NexCen Brands, Inc., the parent of The Athlete’s Foot, said it expects to report revenues from continuing operations of its franchise business of approximately $12 million in the second quarter of 2008 compared with $4.7 million in the second quarter of 2007. Second quarter of 2008 results reflect the acquisitions completed in 2007 and the acquisitions of Shoebox
The preliminary second quarter of 2008 results from continuing operations include:
— Royalty and other revenue of approximately $6.8 million versus $3.5 million in the second quarter of last year.
— Manufacturing (cookie-dough) revenue of approximately $4.8 million from Great American Cookies, which was acquired at the end of January 2008.
— Franchisee fee revenue of approximately $0.4 million versus $1.2 million in the second quarter of last year.
— The Company continued to expand internationally, entering into letters of intent with new or existing franchisees to open a minimum of 40 Great American Cookie units in
— Total franchised locations at the end of the second quarter were 1,895 stores versus 1,174 stores at the end of the second quarter of last year.
The company said revenues relating to NexCen’s consumer branded licensing business, which consists of Bill Blass and Waverly, will be reported as discontinued operations due to the expected sales of those businesses. Licensing revenues from the Bill Blass and Waverly businesses are expected to be approximately $2.4 million in the second quarter of 2008 compared to $4.2 million in the second quarter of 2007.
Full Financial Results Being Finalized
The company is continuing to assess and quantify the impact on its financial results from asset impairment charges, the costs associated with the special investigation by the audit committee, the restructuring of its credit facility, the planned disposition of the Bill Blass and Waverly businesses and the workforce reduction completed at the Company’s New York headquarters, any and all of which may materially impact the second quarter of 2008 operating results. Accordingly, the full financial results for the second quarter of 2008 have not yet been determined.
Third Quarter Highlights
The company also provided an update today regarding recent business activities subsequent to the end of the second quarter, which includes:
— During the third quarter the Company has to date executed franchise agreements for 105 new franchise units across its seven franchise businesses, totaling approximately $1.8 millionin new initial franchise feesversus approximately $0.1 million, representing three franchise units in the second quarter of 2008.
— NexCen’s pipeline of letters of intent and franchise agreements for franchise stores to be opened increased to 343 stores at August 31, 2008 versus 225 stores at the end of the second quarter of 2008.
— Waverly recently extended the paint license for Waverly Home Classic Brand with Lowe’s and re-launched www.waverly.com as an inspiration gallery to guide consumers in how to coordinate Waverly product and where to purchase Waverly product, including a Google Map feature for retail partners.
— Bill Blass recently commercially introduced Peter Som’s new Bill Blass Couture designs during New York Fashion Week.
Business Update
NexCen is working to put itself in a position to reissue the Company’s consolidated financial statements as of December 31, 2007 and 2006. Once that work is complete, the Company intends to amend and re-file its Annual Report on Form 10-K for the year ended December 31, 2007. The company then plans to proceed immediately to complete and file its Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2008 and June 30, 2008. The company is not yet able to estimate when it will be able to complete these filings. Until this process is completed, KPMG LLP, the Company’s independent accountants, is unable to complete a review under Statement on Auditing Standards No. 100 (“SAS 100”) of the company’s consolidated quarterly financial statements.