Bakers Footwear Group, Inc. (Nasdaq: BKRS), a leading specialty
retailer of moderately priced fashion footwear for young women,
today announced results for the thirteen weeks ended May 3, 2008.
For the first quarter, the thirteen weeks ended May 3, 2008: Net
sales were $43.5 million, compared to $49.3 million for the
thirteen-week period ended May 5, 2007. Comparable store sales for
the first quarter of fiscal 2008 decreased 11.1%, compared to a
decrease of 9.3% in the prior-year period; Gross profit in the
first quarter was $11.3 million, or 25.8% of net sales, compared to
$15.3�million, or 31.0% of net sales in the first quarter last
year; Operating loss was $4.1 million, compared to $1.2 million in
the first quarter last year; and Net loss was $4.9 million or $0.70
per share, compared to $1.0 million, or $0.15 per share in the
first quarter last year. The decrease in gross profit percentage in
the first quarter resulted primarily from the sales shortfall which
caused the Company to take additional promotional activity and
reduced our operating leverage. During the first quarter of fiscal
2008, the Company opened one new store and closed one store, ending
the quarter with 249 total stores. Peter Edison, Chairman and Chief
Executive Officer of Bakers Footwear Group commented, �Our first
quarter results reflected a difficult start to the spring selling
season driven by unseasonably cool weather and an early Easter
holiday as compared to last year. Comparable store sales in
February and March were down 16.1% but rebounded nicely in April,
to flat comparable store sales, due to strong customer response to
our open-toe footwear assortment, demonstrating the strength of our
merchandising team. During the quarter, we also achieved our cost
reduction goals and continue to expect this effort to positively
impact operating results this year. In addition, we were pleased to
maintain our tight inventory discipline during the quarter with
inventories at quarter end down 15% from the prior-year period. As
we begin the second quarter, we remain optimistic. Comparable store
sales for the first five weeks of the second quarter are down 0.7%
but, other than the first week of the quarter, due to reduced
promotional activity, have improved each week with June sales
starting off strongly positive. We expect continued positive comps
given the increasing importance of our strongest performing
category of open-toe footwear as the second quarter progresses.�
Mr. Edison continued, �We continue to believe we have adequate
liquidity to operate throughout 2008 and a business plan that
allows us to meet our debt covenants. In addition, we have
continued to cut costs and eliminate underperforming stores. Both
of these initiatives will augment our liquidity and profit plans.�
The Company continues to face considerable liquidity constraints as
a result of lower sales in the first quarter and through the first
five weeks of the second quarter. As of May 3, 2008, the Company
had negative working capital of $12.8 million and unused borrowing
capacity under its revolving line of credit of $2.5 million. As of
May 31, 2008, unused borrowing capacity was $0.6 million. As
previously disclosed, during the first quarter of 2008, the Company
obtained net proceeds of $6.7 million from the entry into a $7.5
million three year subordinated secured term loan and the issuance
of 350,000 shares of common stock. Also as previously disclosed, on
May, 9, 2008, the Company amended the subordinated secured term
loan to adjust the financial covenant for minimum EBITDA for the
first quarter of 2008 and to defer principal payments until
September 1, 2008 and issued an additional 50,000 shares of common
stock as consideration for the amendment. The Company�s business
plan for fiscal year 2008 continues to be based on moderate
increases in comparable store sales beginning in the second quarter
and continuing through the remainder of the year, improved gross
margins, and expense reductions. The Company has adjusted its
business plan in light of year-to-date sales and its current
liquidity position and has taken actions it considers necessary to
maintain adequate liquidity and meet the financial covenants under
its debt agreements. Although the Company believes its business
plan is achievable, in light of past sales results and the current
state of the economy, there is a reasonable possibility that the
Company may not be able to comply with the quarterly minimum EBITDA
covenants. As a result, the Company�s long-term debt obligations
are classified as current liabilities. If the Company is unable to
comply with its financial covenants or otherwise maintain adequate
liquidity it could be necessary for the Company to obtain one or
more amendments or waivers from its lenders, obtain additional
sources of liquidity, or make further cost cuts to fund operations.
However, there is no assurance that the Company could accomplish
these steps. The Company�s Annual Report on Form 10-K provides
additional detail about the risks of the Company�s liquidity
situation and its ability to comply with its financial covenants.
Mr. Edison concluded, �Despite the requirement to classify our long
term debt as short-term debt�for accounting purposes, approximately
$4.0 million of the balance has scheduled repayments due from 12 to
33 months from the end of the first quarter and $4.0 million of the
balance is scheduled for repayment in 2012. In addition, despite
the difficult February and March,�we are excited about the sales
turnaround taking hold in our business now and are pleased that we
now expect our cost reduction plan exceed the $8.0 million in cuts
that we previously announced. We believe we will have adequate
liquidity to operate, make all of our financial covenants and are
poised for a significant rebound in sales and gross margin
beginning in the second quarter.� Conference Call The Company also
announced that it will conduct a conference call to discuss its
first quarter fiscal 2008 results today, Monday, June 9, 2008 at
9:00 a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (877) 407-4018,
approximately five minutes prior to the start of the call. The
conference call will also be webcast live at
http://viavid.net/dce.aspx?sid=000051F2. A replay of this call will
be available until June 16, 2008 and can be accessed by dialing
(877) 660-6853, referencing account number 3055 and entering
confirmation number 287924. The webcast will remain available until
July 9, 2008 at the same web address. About Bakers Footwear Group,
Inc. Bakers Footwear Group, Inc. is a national, mall-based,
specialty retailer of distinctive footwear and accessories for
young women. The Company�s merchandise includes private label and
national brand dress, casual and sport shoes, boots, sandals and
accessories. The Company currently operates over 245 stores
nationwide. Bakers� stores focus on women between the ages of 16
and 35. Wild Pair stores offer fashion-forward footwear to both
women and men between the ages of 17 and 29. THIS PRESS RELEASE
CONTAINS FORWARD-LOOKING STATEMENTS (WITHIN THE MEANING OF SECTION
27(A) OF THE SECURITIES ACT OF 1933 AND SECTION 21(E) OF THE
SECURITIES EXCHANGE ACT OF 1934). BAKERS FOOTWEAR HAS NO DUTY TO
UPDATE SUCH STATEMENTS. ACTUAL FUTURE EVENTS AND CIRCUMSTANCES
COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THIS STATEMENT DUE
TO VARIOUS FACTORS. FACTORS THAT COULD CAUSE THESE CONDITIONS NOT
TO BE SATISFIED INCLUDE MATERIAL DECLINES IN SALES TRENDS AND
LIQUIDITY, INABILITY TO SATISFY DEBT COVENANTS, MATERIAL CHANGES IN
CAPITAL MARKET CONDITIONS OR IN BAKERS FOOTWEAR�S BUSINESS,
PROSPECTS, RESULTS OF OPERATIONS OR FINANCIAL CONDITION AND OTHER
RISKS AND UNCERTAINTIES, INCLUDING THOSE DETAILED IN BAKERS
FOOTWEAR�S MOST RECENT ANNUAL REPORT ON FORM 10-K INCLUDING THOSE
DISCUSSED IN �RISK FACTORS,� IN �MANAGEMENT�S DISCUSSION AND
ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS� AND IN
NOTE 2 TO THE FINANCIAL STATEMENTS, AND IN BAKERS FOOTWEAR�S OTHER
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. Bakers
Footwear Group, Inc. � Income Statement Data � Thirteen Weeks Ended
May 3, 2008 � Thirteen Weeks Ended May 5, 2007 (in thousands,
except per share data) � Unaudited � Unaudited � Net sales $ 43,538
$ 49,256 Cost of merchandise sold, occupancy, and buying expenses �
32,288 � � � 33,968 � Gross profit 11,250 15,288 � Operating
expenses Selling 10,712 11,892 General and administrative 4,385
4,565 Loss on disposal of property and equipment � 222 � � � 36 �
Operating loss (4,069 ) (1,205 ) � Interest expense (807 ) (362 )
Other income, net � 2 � � � 13 � Loss before income taxes (4,874 )
(1,554 ) � Income tax benefit � � � � � (589 ) � Net loss $ (4,874
) � $ (965 ) � Basic loss per share $ (0.70 ) � $ (0.15 ) Diluted
loss per share $ (0.70 ) � $ (0.15 ) � Weighted average shares
outstanding Basic 7,006 6,493 Diluted 7,006 6,493 � � Cash Flow
Data Cash used in operating activities $ (6,057 ) $ (4,134 ) Cash
used in investing activities (314 ) (2,526 ) Cash provided by
financing activities 6,373 6,412 Net increase (decrease) in cash 2
(248 ) � Supplemental Data Comparable store sales decrease (11.1 )%
(9.3 )% Gross profit percentage 25.8 % 31.0 % Number of stores at
end of period 249 258 Bakers Footwear Group, Inc. Balance Sheet
Data � May 3, 2008 � May 5, 2007 (in thousands) � Unaudited �
Unaudited Cash $ 162 $ 159 Accounts receivable 1,773 2,596
Inventories 23,611 27,797 Other current assets � 2,860 � � 7,465
Current assets 28,406 38,017 � Property and equipment, net 41,861
51,374 Other assets � 1,212 � � 1,637 $ 71,479 � $ 91,028 �
Accounts payable $ 8,926 $ 10,084 Revolving credit facility 11,511
19,588 Subordinated secured term loan 5,771 � Subordinated
convertible debentures 4,000 � Other current liabilities � 11,037 �
� 10,788 Current liabilities 41,245 40,460 � Other noncurrent
liabilities 10,197 10,174 Shareholders� equity � 20,037 � � 40,394
$ 71,479 � $ 91,028
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