LESLIE FAY GOES PRIVATE
NEW YORK — Order cancellations and price haggling caused The Leslie Fay Co. Inc. to report a net loss in its final quarter as a publicly traded company.
Leslie Fay’s shareholders, in a special meeting held at the end of November, approved the acquisition of the company’s shares by Three Cities Research, its majority shareholder, together with Constable Partners and members of company management. Under the terms of the agreement, approximately 1.6 million shares were purchased at $5 per share, or $8 million.
For the third quarter ended Sept. 29, Leslie Fay announced a loss of $1.1 million, or 18 cents a diluted share, when compared with last year’s profits of $760,000, or 15 cents. Sales declined 20.5 percent, to 48.5 million from $61 million. However, excluding new or discontinued operations, such as the discontinued Reggio brand and the new Trio New York label, sales declined 16.3 percent.
“The company experienced increased cancellations of orders and renegotiation of prices at the end of September,” John Ward, president and chief executive officer of Leslie Fay, said in a statement. Adjusting to the new reality of the retail industry, Ward said Leslie Fay is tightening the reins on inventory and expenses, the latter of which were down 25 percent from a year ago.
Gross profit fell to $7.9 million from $14.3 million and, as a percentage of sales, down to 16.3 percent from 23.7 percent. The company also recorded an additional $2.3 million in inventory reserves, in anticipation of markdowns to be needed to move inventory as a result of decreased demand. Expenses fell by $2.7 million, or 22.8 percent.
For the nine months, the company recorded a net loss of $1.1 million, or 19 cents a diluted share, versus net income of $4.1 million, or 78 cents. Sales fell 16.7 percent, to $144.2 million from $173.3 million, but were down 14.2 percent when excluding the Liz Claiborne Dresses and Cynthia Steffe licenses, which began last year, Reggio and Trio.