Feeling the heat from a lackluster retailing environment that’s been especially tough for men’s tailored clothing, S&K Famous Brands Inc. may be running out of options in its battle to stay in business.
Credit sources said this week that liquidation was a possibility as the retailer struggles with tighter credit in general and, in its own operations, declining sales, mounting losses and a poor cash position. One credit contact said the retailer has delayed paying some vendors, while another said S&K’s bank is becoming more involved in operations in response to limited availability under its loan facility.
Neither Joseph Oliver 3rd, chief executive officer, nor Richard Hardy Jr., vice president of finance, returned calls Tuesday to comment on the firm’s financial situation.
Rumblings about the health of the Richmond, Va.-based specialty store chain have persisted since the summer. In July, the company hired turnaround firm Alvarez & Marsal and, seeking annual overhead reductions of $3.3 million, eliminated 50 full-time positions in its corporate office.
The retailer’s long-term debt on Aug. 2 was $20.6 million, up from $17.5 million a year ago. Cash and cash equivalents were $1.4 million, down from $1.9 million a year earlier.
Oliver, who hired Alvarez & Marsal, said in August that suits still represented nearly half of S&K’s volume. One bright spot for the company had been the tuxedo rental business, Oliver said then.
An executive from one longtime suit vendor said he wasn’t surprised to hear of S&K’s mounting difficulties. “Any retailer dependent upon tailored clothing is challenged in this market, especially one like S&K that relies heavily on private label brands,” he said. The company continues to ship goods to S&K but has demanded cash payments for a few months.
A check of S&K suppliers found that those still shipping to the chain are requiring cash payments and one, attempting to work down accounts receivable, is even billing the firm $2 for every $1 shipped.
Last year, S&K suffered a $3.9 million loss versus a $2.8 million profit in the prior year as sales declined 14.2 percent to $157 million from $183 million in 2006. Same-store sales contracted 12.1 percent. In the second quarter ended Aug. 2, the loss reached $4.1 million, or $1.85 a diluted share, from a deficit of $1.2 million, or 54 cents, in the year-ago period. Sales in the quarter fell 7.3 percent to $33.7 million from $36.3 million, while same-store sales declined 5.4 percent.
The company listed second-quarter charges of $796,000. The charges weren’t specifically detailed, but S&K said it had incurred restructuring costs due to personnel cuts and the hiring of Alvarez & Marsal.
For the six months, the loss was $5.5 million, or $2.49 a diluted share. Sales fell by 10 percent to $74.8 million from $83.1 million.
S&K, which operates more than 200 stores in 25 states, was founded in 1967 and went public in 1983.
“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