Bakers Footwear Group Inc. reported that fiscal fourth quarter profits plunged 68.9% to to $1.4 million, 21 cents a share, from $4.5 million, or 68 cents, a year ago. Sales were flat at $61.2 million versus $61.3 million a year ago. Comparable store sales dropped 13.8% versus a 24.5% gain a year ago.
Gross margins declined 460 basis points to 33.1% from 37.7%. Operating income was $2.7 million versus $7.3 million a year ago.
Peter Edison, Chairman and Chief Executive Officer of Bakers Footwear Group, called the fourth quarter “particularly challenging for our company, reflecting a difficult boot and bootie season, which led to higher than anticipated markdowns following robust sales growth last year. On a positive note, our strict inventory discipline enabled us to end the year in a healthy inventory position with inventory at year end declining by $1.9 million from last year despite adding 22 net new stores during the year.”
“In February and March of fiscal 2007, our comparable stores sales decreased approximately 5%, reflecting a weak February partially offset by a better March,” continued Edison. “March results were, aided by the presence of Easter sales, but were hurt by extremely cold weather during Easter week.”
Edison concluded: “Looking ahead, our priorities are focused on improving gross margin and profitability. We believe our efforts to deliver compelling assortments while controlling our inventory investment will enable us to achieve this goal. We remain optimistic regarding our growth potential both in the near and long term.”
For the year ended February 3:
- Net sales were $204.8 million, as compared to $194.8 million for the fifty-two week period ended January 28, 2006.
- Comparable store sales for fiscal year 2006, which compares the fifty-three week period ended February 3, 2007 to the fifty-three week period ended February 4, 2006, decreased 7.1%. Comparable stores for fiscal year 2005 increased 16.7%.
- Gross profit in fiscal 2006 was $62.2 million, or 30.4% of net sales, compared to $65.3 million, or 33.5% of net sales in fiscal 2005;
- Operating loss was $1.6 million for fiscal 2006, as compared to operating income of $10.7 million in fiscal 2005;
- Net loss for fiscal 2006 was $1.5 million, or $0.24 per share, as compared to net income of $6.6 million, or $1.04 per diluted share in fiscal 2005
As a result of adopting FAS 123R, Share Based Payment, the company recognized 7 cents a share related to stock-based compensation expense in fiscal 2006. The company did not recognize stock-based compensation expense in fiscal 2005.
Michele Bergerac, President of Bakers Footwear Group, said, “We are not satisfied with our performance during fiscal 2006 and are intently focused on increasing our gross margin. We expect to capitalize on our strong positioning as a leading resource for fashion footwear and believe we have the talent, infrastructure and marketing to support our expansion plans.”
Store Opening Plans
During the fourth quarter of fiscal 2006, Bakers Footwear opened 3 new stores. For the fiscal year, the company opened a total of 34 new stores and closed 12 locations, ending the year with 257 stores. During fiscal 2007 the company expects to open between 10 to 12 new stores with half of these stores opening in the first half of the year. The company currently operates over 250 stores nationwide. Bakers stores focus on women between the ages of 16 and 35. Wild Pair stores offer fashion-forward footwear to both women and men between the ages of 17 and 29.
Fourteen Thirteen Fifty-three Fifty-two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
February 3, January 28, February 3, January 28,
Income Statement Data 2007 2006 2007 2006
----------------------------------------------------------------------
(in thousands, except
per share data) Unaudited Unaudited Unaudited Unaudited
Net sales $ 61,211 $ 61,338 $ 204,753 $ 194,780
Cost of merchandise
sold, occupancy, and
buying expenses 40,940 38,228 142,551 129,439
-----------------------------------------------
Gross profit 20,271 23,110 62,202 65,341
Operating expenses
Selling 13,168 11,278 45,221 38,385
General and
administrative 4,324 4,462 18,208 15,779
Loss on disposal of
property and
equipment 34 10 278 440
Impairment of long-
lived assets 55 20 55 20
----------- ----------- ----------- -----------
Operating income
(loss) 2,690 7,340 (1,560) 10,717
Interest expense (388) (118) (1,005) (427)
Other income, net 11 90 112 212
-----------------------------------------------
Income (loss) before
income taxes 2,313 7,312 (2,453) 10,502
Income tax expense
(benefit) 896 2,784 (910) 3,949
-----------------------------------------------
Net income (loss) $ 1,417 $ 4,528 $ (1,543) $ 6,553
===============================================
Basic earnings
(loss) per share $ 0.22 $ 0.73 $ (0.24) $ 1.10
===============================================
Diluted earnings
(loss) per share $ 0.21 $ 0.68 $ (0.24) $ 1.04
===============================================
Weighted average
shares outstanding
Basic 6,493 6,237 6,454 5,981
Diluted 6,645 6,657 6,454 6,279
Pro Forma SFAS 123
Information
Pro forma earnings per
share reflecting pro
forma stock
compensation expense
in accordance with
SFAS 123
Basic earnings per
share $ 0.70 $ 1.00
Diluted earnings
per share $ 0.66 $ 0.96
