Bakers Footwear Reports Third Quarter Fiscal 2008 Results

  
    
  
  
    
      Bakers Footwear Group, Inc. (Nasdaq: BKRS), a leading specialty 
      retailer of moderately priced fashion footwear for young women, with 241 
      stores, today announced results for the thirteen weeks and thirty 
      nine-weeks ended November 1, 2008.
    
    
      For the third quarter, the thirteen weeks ended November 1, 2008:
    
    
      
        Net sales were $41.1 million, an increase of 1.9% from $40.3 million 
        for the thirteen-week period ended November 3, 2007;
      
      
        Comparable store sales for the third quarter of fiscal 2008 increased 
        4.5%, compared to a decrease of 16.6% in the prior-year period;
      
      
        Gross profit was $9.0 million, or 21.9% of net sales, up from 
        $3.5 million, or 8.7% of net sales in the third quarter last year;
      
      
        Impairment expense was $2.6 million, reflecting non-cash charges in 
        connection with specific underperforming stores, compared to 
        impairment expense of $2.4 million in the third quarter last year.
      
      
        Operating loss was $7.6 million, compared to $14.9 million in the 
        third quarter last year; and
      
      
        Net loss was $8.3 million or ($1.18) per share, compared to $15.3 
        million, or ($2.35) per share in the third quarter last year.
      
    
    
      Peter Edison, Chairman and Chief Executive Officer of Bakers Footwear 
      Group commented, “We are pleased with our improved third quarter 
      performance that included a 4.5% increase in comparable store sales, a 
      substantial increase in gross profit margin and a significant reduction 
      in our operating loss compared to last year. This was driven by the 
      strong acceptance of our footwear styles across categories and through 
      the benefits of our expense and inventory management discipline. Despite 
      the challenging consumer environment, our sales strengthened throughout 
      the quarter, with healthy regular price selling led by our dress shoes, 
      boots and branded athletic categories.”
    
    
      “As we look ahead, we remain optimistic about our ability to maintain 
      our positive momentum,” Mr. Edison continued. “We are experiencing 
      favorable customer response to our holiday assortments, with November 
      comparable store sales up 3.6%, including a 13.4% increase for the 
      Thanksgiving weekend of Black Friday, November 28, 2008 and Saturday, 
      November 29, 2008 compared to the Friday and Saturday after Thanksgiving 
      last year. At the same time, we are operating the business with prudent 
      control of our inventory and expenses. Our inventory level is well 
      controlled, the increase at the end of the third quarter reflects the 
      acceleration of fourth quarter deliveries as well as our expected sales 
      increase during the holiday season. We plan to end the fourth quarter 
      with inventory flat compared to the prior year. We will continue to 
      maintain our financial discipline and believe we are positioned to 
      report improved operating results for the balance of the year.”
    
    
      Based on the Company’s business plan, the Company believes it has 
      adequate liquidity to fund anticipated working capital requirements and 
      expects to be in compliance with its financial covenants throughout the 
      remainder of 2008. The Company’s Quarterly Report on Form 10-Q, issued 
      today and the Company’s Annual Report on Form 10-K disclose in detail 
      the risks of the Company’s current liquidity situation and its ability 
      to comply with its financial covenants.
    
    
      For the first nine months of fiscal 2008, the thirty-nine weeks ended 
      November 1, 2008:
    
    
      
        Net sales were $128.2 million, compared to $131.5 million for the 
        thirty-nine weeks ended November 3, 2007. Comparable store sales 
        decreased 0.8%, compared to a 14.6% decrease in the first nine months 
        of 2007;
      
      
        Gross profit was $33.1 million, or 25.8% of net sales, compared to 
        $28.1 million, or 21.3% of net sales in the first nine months of 2007;
      
      
        Impairment expense was $2.6 million, reflecting non-cash charges in 
        connection with specific underperforming stores, compared to 
        impairment expense of $3.1 million last year.
      
      
        Operating loss was $13.1 million, compared to $23.2 million in the 
        first nine months of 2007; and
      
      
        Net loss was $15.5 million or ($2.20) per share, compared to $25.0 
        million, or ($3.85) per share in the first nine months of 2006.
      
    
    
      Conference Call
    
    
      The Company also announced that it will conduct a conference call to 
      discuss its third quarter fiscal 2008 results today, Tuesday, December 
      9, 2008 at 9:00 a.m. Eastern Time. Investors and analysts interested in 
      participating in the call are invited to dial [phone], 
      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=00005ACB. 
      A replay of this call will be available until December 16, 2008 and can 
      be accessed by dialing [phone], referencing account number 3055 
      and entering confirmation number 305311. The webcast will remain 
      available until January 9, 2009 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 240 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 INABILITY TO SATISFY DEBT COVENANTS, MATERIAL DECLINES IN SALES 
      TRENDS AND LIQUIDITY, MATERIAL CHANGES IN CAPITAL MARKET CONDITIONS OR 
      IN BAKERS FOOTWEAR’S BUSINESS, PROSPECTS, RESULTS OF OPERATIONS OR 
      FINANCIAL CONDITION, INABILITY TO COMPLY WITH NASDAQ LISTING 
      REQUIREMENTS AND OTHER RISKS AND UNCERTAINTIES, INCLUDING THOSE DETAILED 
      IN BAKERS FOOTWEAR’S MOST RECENT ANNUAL REPORT ON FORM 10-K AND OUR MOST 
      RECENT QUARTERLY REPORTS ON FORM 10-Q, 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 IN THESE REPORTS, AND IN BAKERS FOOTWEAR’S OTHER FILINGS WITH 
      THE SECURITIES AND EXCHANGE COMMISSION.
    
    
      
        
        
        
           
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          Bakers Footwear Group, Inc.

          
             
          
          
             
          
          
            Income Statement Data
          
        
        
           
        
        
           
        
        
          Thirteen

          
            Weeks Ended
          
          
            November 1,
          
          
            2008
          
        
        
           
        
        
          Thirteen

          
            Weeks Ended
          
          
            November 3,
          
          
            2007
          
        
        
           
        
        
          Thirty-nine

          
            Weeks Ended
          
          
            November 1,
          
          
            2008
          
        
        
           
        
        
          Thirty-nine

          
            Weeks Ended
          
          
            November 3,
          
          
            2007
          
        
      
      
        
          (in thousands, except per share data)
        
        
        
        
        
        
          Unaudited
        
        
        
        
          Unaudited
        
        
        
        
          Unaudited
        
        
        
        
          Unaudited
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net sales
        
        
        
        
        
        
          $
        
        
          41,075
        
        
        
        
        
        
          $
        
        
          40,294
        
        
        
        
        
        
          $
        
        
          128,181
        
        
        
        
        
        
          $
        
        
          131,534
        
        
        
      
      
        
          Cost of merchandise sold, occupancy, and buying expenses
        
        
        
        
        
        
           
        
        
          
            32,078
          
        
        
           
        
        
           
        
        
           
        
        
          
            36,785
          
        
        
           
        
        
           
        
        
           
        
        
          
            95,055
          
        
        
           
        
        
           
        
        
           
        
        
          
            103,461
          
        
        
           
        
      
      
        
          Gross profit
        
        
        
        
        
        
        
        
          8,997
        
        
        
        
        
        
        
        
          3,509
        
        
        
        
        
        
        
        
          33,126
        
        
        
        
        
        
        
        
          28,073
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Selling
        
        
        
        
        
        
        
        
          9,931
        
        
        
        
        
        
        
        
          11,228
        
        
        
        
        
        
        
        
          30,838
        
        
        
        
        
        
        
        
          34,333
        
        
        
      
      
        
          General and administrative
        
        
        
        
        
        
        
        
          4,016
        
        
        
        
        
        
        
        
          4,753
        
        
        
        
        
        
        
        
          12,411
        
        
        
        
        
        
        
        
          13,704
        
        
        
      
      
        
          Loss on disposal of property and equipment
        
        
        
        
        
        
        
        
          67
        
        
        
        
        
        
        
        
          18
        
        
        
        
        
        
        
        
          321
        
        
        
        
        
        
        
        
          63
        
        
        
      
      
        
          Impairment of long-lived assets
        
        
        
        
        
        
           
        
        
          2,610
        
        
           
        
        
           
        
        
           
        
        
          2,376
        
        
           
        
        
           
        
        
           
        
        
          2,610
        
        
           
        
        
           
        
        
           
        
        
          3,131
        
        
           
        
      
      
        
          Operating loss
        
        
        
        
        
        
        
        
          (7,627
        
        
          )
        
        
        
        
        
        
          (14,866
        
        
          )
        
        
        
        
        
        
          (13,054
        
        
          )
        
        
        
        
        
        
          (23,158
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense
        
        
        
        
        
        
        
        
          (768
        
        
          )
        
        
        
        
        
        
          (499
        
        
          )
        
        
        
        
        
        
          (2,297
        
        
          )
        
        
        
        
        
        
          (1,264
        
        
          )
        
      
      
        
          Other income, net
        
        
        
        
        
        
           
        
        
          52
        
        
           
        
        
           
        
        
           
        
        
          71
        
        
           
        
        
           
        
        
           
        
        
          95
        
        
           
        
        
           
        
        
           
        
        
          109
        
        
           
        
      
      
        
          Loss before income taxes
        
        
        
        
        
        
        
        
          (8,343
        
        
          )
        
        
        
        
        
        
          (15,294
        
        
          )
        
        
        
        
        
        
          (15,256
        
        
          )
        
        
        
        
        
        
          (24,313
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax expense
        
        
        
        
        
        
           
        
        
          —
        
        
           
        
        
           
        
        
           
        
        
          —
        
        
           
        
        
           
        
        
           
        
        
          223
        
        
           
        
        
           
        
        
           
        
        
          691
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
        
        
          $
        
        
          (8,343
        
        
          )
        
        
        
        
          $
        
        
          (15,294
        
        
          )
        
        
        
        
          $
        
        
          (15,479
        
        
          )
        
        
        
        
          $
        
        
          (25,004
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic loss per share
        
        
        
        
        
        
          $
        
        
          (1.18
        
        
          )
        
        
           
        
        
          $
        
        
          (2.35
        
        
          )
        
        
           
        
        
          $
        
        
          (2.20
        
        
          )
        
        
           
        
        
          $
        
        
          (3.85
        
        
          )
        
      
      
        
          Diluted loss per share
        
        
        
        
        
        
          $
        
        
          (1.18
        
        
          )
        
        
           
        
        
          $
        
        
          (2.35
        
        
          )
        
        
           
        
        
          $
        
        
          (2.20
        
        
          )
        
        
           
        
        
          $
        
        
          (3.85
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average shares outstanding
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
        
        
        
        
          7,056
        
        
        
        
        
        
        
        
          6,498
        
        
        
        
        
        
        
        
          7,036
        
        
        
        
        
        
        
        
          6,495
        
        
        
      
      
        
          Diluted
        
        
        
        
        
        
        
        
          7,056
        
        
        
        
        
        
        
        
          6,498
        
        
        
        
        
        
        
        
          7,036
        
        
        
        
        
        
        
        
          6,495
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash Flow Data
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cash used in operating activities
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          $
        
        
          (13,699
        
        
          )
        
        
        
        
          $
        
        
          (7,688
        
        
          )
        
      
      
        
          Cash used in investing activities
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          (713
        
        
          )
        
        
        
        
        
        
          (3,985
        
        
          )
        
      
      
        
          Cash provided by financing activities
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          14,394
        
        
        
        
        
        
        
        
          11,513
        
        
        
      
      
        
          Net decrease in cash
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          (18
        
        
          )
        
        
        
        
        
        
          (160
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Supplemental Data
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Comparable store sales increase (decrease)
        
        
        
        
        
        
        
        
          4.5
        
        
          %
        
        
        
        
        
        
          (16.6
        
        
          %)
        
        
        
        
        
        
          (0.8
        
        
          )%
        
        
        
        
        
        
          (14.6
        
        
          %)
        
      
      
        
          Gross profit percentage
        
        
        
        
        
        
        
        
          21.9
        
        
          %
        
        
        
        
        
        
          8.7.
        
        
          %
        
        
        
        
        
        
          25.8
        
        
          %
        
        
        
        
        
        
          21.3
        
        
          %
        
      
      
        
          Number of stores at end of period
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          241
        
        
        
        
        
        
        
        
          257
        
        
        
      
    
    
      
        
        
        
           
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          Bakers Footwear Group, Inc.

          
            Balance Sheet Data
          
        
        
           
        
        
           
        
        
          
            November 1, 2008
          
        
        
           
        
        
          
            November 3,2007
          
        
      
      
        
          (in thousands)
        
        
        
        
        
        
          Unaudited
        
        
        
        
          Unaudited
        
      
      
        
          Cash
        
        
        
        
        
        
          $
        
        
          142
        
        
        
        
          $
        
        
          247
        
      
      
        
          Accounts receivable
        
        
        
        
        
        
        
        
          1,413
        
        
        
        
        
        
          1,557
        
      
      
        
          Inventories
        
        
        
        
        
        
        
        
          27,184
        
        
        
        
        
        
          21,635
        
      
      
        
          Other current assets
        
        
        
        
        
        
           
        
        
          1,235
        
        
           
        
        
           
        
        
          3,194
        
      
      
        
          Current assets
        
        
        
        
        
        
        
        
          29,974
        
        
        
        
        
        
          26,633
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
        
        
          35,655
        
        
        
        
        
        
          45,386
        
      
      
        
          Other assets
        
        
        
        
        
        
           
        
        
          1,044
        
        
           
        
        
           
        
        
          1,192
        
      
      
        
        
        
        
        
        
        
          $
        
        
          66,673
        
        
           
        
        
          $
        
        
          73,211
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts payable
        
        
        
        
        
        
          $
        
        
          7,329
        
        
        
        
          $
        
        
          10,289
        
      
      
        
          Revolving credit facility
        
        
        
        
        
        
        
        
          20,249
        
        
        
        
        
        
          21,187
        
      
      
        
          Subordinated secured term loan
        
        
        
        
        
        
        
        
          5,346
        
        
        
        
        
        
          —
        
      
      
        
          Subordinated convertible debentures
        
        
        
        
        
        
        
        
          4,000
        
        
        
        
        
        
          —
        
      
      
        
          Other current liabilities
        
        
        
        
        
        
           
        
        
          10,001
        
        
           
        
        
           
        
        
          11,007
        
      
      
        
          Current liabilities
        
        
        
        
        
        
           
        
        
          46,925
        
        
           
        
        
           
        
        
          42,483
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Subordinated convertible debentures
        
        
        
        
        
        
        
        
          —
        
        
        
        
        
        
          4,000
        
      
      
        
          Other noncurrent liabilities
        
        
        
        
        
        
        
        
          9,931
        
        
        
        
        
        
          10,213
        
      
      
        
          Shareholders’ equity
        
        
        
        
        
        
           
        
        
          9,817
        
        
           
        
        
           
        
        
          16,515
        
      
      
        
        
        
        
        
        
        
          $
        
        
          66,673
        
        
           
        
        
          $
        
        
          73,211