Gadzooks, Inc. (Nasdaq: GADZ) today announced that sales for the five weeks of fiscal December ended January 3, 2004 decreased 27.7 percent to $40.5 million from $56.0 million for fiscal December 2002. For the December period, the Company's sixth month as a female-only concept, comparable store sales decreased 25.2 percent compared to a 2.4 percent decrease for fiscal December of 2002. For the first 48 weeks of fiscal 2003, total sales decreased 20.5 percent to $245.4 million from $308.6 million for the comparable period of fiscal 2002. Comparable store sales have declined 19.3 percent for the first 48 weeks of fiscal 2003, versus a 3.2 percent decrease for the first 48 weeks of fiscal 2002. The Company also reported that it has decided to discontinue testing the Orchid concept and expects to close the four stores as soon as possible. Chairman and CEO Jerry Szczepanski remarked: "After two full years of evaluation, Orchid, an innerwear and sleepwear store for teens, has been unable to achieve the level of sales necessary for us to consider rolling out additional stores. We have determined that the most appropriate course of action at this time is to close the four stores and focus our complete attention on the Gadzooks chain." In addition, the Company expects to close up to 35 under performing Gadzooks stores pursuant to lease expirations or kick out clauses by the end of April 2004. Of the 35 stores, the Company expects to close four by January 31, 2004, the end of the Company's fiscal year. "We do not like to close stores, but the closing stores are not generating adequate sales to provide a satisfactory return on investment," continued Mr. Szczepanski. "We will continue to evaluate our options regarding other under performing store locations." For further details, please call 972-662-4201 to listen to Gadzooks' monthly sales commentary. Dallas-based Gadzooks is a specialty retailer of casual clothing, accessories and shoes for 16-22 year-old females. Prior to July 2003, the Company offered clothing, accessories and shoes for both males and females. Gadzooks currently operates 411 Gadzooks stores in 41 states. This material includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include estimates, targets, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. There are many factors that could cause forward-looking statements not to be correct, including the cautionary statements contained in this material and risks and uncertainties inherent in the Company's business set forth in the filings of the Company with the Securities and Exchange Commission, including without limitation the Company's most recent Annual Report on Form 10-K, the registration statement filed on Form S-3 in October 2003 and the quarterly report filed on Form 10-Q for the Company's fiscal quarter ended November 1, 2003. The Company does not undertake any obligation to update any forward-looking statements contained in this material.
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