Bakers Upbeat Despite Obstacles

NEW YORK — Bakers Footwear Group Inc. needs comparable-store sales to continue to rise before it can turn the corner.

On a conference call with analysts last Tuesday, Bakers Chairman and CEO Peter Edison said he is counting on strong boot sales and “increases [to] come out of dress shoes” in the back half of the year.

“Our strong early selling in key categories, including boots and dress shoes, coupled with the introduction of new brands, reflect the favorable reaction to our fall product that is expected to drive positive comp-store sales in the second half of the year at increasing margins,” added Edison.

Bakers introduced Big Buddha footwear on Aug. 18, and the H by Halston line of footwear and accessories earlier this year.

“Big Buddha appeals to our core customers’ desire for quality casual sport shoes, [while the H by Halston] launch has gone extremely well and [has] had a strong, positive effect on our sales and margins since March. We’re also excited by the potential [increase in] sales and margins presented to our company by these brands,” said Edison.

Comps at the company increased 0.2 percent for the second quarter, and had risen 0.3 percent for the third quarter through Sept. 4.

The company said it needs a comp-sales increase of 5 percent to 7 percent for the full year to return to breakeven.

Edison dismissed ideas that selling $5 million in subordinated debentures to Steven Madden Ltd. last month — and giving Madden a nearly 20 percent stake in the company — buys Bakers time to get sales back on track.

“We feel we are generating enough cash to pay off our long-term debt and operate our business, but [the sale] provides us with a cushion in case we happen to have been wrong. It would be wrong to say it buys us time because we are cash-flow positive,” said Edison.

At the end of the second quarter, Bakers’ revolving credit facility balance stood at $9.5 million, and negative shareholders’ equity was $3.2 million. Cash and cash equivalents stood at $149,900, down from $152,700 in the same quarter a year ago.

For the period ended July 31, the St. Louis-based company recorded a net loss of $2.1 million, or 28 cents, compared with a loss of $1.7 million, or 24 cents, last year.

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