Wilsons Leather’s accessories sales soar

May 21, 2008 - United States Of America

Wilsons The Leather Experts Inc announced results for the quarter ended May 3, 2008. Net sales decreased 14.0% to $36.4 million compared to $42.4 million for the same period last year. Sales related to the 163 stores that closed during the first quarter of 2008 are reported as discontinued operations. Comparable store sales for the first quarter ended May 3, 2008 decreased 8.8% compared to a decrease of 20.8% in the same period last year.

Wilsons Leather reported a loss from continuing operations for the 2008 first quarter of $13.4 million, or $0.38 per basic and diluted share. This compares to a loss from continuing operations for the 2007 first quarter of $15.3 million, or $0.39 per basic and diluted share.

The 2008 first quarter loss from discontinued operations was $9.0 million, or $0.22 per basic and diluted share, and includes a charge for future estimated lease obligations of $5.3 million for the discontinued stores. This compares to a loss from discontinued operations for the 2007 first quarter of $5.9 million, or $0.15 per basic and diluted share.

Net loss available to common shareholders for the 2008 first quarter was $23.7 million, or $0.60 per basic and diluted share, and includes a preferred stock dividend of $1.4 million to determine net loss attributable to common shareholders. This compares to a net loss available to common shareholders during the 2007 first quarter of $21.3 million, or $0.54 per basic and diluted share.

The Company saw some improvement in the performance of its go-forward operations during the quarter. Comparable store sales results improved each month during the quarter and were positive during the month of April. First quarter 2008 comparable store sales results for malls were down 27.1%, outlets were down 1.4%, men's was down 21.7%, women's was down 27.1% and accessories were up 7.8%.

Across all channels, handbag comparable store sales results were up 28.1%. The Company believes that the first quarter results indicate that the strategic shift toward a predominantly accessories based assortment is headed in the right direction.

The Company continues to face many challenges and will need to successfully mitigate these challenges in order to convert its go-forward mall stores into an accessories concept. The Company needs to successfully exit all of the lease obligations in the stores that were recently closed, raise capital and lessen some of the current restrictions in its credit agreement.