Byline: Sidney Rutberg

NEW YORK-- Bradlees Inc. reported a first-quarter loss of $30.8 million, at the high end of its previous loss estimate, and there was speculation in the financial community Friday that the chain could be headed for a Chapter 11 filing.
As reported, the 136-store discounter said May 23 it expected to report a first-quarter loss of $25 million to $31 million.
Bradlees has previously noted that it did not intend to file a Chapter 11 petition. Mark A. Cohen, the chain's chairman and chief executive officer, could not be reached for comment on Friday. A spokeswoman for Bradlees on Friday said, "Everything we have to say is in the press release. We have nothing further to add."
Many factors have put the chain on hold and, without the ability to free up the flow of new merchandise, the possibility of a Chapter 11 filing grows more likely, analysts noted.
Another possible indication of uncertainty at Bradlees was the cancellation on Friday of conference calls to factors and financial analysts.
In an interview on May 30, Cohen said, "The bottom line is we're not contemplating going into 11." He said Bradlees expected its business to turn around by the fall season.
In the first quarter, the discounter's actual loss of $30.8 million comes against a year-ago loss of $8.9 million. Before income tax benefits, the loss for the latest quarter was $52.2 million against $14.7 million.
The company, based in Braintree, Mass., said the loss was due primarily to lower-than-expected sales, inventory reduction and expenses from new stores opened in 1994.
Sales were up 5.1 percent to $486.3 million from $462.8 million, but same-store sales were down 5.5 percent.
The company reiterated that its bank group, led by Bankers Trust, had agreed to waive any restrictions that would be triggered by the loss. The company also noted that it is trying to work out a new agreement with several banks for a larger, more flexible asset-based credit agreement.
However, the bank agreement now in place expires on July 31, before payments would be due on shipments made late in June. Thus, the factoring community, with some exceptions, has put new shipments to Bradlees on hold.
One factoring executive, who requested anonymity, said his company is willing to "trade dollars" (approve new shipments with the same value as payments received for previous shipments) with Bradlees. This might give the chain time to work out new financing, he said.
"They don't want to file for Chapter 11, and I think we'd all be better off if they didn't file," the factor said.--Fairchild News Service

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