Retail Ventures Inc. has a new chief executive officer and a new challenge as department stores slash prices and push its Filene’s Basement off-price unit to go even lower.
James McGrady, 57, chief financial officer of the company, will add the titles of president and ceo after Heywood Wilansky steps down at the end of January upon expiration of his contract. McGrady continues as a vice president of RVI’s DSW division.
Disclosure of the corner-office switch, filed with the Securities and Exchange Commission on Thursday, came a day after Retail Ventures posted lower third-quarter profits.
Net income for the parent of Filene’s and DSW fell 85.4 percent to $10 million, or 20 cents a diluted share, from $68.2 million, or $1.20, a year ago. The firm spun off an 81 percent share of Value City Department Stores in January, but the business failed in October and began to liquidate.
Sales for the three months ended Nov. 1 inched up 2.9 percent to $503.5 million from $489.4 million. Same-store sales fell 3.3 percent, with Filene’s off 1 percent and DSW down 4.1 percent.
Shares of the firm rose 2 cents, or 1.7 percent, on Thursday to close at $1.20, 83.9 percent below the 52-week high of $7.46.
On a conference call with Wall Street to discuss the results, McGrady said RVI shares had been pulled down by the firm’s exposure to the Value City bankruptcy and that turning around Filene’s Basement is a priority.
“What’s going to have to happen is, once we get through the bankruptcy, we’ll get to see what the true effect is upon Retail Ventures,” McGrady said. “One thing that we can do is to focus upon Filene’s Basement…and get it to be in a profitable position.”
Filene’s sales fell 8.1 percent for the quarter to $112.2 million. DSW’s sales rose 6.5 percent to $391.4 million.
Although the plan is to continue to operate Filene’s and DSW under the Retail Ventures banner, McGrady, in response to an analyst’s question, said the company would continue to evaluate that structure.
Even with an abundance of excess merchandise on the market for off-price retailers, Filene’s is buying cautiously because consumers are so hesitant to spend.
“With our plans for the ’09 business being uncertain, we’re going to try to keep our inventories very, very tight,” Mark Shulman, president of Filene’s, said on the conference call. “We are holding a lot of money back. We’re not spending it up front like we have in the past.
“We’re going to have to be a lot more promotional than we ever have been in the fourth quarter, particularly in December,” he said. “Our thinking about December is to be as promotional as we need to be to make sure that we hit the customer when they are in the store, because when you get into January, that’s going to be very difficult to do.”
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