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In Brief: Claire's Tough Quarter... CITA Ruling

Lower sales and almost $49 million in interest expense dropped Claire's Stores Inc. to a $35.6 million loss in the first quarter.

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- CLAIRE'S TOUGH QUARTER: Lower sales and almost $49 million in interest expense dropped Claire's Stores Inc. to a $35.6 million loss in the first quarter. The Pembroke Pines, Fla.-based specialty retailer of jewelry and accessories, which was acquired and taken private by Apollo Management LP and other interests in May 2007, reported the red ink compared with net income of $28.8 million in last year's quarter. In the three months ended May 3, sales decreased 4 percent to $327 million from their year-ago level of $340.6 million as comparable-store sales fell 8.4 percent. Gross margin pulled back more than 500 basis points, to 47.4 percent of sales from 52.6 percent a year ago. Gene Kahn, chief executive officer, noted that the company began the year with expectations of same-store sales growth, but that eroding sales trends led to a review of expenses. He estimated that the company can trim $15 million from its original cost projections and realize $40 million in annualized savings beginning next year. "Our same-store sales, while still negative, have shown improvement in the second quarter," he said.

- CITA RULING: The Committee for the Implementation of Textile Agreements has added 100 percent cotton woven indigo-dyed fabric to the short-supply list of the Central American Free Trade Agreement. CITA said it determined the fabric can't be found in commercial quantities in the CAFTA region. Adding the material to the short-supply list gives companies that manufacture apparel in the region permission to obtain the fabric from outside the CAFTA area without losing duty free benefits. CITA received the original request on May 6 from Sandler, Travis & Rosenberg on behalf of BWA of New York.
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