Burlington Coat Factory Investments Holdings Inc. said second-quarter profits declined more than 20 percent but instituted a cost-cutting program that it expects will reduce costs by more than $45 million during the back half of the year.
In the three months ended Nov. 29, the Burlington, N.J.-based off-price chain’s net income fell 21.6 percent to $18.2 million from $23.2 million in the 2007 quarter, despite an almost $6 million reduction in interest expense against last year’s period and a $6.8 million impairment charge in the year-ago quarter.
However, the most recent quarter included $11.5 million in markdowns that in previous years had been taken in subsequent periods, and a $1.7 million write-off of Burlington’s investment in the troubled Reserve Primary [Mutual] Fund.
Sales moved up 5.9 percent to $1 billion from $946.6 million as a net increase of 33 stores helped overcome a 2.1 percent decline in same-store sales.
In December, sales increased 4 percent but declined 4.2 percent on a same-store basis.
Based on “weaker than expected second-quarter earnings and lower-than-expected December comparable-store sales,” Moody’s Investors Service last week downgraded the company’s corporate family rating to “B3” from “B2” and its speculative grade liquidity rating to “SGL-3” from “SGL-2.” About $1.2 billion in loans and notes were affected, and the outlook remained negative.
“The downgrades also reflect the risk that this lower earnings performance places Burlington Coat at risk for a potential financial covenant violation,” the ratings agency said, noting that further deterioration in sales and earnings was possible and that the firm might need to amend its covenants. “This could result in higher pricing under its term loan and revolving credit facilities, and may further weaken its interest coverage,” Moody’s said. Without providing specifics, the company said it had undertaken several initiatives “to enhance the organization’s productivity…including some that have resulted in the elimination of certain positions and the restructuring of certain other jobs and functions.”
Tom Kingsbury, who joined Burlington as chief executive officer in December from Kohl’s Corp., said, “We are pleased to report a total sales and market share increase in a difficult economic and retail sales environment. In addition, by remaining focused on receipt management and staying current on seasonal product, we are well positioned to take advantage of opportunistic buys, which we believe will help us sustain our planned gross margin rate for the fiscal year.”
For the six months to date, the company reduced its net loss by almost half, to $14.3 million from $27.2 million as sales expanded 5.2 percent to $1.71 billion, with a 1.1 percent comparable-store sales drop.
The firm, acquired by Bain Capital Partners for about $2.1 billion in early 2006, is privately held, but discloses its financial results because of public debt. It operates 427 off-price stores in 44 states and Puerto Rico.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast