Despite the challenging economic climate and additional store closures, men’s specialty store chain S&K Famous Brands Inc. isn’t considering liquidation.
This story first appeared in the December 8, 2008 issue of WWD. Subscribe Today.
“Part of what you do [in a turnaround situation] is look at every option, including a sale, restructuring, bankruptcy and liquidation,” Joseph Oliver 3rd, chief executive officer, told WWD. “We made the decision that this is a viable go-forward business. We have no intention of liquidating the company.”
Credit sources last week said the Richmond, Va.-based chain was struggling with tighter credit and facing limited options as sales declined and losses mounted. In the second quarter, losses hit $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 fell 7.3 percent to $33.7 million from $36.3 million in the period as same-store sales dropped 5.4 percent.
“We announced a restructuring in July,” Oliver said, “that included the closing of a number of unprofitable stores.” He said closing sales started at 37 stores about two weeks ago. This is on top of 19 stores that were conducting going-out-of-business sales at the end of the summer, when S&K operated 219 units in 26 states. S&K hired Alvarez & Marsal to assist in its restructuring efforts.
Oliver said additional stores may need to be shuttered: “We’ll see. We don’t know where the bottom is right now. Some of our stores are performing well and others are down 20 percent. If this economic situation continues into the spring, we may have to make some tough decisions. But we’re doing everything we can to move this business forward.”
Oliver pointed out that S&K’s thrust to attract a younger customer with more sportswear and casualwear is meeting with good response. And the company’s tuxedo rental business is also a bright spot.
“We’re optimistic S&K will be in the market for a long time,” Oliver concluded.