from a 17.1% increase in selling, general and administrative costs. The Company's efforts to realign costs with new operating levels (as discussed below) resulted in a 2.6% reduction in 2014 Q3 operating costs compared to Q3 2013.
  • The Company ended the quarter at September 30, 2014 with $339,000 cash, working capital of $1.9 million and inventory and inventory deposits of $3.3 million.
  • During the third quarter the Company launched its first Canadian based boutique in the high-profile fashion district of Toronto.

The specialty retail sector is challenging under the current environment. Store traffic count is down, disposable income has declined and internet based retailers are competing with thin margins. As a part of our efforts to react to a fast changing retail environment the Company closed three underperforming boutiques during the third quarter and continues to analyze each boutique's performance. The Company plans to close three additional underperforming boutiques in the fourth quarter and continue realigning operating costs to sales performance. While operating costs increased during the first six months compared to the prior year the Company's cost containment efforts in the third quarter resulted in reduced third quarter operating costs compared to the prior year's third quarter.

The Company believes the retail industry is being reshaped by changes in consumer buying behavior moving from traditional bricks & mortar to online and mobile. The shift in consumer buying habits, primarily, the rapid growth in the use of mobile devices for purchases by consumers has affected traditional brick and mortar retailers disproportionately. Countering this trend there is a movement by online only operators to adopt some brick & mortar locations. Accordingly, the Company is realigning to this new retail landscape with the goal of a balance of strategic and profitable retail locations along with an increased emphasis on e-commerce. The Company is focusing human, financial and technical resources to support important e-commerce initiatives including multiple online marketplaces, comparison shopping engines and additional niche domains.

Jan Glaser, co-CEO and treasurer of Tatyana Designs, Inc. reported, "We are seeing results from our previously announced efforts to reduce fixed costs and align costs with sales levels. We are improving in-store customer interactions and displays to better integrate our online and offline shopping experience. Our goal is a balanced multi-channel retailing experience focused on the enduring trend of retro elegance for the modern woman. While we face significant challenges for the balance of 2014 and beyond, we are seeing positive improvements from our new initiatives. The goal is to tighten our operations by reducing the enormous fixed (and variable) costs required by operating non-performing brick and mortar stores while increasing our e-commerce sales both directly and through third party sites."

Non-GAAP Information - This press release includes non-GAAP EBITDA and Adjusted EBITDA (adjusted for non-cash deferred rent and stock-based compensation) each a non-GAAP financial measure. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Company's business as it grows. The Company's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. The Company has provided this information as a means to evaluate the results of its ongoing operations. Other companies in the Company's industry may calculate these items differently than it does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

About the Company - Based in Las Vegas, Nevada, Tatyana Designs, Inc. is a retailer specializing in contemporary designs inspired by the 1940's and 50's – the "Golden Age" of fashion. The Company owns significant trademark and license rights. The merchandise offered through the chain of retail boutiques, e-commerce and wholesale divisions offer retro elegance for the modern woman through a diverse mix of high-quality and attractively priced apparel, jewelry, accessories and gifts. The Company's boutiques and e-commerce target the 18-35 year-old, fashion conscious female customer, but women of all ages are attracted to the unique retro inspired, yet modern, look. New product styles are presented monthly. For more information on the company please visit the Web site at www.tatyanadesigns.com.

Cautionary note on forward-looking statements:

Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected, including: the costs and effects of our rebranding and related disputes including current litigation; possible adverse changes in general economic conditions and their impact on consumer confidence and spending; possible inability to predict and respond in a timely manner to changes in consumer demand; possible loss of key management or inability to attract and retain the talent required for our business; possible inability to maintain and enhance our brands; our ability to borrow capital or service our indebtedness; our ability to reduce operating costs or close unprofitable business units; possible inability to successfully implement our strategies or manage our business; possible inability to successfully operate our boutiques and expand e-commerce business as planned; the inability to successfully implement certain strategic initiatives; the ability to raise additional capital if required; and possible inability to sustain sales volumes. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to the Company's most recent public corporate documents and risk factors discussed therein (www.otcmarkets.com/stock/TATD/filings). We undertake no obligation to publicly update or revise any forward-looking statement. Future results may differ materially from the Company's current expectations.

Tatyana Designs, Inc.
Condensed Consolidated Balance Sheets
(000's omitted except per share amount)
(unaudited)
September 30, December 31,
2014 2013
$ $
ASSETS
Current
Cash 340 683
Inventories 3,147 2,576
Receivables and other 552 338
Total current assets 4,039 3,597
Property and equipment, net 818 698
Deferred income taxes -- 409
Deposits 672 443
Total assets 5,529 5,147
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accruals 1,375 1,061
Bank debt 489 202
Due stockholder 287 376
Total current liabilities 2,151 1,639
Deferred rent 1,229 1,080
Bank debt - long term 289 472
10% Secured convertible note-net 973 --
6% Convertible notes 300 300
Total liabilities 4,942 3,491
Stockholders' equity 587 1,656
Total liabilities and stockholders' equity 5,529 5,147
Tatyana Designs, Inc.
Condensed Consolidated Statements of Operations
(000's omitted except per share amount)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
$ $ $ $
Net sales 3,251 4,255 9,633 11,144
Cost of revenues 1,335 1,586 3,197 3,947
Gross profit 1,916 2,669 6,436 7,197
Selling, general and administrative 2,572 2,640 8,080 6,897
Income (loss) from operations (656) 29 (1,644) 300
Other expenses 199 9 445 54
Income before income tax (855) 20 (2,089) 246
Income tax expense (benefit) -- 15 389 107
Net income (loss) (855) 5 (2,478) 139
Basic and diluted earnings per common share ($0.07) $0.00 ($0.20) $0.01
Weighted average shares outstanding:
Basic and diluted shares 12,334 11,935 12,235 11,935
Tatyana Designs, Inc.
GAAP to Non-GAAP Reconciliations
(000's omitted)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
$ $ $ $
Reconciliation of net income (loss) to EBITDA:
Net income (loss) (855) 5 (2,478) 139
Adjustments:
Interest 191 9 385 65
Depreciation 42 86 144 115
Taxes -- 15 389 107
EBITDA (622) 115 (1,560) 426
Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss) (855) 5 (2,478) 139
Adjustments:
Interest 191 9 385 65
Depreciation 42 86 144 115
Taxes -- 15 389 107
Stock-based compensation 12 19 38 69
Non-cash increase deferred rent 58 89 150 326
Adjusted EBITDA (552) 223 (1,372) 821

CONTACT: Jan Glaser 702.458.1632 Ext 5

Source:Tatyana Designs, Inc.