Leading shoe retailer loss widens in Q3
Bakers Footwear Group, Inc. a leading specialty retailer of moderately priced fashion footwear for young women, with 241 stores, announced results for the thirteen and thirty nine-weeks ended October 31, 2009.
For the third quarter, the thirteen weeks ended October 31, 2009:
• Net sales were $39.0 million, a decrease of 4.9% from $41.1 million for the thirteen-week period ended November 1, 2008, reflecting weak demand for our transitional fall product;
• Comparable store sales decreased 5.1%, compared to an increase of 4.5% in the prior-year period;
• Gross profit was $6.8 million, or 17.3% of net sales, compared to $9.0 million, or 21.9% of net sales, in the prior-year period, reflecting increased promotional activity and lower leverage on occupancy and buying costs;
• Selling, general and administrative expenses were $13.5 million, or 34.6% of net sales, compared to $13.9 million, or 34.0% of net sales, in the prior-year period;
• Impairment expense was $2.8 million, reflecting non-cash charges in connection with specific underperforming stores, compared to impairment expense of $2.6 million in the third quarter last year;
• Operating loss was $9.5 million, compared to $7.6 million in the third quarter last year; and
• Net loss was $10.2 million or ($1.38) per share, compared to $8.3 million, or ($1.18) per share in the third quarter last year.
Peter Edison, Chairman and Chief Executive Officer of Bakers Footwear Group commented, “In a period that typically represents a seasonal loss for our Company, and despite tougher sales comparisons from last year, we continued to successfully manage our inventory levels, control our operating expenses and maintain compliance with our debt covenants. Our quarter end balance sheet included a 14% decline in inventory. Although comparable store sales declined for the quarter and were below our expectations, consumer response to our boot offerings across key categories was strong. This led to a strengthening in sales as the quarter progressed with positive comp sales recorded in October.
“As we look ahead, we are well positioned to deliver sales growth and improved operating performance in the fourth quarter. While our comparable stores sales are down 2.2% in the fourth quarter through December 6, 2009, holiday sales are encouraging with comparable store sales up 4.0% from Black Friday, November 27, 2009, through December 6, 2009, reflecting continued momentum in boots. We remain confident that our compelling footwear assortments and continued financial discipline will enable us to generate improved operating results and adjusted EBITDA during the fourth quarter. We are also excited by a favorable response to our early spring product that was delivered to warm weather stores.”
Based on the Company's business plan, the Company believes it has adequate liquidity to fund anticipated working capital requirements and expects to be in compliance with its financial covenants throughout the remainder of 2009. The Company's Quarterly Report on Form 10-Q, issued today and the Company's Annual Report on Form 10-K disclose additional information regarding its debt agreements and provide additional disclosure regarding the risks of the Company's current liquidity situation and its ability to comply with its financial covenants.