Eddie Bauer estimates Q4 store sales to be down 5.7 percent
In a preliminary report, Eddie Bauer Holdings (Nasdaq: EBHI) said its combined comparable store sales fell 5.7 percent for the quarter and 1.1 percent for the fiscal year — results exclude the effect of foreign exchange rates resulting from the sharp fall in the Canadian dollar.
For fiscal 2008, the company estimates that adjusted EBITDA will be in the range of $50 million to $55 million, an increase of $8 million to $13 million from the prior year. Estimated fourth quarter adjusted EBITDA will be in the range of $53 million to $58 million, a decrease of $2 million to $7 million from fourth quarter 2007. The estimated EBITDA presented is adjusted for certain non-recurring and non-operational items.
“The retail environment in the fourth quarter was brutal, the worst in decades,” said Neil Fiske, president and CEO, in a statement. “In spite of the recession in 2008, we managed to improve our year-over-year adjusted EBITDA and cash flow. Our sales were soft, but much of the market fared worse. Our turnaround program continues to show results, even in a tough environment.”
Preliminary net merchandise sales for the fourth quarter declined 5.7 percent and for the full-year net merchandise sales for 2008 declined 1.8 percent, driven by a small decline in comparable store sales and a smaller store base, the company said. Merchandise margins for the fourth quarter and year were lower due to the high level of promotional activity in the market, it added.
Inventories at quarter-end were down approximately 13.8 percent in total and approximately 8.2 percent on a per store basis.
At year-end, the company said cash balances were $60.4 million, adding there were no short-term borrowings outstanding and the balance outstanding under the senior term loan was $192.8 million at the end of the year.
Eddie Bauer said SG&A expense for the year is expected to be down by $45 million to $50 million, ahead of its previously announced target.
It ended the year with 16 fewer retail stores and one more outlet store than at year-end 2007.
The company released its estimated fourth-quarter and full-year adjusted EBITDA early because it is a key component of the company’s loan covenants.
Quiksilver reduces base salaries of select executives
As part of its cost-cutting efforts, certain Quiksilver (NYSE: ZQK) top executives had their annual base salaries cut by 5 percent, according to a filing with the SEC. Effective Feb. 1, the current reductions are in addition to earlier pay cuts implemented in February last year.
Among those adjusted is CEO Robert McKnight, whose annual base salary has declined 16 percent to $903,000. Also affected were Charles Exon, chief administrative officer, secretary and general counsel, and Pierre Agnes, the president of Quiksilver Europe, who are both at $404,000 now.
With both salary reductions, the base salaries of Exon and CFO Joseph Scirocco have been reduced by approximately 10 percent and 8 percent, respectively.
The company, which has seen deteriorating same-store sales trends, is also expecting a loss for the first quarter.
Also Marty Samuels, president of its Americas region, resigned on Jan. 12, and Craig Stevenson was named as an interim replacement.
–Compiled by Wendy Geister
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