BKRS Bakers Footwear Grp. (MM)

Bakers Footwear Group, Inc. (Nasdaq: BKRS), a leading specialty retailer of moderately priced fashion footwear for young women, with 239 stores, today announced results for the thirteen weeks ended May 1, 2010.

For the first quarter, the thirteen weeks ended May 1, 2010:

• Net sales were $43.5 million, a decrease of 3.2% from $45.0 million for the thirteen-week period ended May 2, 2009;
• Comparable store sales decreased 1.6%, compared to a comparable store sales increase of 4.8% for the first quarter of fiscal 2009;
• Gross profit was $10.7 million, or 24.7% of net sales, compared to $12.7 million, or 28.2% of net sales in the first quarter last year;
• Operating loss was $2.9 million, or 6.7% of net sales, compared to an operating loss of $1.9 million, or 4.2% of net sales in the first quarter last year; and
• Net loss was $3.5 million or $0.47 per diluted share, compared to a net loss of $2.8 million, or $0.39 per diluted share in the first quarter last year.

Peter Edison, Chairman and Chief Executive Officer of Bakers Footwear Group, commented, “While we began the year with a positive performance, an unfavorable response to our sandal category in the latter part of the first quarter led to lower sales and margins, as compared to the prior year. During the quarter we continued to control operating expenses and inventory levels. We also successfully amended our term loan and extended our credit facility through May 2013.”

“While we remain cautious with regard to our near term performance given a tough sandal season, reflected by year-to-date comparable store sales through June 12, 2010 down 2.3%, we are very encouraged as we look further into fall,” Mr. Edison continued. “For the fall season, we will introduce a number of new brands and are already beginning to see promising initial reads in the boot category. We continue to believe our strategies will result in improved financial performance and increased value for our shareholders.”

Nasdaq Capital Market Listing

Today the Company notified the Nasdaq Stock Market that it did not achieve the minimum level of shareholders’ equity required for continued listing on the Nasdaq Capital Market. Consequently, the Company expects to receive notification from Nasdaq that it will be delisted from the Nasdaq Capital Market as soon as this week. The Company is working with market makers to have its common stock quoted on the OTC Bulletin Board or “Pink Sheets”.

Peter Edison commented, “While disappointed that we are unable to maintain our NASDAQ listing, we do not believe that our trading on the OTC Bulletin Board will affect the operations of our business in any significant way. It is important to reiterate that our re-establishment of positive annual adjusted EBITDA while a very strong long-term positive for our company does not happen to be one of the three standards that NASDAQ looks to for continued listing eligibility.”

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 2010. The Company’s Quarterly Report on Form 10-Q, issued today, and the Company’s most recent Annual Report on Form 10-K disclose in detail the risks of the Company’s current liquidity situation, its ability to comply with its financial covenants, and the risks related to its Nasdaq listing status.

Annual Meeting

As announced on March 25, 2010, the Company’s Annual Meeting of Stockholders will be held on Wednesday, June 16, 2010, at 11:00 a.m., at the Marriott Residence Inn, 525 South Jefferson Avenue, St. Louis, Missouri 63103.

Conference Call

The Company also announced that it will conduct a conference call to discuss its first quarter fiscal 2010 results today, Tuesday, June 15, 2010 at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784, 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=0000768E. A replay of this call will be available until June 22, 2010 and can be accessed by dialing (877) 660-6853, referencing account number 3055 and entering confirmation number 351938. The webcast will remain available until July 15, 2010 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 approximately 239 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 DELISTING FROM THE NASDAQ STOCK MARKET, INABILITY TO HAVE ITS COMMON STOCK QUOTED ON THE OTC BULLETIN BOARD, 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, 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 REPORT 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

May 1, 2010

  Thirteen

Weeks Ended

May 2, 2009

(in thousands, except per share data) Unaudited Unaudited   Net sales $ 43,524 $ 44,977 Cost of merchandise sold, occupancy, and buying expenses  

32,788

     

32,280

  Gross profit 10,736 12,696   Operating expenses Selling 9,804 9,976 General and administrative 3,791 4,340 Loss on disposal of property and equipment   51       284   Operating loss (2,910 ) (1,904 )   Interest expense (555 ) (887 ) Other income, net   14       22   Loss before income taxes (3,451 ) (2,769 )   Income tax benefit   —       —     Net loss $ (3,451 )   $ (2,769 )   Net loss per common share $ (0.47 )   $ (0.39 )     Weighted average shares outstanding 7,383 7,164     Cash Flow Data Cash used in operating activities $ (1,644 ) $ (1,504 ) Cash used in investing activities (420 ) (155 ) Cash provided by financing activities 2,058 1,665 Net increase (decrease) in cash (5 ) 6   Supplemental Data Comparable store sales increase (decrease) (1.6 )% 4.8 % Gross profit percentage 24.7 % 28.2 % Number of stores at end of period 239 239                   Bakers Footwear Group, Inc.

Balance Sheet Data

            May 1, 2010       May 2, 2009 (in thousands) Unaudited Unaudited Cash $ 149 $ 141 Accounts receivable 1,955 1,709 Inventories 23,248 22,610 Other current assets   1,000           1,279 Current assets 26,352 25,739   Property and equipment, net 23,465 32,167 Other assets   771           1,012 $ 50,588         $ 58,918   Accounts payable $ 13,217 $ 8,771 Revolving credit facility 13,277 13,835 Subordinated secured term loan 2,177 4,281 Subordinated convertible debentures 4,000 4,000 Other current liabilities   10,047           10,364 Current liabilities 42,718 41,251   Accrued noncurrent rent liabilities 9,099 9,667 Shareholders’ equity (deficit)   (1,229 )         8,000 $ 50,588         $ 58,918   Reconciliation of Net Loss to Adjusted EBITDA       Thirteen

Weeks Ended

May 1, 2010

  Thirteen

Weeks Ended

May 2, 2009

Net loss $ (3,451 ) $ (2,769 ) Interest expense 555 887 Depreciation expense 1,497 1,734 Loss on disposal of property and equipment 51 284 Stock based compensation expense   81       127   Adjusted EBITDA $ (1,267 )   $ 263    

Adjusted EBITDA is calculated in accordance with the terms of our secured revolving credit facility. Adjusted EBITDA is defined as net income (loss) before deducting interest expense, income taxes, depreciation, gains or losses on disposal of property and equipment, impairment expense, and stock based compensation expense. Adjusted EBITDA should not be considered as an alternative to operating income or net income (as determined in accordance with generally accepted accounting principles (GAAP)) as a measure of our operating performance or to net cash provided by operating, investing and financing activities (as determined in accordance with GAAP) as a measure of our ability to meet cash needs. The Company believes that adjusted EBITDA is a measure commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance because it assists in comparing performance on a consistent basis without regard to capital structure, depreciation and amortization or non-operating factors (such as historical cost) and is also used to determine compliance with a financial covenant in our secured revolving credit facility. This information has been disclosed here to permit a more complete comparative analysis of our operating performance relative to other companies. Adjusted EBITDA may not, however, be comparable in all instances to other similar types of measures.