Williams-Sonoma Joins Growing List Of Distressed Retailers
23 January 2009 - 3:49AM
Dow Jones News
The predicted acceleration in troubles for retailers is playing
out in force, with half a dozen major companies - including
Willams-Sonoma Inc. (WSM) and Phillips-Van Heusen Corp. (PVH) -
indicating signs of distress since late Wednesday.
Housewares retailer Williams-Sonoma said it will cut 1,400 jobs
- 18% of its full-time staff - as part of an effort to trim fiscal
2009 overhead costs by $75 million before taxes.
Phillips-Van Heusen, which supplies clothes under brands
including Calvin Klein, DKNY, Kenneth Cole and Izod, said it will
reduce jobs and shut 175 stores over the next two to three years to
reduce costs.
Jones Apparel Inc. (JNY) projected a fourth-quarter loss and
$840 million in goodwill write-downs as it slashed planned capital
spending as well as its dividend by 64%.
Charlotte Russe Inc. (CHIC) reported a first quarter loss of 7
cents a share and projected a second quarter loss of 10 cents a
share to 20 cents a share.
The mall-based women's apparel retailer also said it is
evaluating strategic alternatives, including a possible sale of the
company and has received potential expressions of interest.
Filene's Basement Corp. (BSMTQ), which offers names like Gucci,
Armani and Dolce & Gabana at off-prices, reportedly plans to
close 11 of its 36 stores. A spokeswoman for Filene's couldn't be
reached.
Fortunoff is for sale again, less than a year after the jewelry
and higher end-home furnishings retailer emerged from bankruptcy
through its purchase by NRDC Equity Partners, Women's Wear Daily
reported. Fortunoff didn't return a phone call requesting
comment.
The latest developments are occurring in a week that was already
full of less than uplifting events for retailers.
Wal-Mart Stores Inc. (WMT) on Wednesday received a rare stock
downgrade, as Credit Suisse reduced its rating to neutral from
outperform. Credit Suisse said Wal-Mart faces a sales slowdown
because of economic conditions and the maturity of its own U.S.
operations.
J.C. Penney Corp. (JCP), thought of as an industry stalwart,
felt compelled on Tuesday to issue a statement that it's
financially sound. J.C. Penney acted after J.P. Morgan analyst
Charles Grom said the retailer's financial performance was
deteriorating to such a degree that covenant violations are
likely.
Coach Inc.'s (COH) second-quarter net income dropped 14% amid
weak sales and margins and the leather goods retailer said it will
be selling its iconic handbags for 10% to 15% less.
The worst is hardly over, for many reasons, including high
unemployment, poor levels of consumer confidence, and greater
consumer savings rates, analysts say.
Conditions for retailers are "brutal," said Matt Bordwin,
managing director with KPMG Corporate Finance LLC.
Bordwin doesn't see much, if any, improvement before the third
or fourth quarter of this year.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com
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