The Walking Company, parent of the big American shoe retail chain of the same name as well as Big Dogs stores, has taken steps to shore up its balance sheet is now seeking a delisting of its stock from the Nasdaq stock exchange. The company lost about $12 million before taxes in 2008.
The measures being taken include lowering pay levels the executive team and some other employees and the elimination of 500 jobs, mostly in its Big Dogs business, in order to reduce overhead costs by approximately 20 percent. The company is also trying to requesting rent reductions from all the owners of its stores for the rest of the year, planning to repay them out of 2009 and 2010 profits. Property owners have not yet replied to the request.
Additionally, The Walking Company is trying to negotiate high credit lines and securing an extension with bond holders that allows for payment-in-kind interest payments for up to two years and an indebtedness reduction of about $3 million.
The company estimates that its restructuring program will generate approximately $10 million in annualized cash savings and up to another $15 million in improved cash flow and credit, allowing it to weather the current difficult retail climate. Already, the Walking Company has pared back the unprofitable Big Dogs’ retail outlet chain to 14 doors from 131 at the end of 2007, converting the inventory to approximately $20 million in cash for debt repayments. It is currently evaluating further options for the brand that could include the sale of its remaining assets.
The group Company saw a 4 percent increase in fourth-quarter sales to $79.6 million with a 6.7 percent increase a same-store basis, but the gross margin fell by about 2.0 percentage points because of the discontinuation of the Big Dog outlet business and its inventory liquidation.
For the 2008 fiscal year, comparable store sales inched 1.8 percent higher while total sales grew by 3.5 percent to $241.5 million. The positive results were attributed to excellent sales of UGG boots and women’s products overall, as well as a more solid presence on the internet. The men’s footwear business remained flat.
The company ended the year with 209 Walking Company stores versus 186 at the end of 2007. The banner is forecast to generate a «mid- to high-single-digit» drop in comparable sales for the first quarter of 2009, and flat margins year-over-year.