Expectations were a bit higher for Footstars Athletic division to post improved comp store sales results for Q4 due to increased allocations of Nike marquee product that drove such strong results at cross mall competitor The Finish Line. A resurgent Foot Locker and a big miss on Licensed Apparel could be culprits as well as the continued drag from Just for Feet.
The weaker-than-expected results were delayed a week, presumably to be combined with the good news of a new CEO. A company IR spokesperson explained the delay on the fact that 2003 was a 53-week period versus the 52-week 2002 period. Huh?
Total sales for Q4, which was comprised of 14 weeks versus 13 weeks a year ago, declined 10.2% to $508.3 million, while the Athletic group gained 4.7% to $235.6 million and Meldisco dropped 20.1% to $272.7 million.
For the 53-week year, total sales declined 13.5% to $1,989 million on a 24.5% fall at the Meldisco unit to $1,106, while the Athletic group increased 2.0% to $973.2 million.
The company said it is in discussions with its lenders, Fleet National Bank, which is reportedly owed $180 million, and Back Bay Capital Funding LLC, which is owed $90 million, to get an extension past January 30, 2004, the date the company has committed to deliver its audited financial statements.
That restatement is now expected to result in a reduction in earnings over the 1997 to mid-2002 period of $51 million, or $31 million to $38 million after minority interest and taxes. Sales and cash flow over the period are not expected to be affected.
FTS said that some vendors have “modified” some credit terms, but continue to ship product. SEW did an informal poll with a number of footwear sales VPs that indicates that Footstar A/P appears to be current.