Off-pricer Syms Corp. saw a more-than-sevenfold increase in second-quarter losses as the company struggled with flagging sales at its namesake business and sought to rebuild inventory at the recently added Filene’s Basement stores.
The net loss for the quarter ended Aug. 29 widened to $9.7 million, or 66 cents a share, from $1.3 million, or 9 cents, a year earlier. With help from the 23 Filene’s stores acquired in June, sales rose 29.5 percent to $76.4 million from $59 million. Same-store sales at Syms doors fell about 23 percent during the quarter and 22 percent for the first half, which the company attributed to “reductions in store traffic concurrent with declines in U.S. economic conditions.”
The Secaucus, N.J.-based retailer registered one-time costs of about $5.7 million for the Filene’s acquisition. On paper, those costs were more than offset by a $7.6 million gain to reflect the fair market value of the Filene’s assets, which were picked up out of bankruptcy court.
Syms said both sales and inventory levels at Filene’s were at “significantly lower than historical levels” at the time of the acquisition and that the firm had been adding inventory to support planned sales growth.
Losses for the first half widened to $11.7 million, or 80 cents a share, from $669,000, or 5 cents, a year earlier. Sales for the six months inched up 2.5 percent to $126.7 million from $123.6 million. The company operates 53 stores under its two nameplates.
In June, Syms won a complicated auction process for Filene’s and agreed to pay $64.4 million in cash for the stores, with about $25 million of the funding coming from Vornado Realty Trust.
The initial auction for the firm was won by The Men’s Wearhouse Inc., but Syms and another suitor, Crown Acquisitions, complained to the court, which reopened the bidding. Syms prevailed by agreeing to take on more stores than Crown and Men’s Wearhouse proposed in a joint bid.
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