LOEHMANN’S PREPARING TO LEAVE CH. 11 IN JULY
Byline: Vicki M. Young
NEW YORK — Loehmann’s Inc. is gearing to exit Chapter 11 by the end of July. Robert Friedman, chairman and chief executive officer, told WWD that the company is in negotiations with Deutsche Bank for an exit financing package.
Robert Glass, president, chief financial officer and chief operating officer, described the package as a $75 million facility that includes a $15 million term loan and a $60 million line of credit.
The plan of reorganization and disclosure statement was approved by the Delaware bankruptcy court on April 24. A confirmation hearing is set for June 27. Loehmann’s filed for Chapter 11 in May 1999. As reported, the recovery for unsecured creditors would be 53 percent of the stock in the reorganized Loehmann’s. Existing shareholders get nothing.
Friedman said, “We’re pleased with the progress that we’ve made. We continue to outperform plan on a sales, margin and sales, general, and administrative basis.”
He disclosed that sales for the first quarter were up 1 percent over the prior year, and 3 percent over plan for the quarter. “Earnings before interest, taxes, depreciation and amortization are above plan, and for the first quarter will be above 50 percent of plan.”
The firm’s turnaround strategy included a return to its roots, targeting the customer who shops for the high-end designer labels at discount. To keep its core customer, Loehmann’s has refocused its energies to its Back Room, which houses discounted designer, bridge and social-occasion wear.
“Our Back Room strategy is on track. The customers shopping for women’s apparel in the high-end designer line continue to fuel our business. We’ve made some good buys, and consumers are shopping,” Friedman said.
According to the firm’s annual report, filed on Friday with the SEC, Loehmann’s ended 1999 with a loss of $33.5 million compared with a $5.1 million loss in 1998. Excluding reorganization costs of $19.9 million for 1999, and an 1998 one-time charge, the losses would have been $13.5 million for 1999 versus 1998’s $4.5 million. Sales for the year were $386 million, a 10.6 percent decrease from $432 million in 1998. comparable store sales were down 5.3 percent.
The chain’s designer brands include Donna Karan, Calvin Klein, Ralph Lauren and Anne Klein. Bridge brands include DKNY, Anne Klein II, CK/Calvin Klein, Emanuel and Tahari, while better brands include BCBG, Jones New York, Kasper, Polo and Harve Bernard. The filing noted that in 1999, sportswear accounted for 45.8 percent of the business, with dresses and suits at 16.6 percent and acces-sories/intimate apparel at 12.6 percent.
Loehmann’s competes against other off-pricers, outlet centers, department store price promotions, and the latest addition to retail, Internet discounters.
“As long as we can effectively buy the key brand names at an aggressive discount, we can keep our customers,” Friedman said. “We are focusing on what we do well, so we don’t get distracted by the competition. We target a small niche, and so far it seems to be working.”
As for a possible Web presence, Friedman said “not right now.” The ceo added, “We are focusing on our emergence, ensuring that our fall season will be a good season. If we move in that direction, it won’t be until the first of the year.”