Carter Hawley’s Loss for Quarter at $32.4 Million : Retailing: The figure was higher than expected. Analysts said restocking problems and sluggish consumer spending hurt the parent of the Broadway department store chain.
Carter Hawley Hale Stores on Monday reported a worse-than-expected first-quarter loss of $32.4 million, a strong indication that the company’s efforts to reorganize under bankruptcy court protection have gotten off to a frustrating start.
The Los Angeles-based retailer, parent of the Broadway chain and the biggest department store organization in the West, posted a loss of $6.6 million a year earlier.
Analysts blamed Carter Hawley’s results partly on the difficulty it initially faced in getting fresh merchandise from suppliers after filing for Chapter 11 bankruptcy on Feb. 11, a common problem for companies in the early stages of reorganization. The company said its inventories are now returning to “normal levels.”
But Carter Hawley also was hurt, analysts said, by sluggish consumer spending in its major California markets and by the company’s longtime competitive weaknesses. “They obviously have had problems or they wouldn’t be in this situation, and the economy isn’t helping them,” said Thomas Razukas, an analyst with Fitch Investors Service.
Although Carter Hawley said the quarterly results were better than it projected when it entered bankruptcy, analyst Barbara Wedelstaedt of Duff & Phelps maintained that the company led Wall Street to believe that sales would be stronger in its first quarter, which ended May 4.
“Once again, they’ve underestimated” their problems, Wedelstaedt said.
She noted that in April, the most recent month for which Carter Hawley reported results, sales at stores open more than one year were off 11% from the weak results of a year earlier. Overall sales for the company’s first quarter fell 27% to $430.1 million, but much of that decline stemmed from the sale in December of the Richmond, Va.-based Thalhimers chain.
Wedelstaedt said the disappointing quarterly results could put pressure on Carter Hawley to act more swiftly and dramatically to cut costs by, among other things, closing stores. No store closings have been announced since Carter Hawley went into Chapter 11, but company officials are considering such plans.
Separately, a bankruptcy judge Monday granted the company’s request to extend until next March the period during which it has the exclusive right to submit a reorganization plan to the court. The company’s unsecured creditors committee sought to limit the “exclusivity period” until October as a way of pressuring the company to act more quickly.
In trading on the New York Stock Exchange, Carter Hawley’s stock was off 12.5 cents a share at $1.25, just above its all-time low of $1.125.
Chairman and Chief Executive Philip M. Hawley said in a news release:
“While we continue to feel the effects of the softness in the retailing environment, we are encouraged by the rapid restoration of our business operations, which is demonstrated by the renewal of vendor confidence, the flow of merchandise into our stores and the rebuilding of sales volume. We are positioned now to take a more aggressive approach to our business.
Carter Hawley Hale Stores Profits and Losses Net income for fiscal quarters, in million of dollars.2nd quarter, 1990: $20 3rd quarter, 1990: -$6.6 4th quarter, 1990: -$25.5 1st quarter, 1991: -$14.9 2nd quarter, 1991: -$72.7 1st quarter, 1992: -$32.4 Note: Carter Hawley’s last fiscal year ended Feb. 2, after what had been the company’s second quarter. After filing for Chapter 11 bankruptcy court protection in Febuary, the company began a new fiscal year.
