BARNEYS CUTS LOSS IN 2ND QUARTER
NEW YORK — Moving ahead in its turnaround efforts, Barneys New York Inc. cut its loss in the second quarter ended July 31 to $7 million, from $11 million a year ago.
The year-ago period included $4.4 million in bankruptcy costs, according to a filing with the Securities and Exchange Commission. Barneys emerged from bankruptcy proceedings last January.
The company is required to file its numbers because it issued 12.5 million shares as part of its reorganization plan.
Last spring, Barneys named Allen Questrom, the former Federated Department Stores chairman and chief executive, as its ceo, to lead the turnaround. It involves increasing productivity, improving service, attempting to restore the specialty chain’s reputation for innovative merchandising and marketing, and possibly one day launching an IPO.
As the filing indicates, some progress is being made, as Barneys cut its operating loss in the quarter to $449,000 from $1.4 million.
Sales fell 6.7 percent to $71.9 million from $76.7 million. However, the year-ago period included sales of about $1.1 million generated from a full-price store which was located at the South Coast Plaza mall in Costa Mesa, Calif. The store closed in July 1998.
Excluding business from two outlet stores closed at the end of July and the beginning of August of this year, comparable-store sales increased 7.7 percent, principally due to a 9.3 percent same-store increase in the full-price stores.
Barneys said in the filing that the same-store gains “were driven by a strong flow of new seasonal receipts into the stores and, to an extent, by more promotional activities.”
Gross margins improved to 47.2 percent of sales from 46.3 percent.
The upscale retailer said a higher actual shrink in the quarter was substantially offset by greater foreign-exchange gains realized upon settlement of certain liabilities in 1999 and certain nonrecurring year-end adjustments recorded against gross profit in 1998.
Selling, general and administrative expenses were reduced to 47.8 percent of sales from 48.3 percent as a result of continuing improvements from cost-reduction initiatives, as well as savings from the Costa Mesa closing.
Barneys currently operates seven full-price stores and 11 outlets.
Depreciation and amortization jumped to $4.3 million from $2.5 million primarily due to the amortization of the excess reorganization value. Interest expense decreased to $3.2 million from $3.4 million in the prior year.
In the half, the loss was trimmed to $10.8 million from $15.8 million. The prior year included $7.3 million in reorganization costs. Operating earnings improved to $2.2 million from $1 million. Sales nudged up 2.1 percent to $162.5 million from $159.2 million.