Bakers Footwear Group Inc. said in its quarterly release that its independent auditing firm cited conditions that raise substantial doubt about whether the shoe retailer can continue as a going concern. The company reported a profit for the fourth quarter, on sales that fell 10.6%, but a wider loss for the year.
For the 13-week quarter ended Feb. 2, Bakers reported net income of $7.3 million on net sales of $54.7 million. That's compared to the prior year's 14-week quarter, when the retailer saw net income of $1.4 million on net sales of $61.2 million. Bakers' same-store sales for the recent fourth quarter fell 6.8%, using comparable 13-week periods.
Bakers said that for the 52-week year ended Feb. 2, it saw a loss of nearly $17.7 million, compared to a loss of $1.5 million in the prior 53-week year. For fiscal 2007, the company said its net sales fell 9% to $186.3 million from $204.8 million in fiscal 2006.
Bakers' same-store sales for fiscal year 2007 fell 12.3%, using comparable 52-week periods. That's on top of fiscal 2006 same-store sales that had decreased 7.1%.
Bakers reported that first-quarter sales to date in fiscal 2008 declined 11.5%. A same-store sales decrease of 16.2% in February and March was offset by a strong rebound in April, the company said. Spring deliveries and seasonal weather significantly improved April month-to-date same-store sales, which are flat compared to last year's month, Bakers said. “Our fourth quarter results showed significant progress in our turnaround efforts,” Peter Edison, Bakers' chairman, CEO and president said in a statement. “We successfully reduced costs and inventory compared to the prior year period while transitioning our assortments to better align with our customers' desires.” He added that business has “rebounded beautifully” in April, and the company is optimistic that is sales results will continue to improve over the next several months.
In a release, the company said that based on its business plan, it believes it has adequate liquidity to fund anticipated working capital requirements and expects to be in compliance with its financial covenants throughout 2008. Bakers said its bankers and lenders have expressed support for the company, its business, liquidity and its management.
The company's accounting firm, Ernst & Young LLP, issued an audit report included with Bakers' annual report filed with the Securities and Exchange Commission that cited conditions the accounting firm said “raise substantial doubt about its ability to continue as a going concern.”
“We strongly and respectfully disagree with this view of our potential future improvement,” Edison stated in the company's release.
St. Louis-based Bakers Footwear Group (Nasdaq: BKRS) is a mall-based retailer of footwear and accessories operating more than 240 stores under the Bakers and Wild Pair names.