Predicting a “very difficult” 2009 in its fourth-quarter earnings call Wednesday, Eddie Bauer Holdings Inc. said it foresees first-quarter revenues dropping about 15 percent compared with last year’s quarterly sales of $213.2 million.
This story first appeared in the April 9, 2009 issue of WWD. Subscribe Today.
The Seattle-based company, which said last month it was at “significant risk” of violating its covenants on a $225 million loan, also said it signed an amendment to its term loan last week.
Chief executive officer Neil Fiske said the amendment, which was “well above what would have been considered market rate even a year ago,” was the “best available option for the company and its stakeholders.”
“This was a covenant issue, not a liquidity issue,” said chief financial officer Marv Toland, explaining the company ended the year with $60.4 million in cash. “Our goal is to create a window where long-term debt can be reduced.”
“There is no sign yet that the economy has hit bottom and is beginning to turn,” he said, adding that aside from lower sales next quarter, same-store sales are expected to be negative through the fourth quarter of this year, and possibly into the first quarter of 2010.
Last month, Eddie Bauer said that, including a pretax, noncash charge of $144.6 million for asset impairment, its net loss widened to $127.5 million, or $4.13 a diluted share, in the fourth quarter ended Jan. 3. The year-ago loss was $18.2 million, or 59 cents. Sales fell 5.7 percent to $369.9 million from $392.4 million as same-store sales slid 8.8 percent.
The company reported a 2008 loss of $165.5 million, or $5.38 a share, on a 2 percent drop in sales to $1.02 billion.
On Thursday, the company’s shares fell 2 cents, or 3.4 percent, to 44 cents.