G&G NET HURT BY INTEREST COSTS
Byline: Thomas J. Ryan
NEW YORK — G&G Retail, which owns the Rave and G&G junior chains, saw net earnings slide 10.6 percent last year to $4.2 million from $4.7 million the year before, as higher operating earnings were offset by increased interest costs.
The higher interest costs — up to $13 million from $7 million — stem from the August 1998 spinoff from Petrie Retail, then in bankruptcy proceedings. G&G files its numbers because of public debt sold in May 1999.
Sales in its year rose 8.2 percent to $318.5 million from $294.4 million, as new store openings offset a 0.5 percent dip in same-store sales. G&G operated 456 stores as of Jan. 29, compared with 422 the prior year, adding 48 stores and closing 14 during the 12 months.
Gross margins improved to 38.4 percent from 37 percent, as an increase in initial markups and a $600,000 rise in vendor markdown allowances offset higher rent costs. Selling, general and administrative expenses dipped to 28.1 percent of sales from 29 percent. The year before also included a $1 million charge to acquire trademarks from Petrie.
G&G noted that earnings before interest, taxes, depreciation and amortization improved 33 percent to $32.8 million from $24.6 million.
G&G opened 63 G&G/Rave stores and 7 Rave Girl stores in 1998 and 1999, and will open about 50 stores in 2000. In general, the G&G name is used in New York, New Jersey and Connecticut markets, and the the Rave name is used elsewhere. Rave Girl, a concept launched last summer that targets 6-to-12-year-old girls, has 21 stores.
G&G’s merchandise, which includes tops, bottoms, dresses, lingerie, coordinates and outerwear, is sold primarily under such private label names as Rave, Rave Up, Rave Girl, Rave City, R4R and In Charge, according to the 10-K. Its stores, located in malls and strip centers, average about 2,400 square feet, and average sales per square foot increased to $296 in 1999 from $290 in 1998.
G&G said an emphasis on buying domestically allowed it to respond quickly to fashion trends, while an everyday-low-pricing strategy minimized markdowns. G&G’s gorave.com and goravegirl.com Web sites provide information on trends and store locations.
The Galins and Pegasus Capital Advisors, a Cos Cob, Conn., buyout firm, bought the company in 1998 for $134 million. Other stakeholders are New York-based Cerberus Partners and former creditors of Petrie.