NEW YORK — Sagging sales, promotional pressures and special charges conspired to drive United Retail Group Inc. out of the catalog business as its fourth-quarter losses grew to plus-size proportions.
This story first appeared in the February 20, 2003 issue of WWD. Subscribe Today.
For the three months ended Feb. 1, the Rochelle Park, N.J.-based specialty retailer of plus-size women’s apparel reported a net loss of $16.1 million, or $1.24 a diluted share. That compares with last year’s smaller loss of $624,000, or 5 cents. Excluding a pretax, noncash charge of $5.6 million for goodwill impairment, as well as a deferred tax asset valuation allowance that increased its tax provision by $7.3 million, the company would have recorded a more modest loss of $3.2 million, or 25 cents.
Sales for the period fell 7.5 percent to $105.7 million from $114.3 million, as comparable-store sales retreated 8 percent.
Shares of United fell 8 cents, or 3.2 percent, to close at $2.40 in Nasdaq trading Wednesday.
In a statement, chief executive officer Raphael Benaroya said: “Quarterly results were affected by the need to intensify promotions and increase marketing expenses more than usual and above plan in response to a holiday selling season that was characterized by cautious consumers responding primarily to heavily promoted items.”
In an effort to right the foundering company, Benaroya said United Retail will suspend catalog operations for the foreseeable future after next month’s mailing. He also reiterated the company’s previous statement that it will put off any meaningful addition of new stores until retail conditions improve.
In fiscal 2001, United’s “shop@home” sales, the combination of its Web site and catalog revenues, were $11.5 million, about 2.7 percent of its total and 18.6 percent above the prior year. However, operating losses for these operations, exclusive of unallocated expenses, were $6.9 million, reduced from an $8.2 million deficit in the prior year.
According to Benaroya, United also plans to focus more on distinctive fashions and coordinated assortments and less on basic items that are also available at mass-market retailers.
Overall, for the full fiscal year, the company reported a net loss of $23.1 million, or $1.77 a diluted share. That compares with year-ago profits of $430,000, or 3 cents. Excluding aforementioned charges, United Retail would have recorded a less dramatic loss of $10.2 million, or 78 cents.
Sales for the year increased 1.2 percent to $432 million from $427 million in 2001, and comp-store sales fell back 1 percent.
United Retail operates 553 specialty stores under the name Avenue as well as the avenue.com Web site.