NEW YORK — Wilsons The Leather Experts said Tuesday it entered into an agreement to amend its $180 million revolving credit facility.
This story first appeared in the April 16, 2003 issue of WWD. Subscribe Today.
The Minneapolis-based retailer said the amended agreement waives defaults under previous ratio covenants and contains covenant changes, an increase in advance rates and an advance on an anticipated fourth-quarter income tax refund.
Shares of Wilsons rose 43 cents, or 10.1 percent, to close the day at $4.71 in Nasdaq trading Tuesday.
The firm also said the credit line, provided by GE Capital, CIT, Wells Fargo, LaSalle and US Bank, is effective until June 2005.
“Our amended agreement fulfills our anticipated working capital requirements,” chief executive Joel Waller said in a statement. “As a seasonal business, our relationship with our commercial banking group is very important to us.”
The amendments are good news for Wilsons, which has been struggling with weak sales in its core leather division and the ill fiscal effects of poorly timed acquisitions of travel product retailers before the Sept. 11 terrorist attacks.
In January, Wilsons completed the inventory liquidation of its travel subsidiaries’ 135 stores. At that time, it anticipated an aftertax charge of $28 million to $32 million, or $1.37 to $1.56 a diluted share, for the closure.
In November, Waller said the first step to achieve stronger results was by exiting the travel subsidiaries, “which have unduly compounded our difficulties,” and focusing on the core Wilsons Leather business. Sales results and unit productivity in test stores were deemed insufficient to warrant further investment.
For fiscal 2002 ended Feb. 1, Wilsons reported a loss of $80.9 million, or $4.03 a diluted share, including the discontinued operations related to the travel subsidiaries and the cumulative effect of an accounting change. Net sales for the year decreased 4.5 percent to $571.5 million.