The St. Louis-based company said late Monday it will close more than 70 stores and liquidate inventory at those locations. It will also reduce its workforce and terminate its licensing agreement for the H by Halston brand.
As of April 28, 2012, Bakers had negative working capital of $18 million, unused borrowing capacity under the revolving credit facility of $1.3 million and a shareholders’ deficit of $17.6 million.
As of June 30 of this year, negative working capital was $20.3 million and shareholders’ deficit was $19.9 million.
Fiscal year 2012 comparable store sales were also lower than planned, placing increased pressure on the firm’s liquidity position.
Bakers expects to increase productivity of each store with a smaller store base. It expects fiscal 2013 net sales of approximately $140 million with e-commerce sales representing 15 percent to 20 percent of this total, as well as potential profitability on an annual basis.
Up to 52 store leases will be sold to Aldo U.S. Inc. for $6.4 million in cash, while the remaining 20 to 25 underperforming stores will close in conjunction with lease expirations or other agreements with landlords.
Proceeds generated from the exit of stores and reduction of costs will be used to reduce debt. The liquidation of inventory should also raise an additional $6 million to $8 million in cash between October 2012 and June 2013, the firm said.
Bakers plans to reduce its workforce by as much as a third, according to the firm’s SEC filing late Monday, resulting in up to $7 million in annual savings.
The termination of the licensing agreement for H by Halston will be effective Dec. 31, although Bakers still has scheduled payments for it totaling up to $2.6 million over the next three years.
Peter Edison, Chairman and CEO of Bakers, said in a statement, “We expect to generate significant short-term cash and savings over the next 12 months that will enable us to reduce outstanding debt and improve cash flow. Upon completion of this plan we will operate a more productive chain of approximately 145 stores with a team that is passionate and focused on our Bakers brand and possess increased financial flexibility to execute our business plan.”