Bakers Footwear Group, Inc. reported sales increased 3.9% in the fourth quarter ended Jan. 30, to $57.6 million from $55.5 million a year ago. Comparable store sales increased 3.9%, compared to 3.6% in the prior-year period.
Gross profit was $21.0 million, or 36.4% of net sales, compared to $17.4 million, or 31.4% of net sales in the fourth quarter last year. Operating income was $6.1 million, or 10.6% of net sales, compared to $1.3 million, or 2.3% of net sales in the fourth quarter last year. Net income was $5.6 million or $0.73 per diluted share, compared to $0.5 million, or $0.07 per diluted share in the fourth quarter last year.
For the fiscal year, the fifty-two weeks ended January 30, 2010:
— Net sales were $185.4 million, up from $183.7 million for the fifty-two weeks ended January 30, 2009. Comparable store sales increased 1.3%, compared to an 0.5% increase in fiscal 2008;
— Gross profit increased to $53.4 million, or 28.8% of net sales, compared to $50.6 million, or 27.5% of net sales in fiscal 2008;
— Operating loss decreased to $6.5 million, compared to an operating loss of $11.8 million in fiscal 2008; and
— Net loss was $9.1 million or $1.24 per share, compared to a net loss of $15.0 million, or $2.13 per share in fiscal 2008.
For the first seven weeks of fiscal 2010 ended March 20, 2010, comparable store sales increased 2.3% compared to an increase of 3.8% in the same period last year.
Peter Edison, Chairman and Chief Executive Officer of Bakers Footwear Group commented, “We are pleased with our fourth quarter performance, which included a 3.9% increase in comparable store sales, a 500 basis point increase in gross profit margin and a dramatic improvement in net income compared to the fourth quarter last year. Our results demonstrate the progress of our turnaround strategies that are focused on delivering compelling fashion and value to our customers and increasing inventory turns through narrow and deep assortments. We are equally pleased with our fiscal 2009 results. Fiscal 2009 marked our second consecutive year of comparable store gains. We generated positive adjusted EBITDA of $3.8 million and improved our bottom line by $5.9 million.”
“As we look ahead, we believe we are well positioned and expect another year of solid improvement in fiscal 2010,” Mr. Edison commented further. “Our goals for the year are to pay off our subordinated secured term loan and continue to improve cash flow, as we drive increases in comparable store sales and gross profit margin while targeting a further reduction in expenses. In support of our expectations our spring comparable store sales are up 2.3% for the first seven weeks of the year. We remain confident that our strategies will continue to benefit all Bakers stakeholders.”
Amendment to Debt Agreement
On March 23, 2010, the Company amended the terms of its subordinated secured term loan. The amendment was made to eliminate the EBITDA covenant for the fourth quarter of fiscal year 2009 in order to maintain compliance at January 30, 2010 and to eliminate the EBITDA and tangible net worth covenants for fiscal year 2010. The Company was not required to pay any fees for these changes.
Based on the Company’s business plan, the Company believes it has adequate liquidity to fund anticipated working capital requirements throughout 2010. The Company’s Current Report on Form 8-K, issued today, discloses additional information regarding the amendment to the debt agreement and provides additional disclosure regarding the risks of the Company’s current liquidity situation.
Nasdaq Capital Market Listing
Bakers shareholders equity at the end of fiscal year 2009 does not meet the $2.5 million minimum requirement for continued listing on the Nasdaq Capital Market. As a result, the Company expects to receive a delisting notification letter from Nasdaq. Upon receipt of such notification, Bakers intends to file an appeal with Nasdaq for continued listing. However, the Company can give no assurance that it could successfully appeal a staff delisting notification by Nasdaq.
