“As we begin the fourth quarter, we are encouraged by our solid start to the holiday season. We expect our fourth-quarter results to include increased net sales, increased comparable-store sales and increased positive operating profit,” Peter Edison, chairman and CEO of Bakers, said on the firm’s post-earnings conference call.
The CEO cited the expected strength of boots, which he said could be more than 60 percent of sales in the fourth quarter. He noted that from Black Friday through Dec. 6, comps rose 4 percent. “We also have several strategies in place to maximize the season, including a number of boot promotions designed to increase volume during the holiday season,” he said.
One of the new ways the retailer expects to improve earnings in 2010 is by launching a private-label brand, while also expanding its overall product assortment. Edison said the private-label merchandise will have deliveries in the second half of the year.
“We’re taking our time in developing it carefully,” Edison said. And eventually, the firm has plans to reduce the percentage of its branded footwear content.
On the expense front, Bakers has targeted an additional $4 million to $5 million in cost reductions for 2010, impacting store payroll, merchandise, freight and administrative costs. Bakers said it expects to remain in compliance with its financial covenants through the rest of 2009.
“We remain hopeful,” Edison said of the plans to improve profitability. “It’s certainly achievable and something we are working very hard to get to.”
Last Wednesday, the firm reported a third-quarter loss of $10.2 million, or $1.38, versus a loss of $8.3 million, or $1.18, the prior year. Net sales fell to $39 million from $41.1 million last year. Comp-store sales dropped 5.1 percent.
“While the third quarter typically represents a loss for our company, our performance this quarter reflected a tough comparison with last year, when trends favored footwear across multiple categories versus this year’s strong boot trend, which does not represent a significant portion of our mix until the latter part of the quarter,” Edison said on the call.