NEWS OUT
Bradlees Reports $81 Million EBITDA Turnaround In Fiscal 1997 And Fourth-Quarter
Profit
Mar-17-1998 9:58 AM, PRNewswire,
Company Expects To File Plan Of Reorganization In April
BRAINTREE, Mass., March 17 /PRNewswire/ -- Bradlees, Inc. today reported a net loss
for fiscal 1997 (52 weeks ended January 31, 1998) of $22.6 million, or $1.98 loss per share,
compared with a net loss of $218.8 million, or $19.17 loss per share, in the prior year. The
fiscal 1997 operating loss (before interest, reorganization items and asset impairment
charge) was $5.2 million, compared with an operating loss of $96.7 million in the prior year,
an improvement of $91.5 million. In addition, the company reported annual fiscal 1997
EBITDA (earnings before interest, taxes, depreciation and amortization) of $35.1 million,
an $81.2 million improvement over the prior year.
Bradlees also reported a net profit of $25.9 million, or $2.29 per share, for the fiscal 1997 fourth
quarter (13 weeks) ended January 31, 1998, its second consecutive quarterly net profit, compared
with a net loss of $59.2 million, or $5.19 loss per share, for the fourth quarter (13 weeks) ended
February 1, 1997. Operating earnings (before interest, reorganization items and asset impairment
charge), which benefited from an improved gross margin rate performance and certain additional
cost reduction initiatives, were $33.7 million in this year's fourth quarter, compared with an operating
loss of $1.5 million in the prior year's fourth quarter. Fourth quarter EBITDA was $45.5 million,
compared with EBITDA of $11.2 million in the prior year.
Total sales for the fourth quarter were $461.6 million, down from $463.0 million in the prior year, due
to one less store in operation. Comparable store sales stabilized during the important fourth quarter
and were unchanged from last year's fourth quarter. Total sales for fiscal 1997 were $1.4 billion,
down from $1.6 billion in fiscal 1996, due primarily to 27 stores closed during the prior year. Annual
comparable-store sales declined 5.0 percent due to a significant reduction in the number of
promotional activities in 1997 that had historically poor profit productivity.
Peter Thorner, Chairman and Chief Executive Officer, said, "Bradlees' EBITDA and earnings levels
exceeded the amounts set forth in our fiscal 1997 business plan and represent a significant
improvement over the prior two years. The magnitude of this improvement in operating performance
will permit the company to emerge from Chapter 11 by the middle of this year. We expect to file a
plan of reorganization next month.
We accomplished our objectives for 1997 -- and we've witnessed positive customer reaction to the
numerous merchandising and marketing initiatives implemented throughout the year resulting in
increased customer traffic and improved sales trends during the second half of fiscal 1997.
Furthermore, the momentum of the various merchandise and marketing changes continues to have a
very beneficial impact on sales and profit thus far in 1998."
The Company made the following key modifications to its business strategy during fiscal 1997 to
enhance profitability and improve customer service. (a) reintroduced lower opening price points in a
comprehensive variety of merchandise categories to enhance value and increase customer traffic;
(b) reduced costly promotional events and thereby eliminated or reduced substandard profit margins;
(c) reintroduced certain basic convenience and commodity products that are typical of assortments
carried by discount retailers; (d) reinstituted a layaway program and installed new in-store directional
and departmental signage; (e) revised the Company's markdown policy based on product rate of
sale; (f) modified weekly ad circulars to achieve more item-intensive and price-point oriented ad
offerings; (g) introduced both a "Certified Value" program that highlights certain key recognizable
items at competitive everyday prices and a "Wow!" program which integrates targeted and
unadvertised opportunistic purchases; and (h) significantly reduced overhead while improving
operating efficiencies.
The Company continues to focus on key merchandise categories (moderately priced family apparel,
home decor and conventional consumable hardlines products). Bradlees is committed to quality and
fashion, especially in apparel and home decor, and to improving customer service, to differentiate
itself from its competition. The Company believes that it can strategically leverage its strength in the
fashion content of its product offerings while driving traffic with selected hardlines merchandise.
Management is continuing efforts to improve sales, including the expansion of both the "Wow!" and
"Certified Value" programs that have been particularly successful to-date.
Bradlees, which operates 103 stores in seven Northeastern states, is a leading regional discount
retailer and one of the nation's largest discount department store chains with annual total sales of
$1.4 billion.
BRADLEES, INC.
(Operating as Debtor-In-Possession)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
13 Weeks ended 52 Weeks ended
Jan. 31, Feb. 1, Jan. 31,
Feb. 1,
1998 1997 1998
1997
Total sales $461,567 $463,039 $1,392,250 $1,619,444
Leased department
sales 12,343 13,058 47,806 57,726
Net sales 449,224 449,981 1,344,444 1,561,718
Cost of goods sold 322,566 332,885 948,087 1,127,651
Gross margin 126,658 117,096 396,357 434,067
Leased department and
other operating income 3,429 3,085 12,151 13,734
130,087 120,181 408,508 447,801
Selling, store operating,
administrative and
distribution expenses 93,066 111,576 382,910 504,030
Depreciation and
amortization expense 8,700 10,128 36,244 42,200
Gain on disposition of
properties (5,425) (50) (5,425) (1,739)
Income (loss) before
interest, asset
impairment charge,
and reorganization
items 33,746 (1,472) (5,221) (96,690)
Interest and
debt expense 4,910 3,657 16,584 11,495
Impairment of long-lived
assets --- 40,782 --- 40,782
Reorganization items 2,911 13,243 752 69,792
Net income (loss) $25,925 ($59,155) ($22,557) ($218,759)
Net income (loss)
per share: $2.29 ($5.19) ($1.98) ($19.17)
EBITDA $45,516(A) $11,156(B) $35,096(A) $(46,129)(B)
NOTE: The prior year amounts include certain reclassifications to conform to the current year's
presentation.
(A): Includes gain on disposition of properties of $5.6 million for the current quarter and $6.6 million
for fiscal 1997, and add-backs of $2.9 million in both periods for a going-out-of-business (GOB)
markdown provision for six closing stores included in cost of goods sold.
(B): Includes $1.7 and $3.4 million for gains on disposition of properties for the quarter and
year-to-date periods, respectively, and $0.8 and $6.7 million in the quarter and year-to-date periods,
respectively, for add- backs of GOB markdown provisions included in cost of goods sold.
BRADLEES, INC.
(Operating as Debtor-In-Possession)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS 1/31/98 2/1/97
Current assets:
Unrestricted cash and
cash equivalents $10,949 $10,025
Restricted cash and
cash equivalents 16,760 9,126
Total cash and cash
equivalents 27,709 19,151
Accounts receivable 10,013 8,240
Inventories 238,629 236,920
Prepaid expenses 8,733 8,466
Assets held for sale 7,754 8,419
Total current assets 292,838 281,196
Property excluding capital
leases, net 131,525 139,246
Property under capital
leases, net 18,959 24,395
Total Property, plant
and equipment, net 150,484 163,641
Lease interests at
fair value and lease
acquisition costs, net 142,454 150,229
Assets held for sale 4,000 5,250
Other, net 5,390 3,884
Total other assets 151,844 159,363
Total Assets $595,166 $604,200
BRADLEES, INC.
(Operating as, Debtor-In-possession)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIENCY) 1/31/98 2/1/97
Current liabilities:
Accounts payable $124,361 $115,315
Accrued expenses 30,516 45,924
Short-term, debt 84,208 42,500
Self insurance reserves 6,564 7,086
Current portion of capital
lease obligations 1,038 1,722
Total current liabilities 246,667 212,547
Lone-term liabilities:
Obligations under
capital leases 27,073 33,296
Deferred income taxes 8,581 8,581
Self insurance reserves 13,328 14,86
Other long-term liabilities 23,342 27,642
Total long-term liabilities 72,324 83,905
Liabilities subject to
settlement under
the reorganization case 562,105 571,041
Stockholders' equity (deficiency):
Common stock ll,3l2,154 shares
outstanding (11,394,433 shares
outstanding at 2/1/97)
Par value 115 115
Additional paid-in capital 137,821 137,951
Unearned compensation --- (167)
Accumulated deficit (423,082) (400,525)
Treasury stock, at cost (804) (667)
Total stockholders' equity
(deficiency) (285,950) (263,293)
Total Liabilities and
Stockholders' Equity
(Deficiency) $595,166 $604,200 SOURCE Bradlees, Inc.
(Copyright 1998) |
