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L.A. GEAR REPORTS SIX MONTH LOSS

 SANTA MONICA, Calif., July 14 /PRNewswire/ -- L.A. Gear, Inc. (NYSE: LA) announced today, that as anticipated, it incurred a net loss for the first half of 1993. The company reported for the six months ended May 31, 1993 a net loss and a loss applicable to common stock of $24.7 million ($1.08 per share) and $28.6 million ($1.25 per share), respectively, on net sales of $160.9 million. For the six months ended May 31, 1992, the company lost $30.8 million ($1.54 per share) on net sales of $214.3 million and had a loss applicable to common stock of $34.6 million ($1.73 per share).
 For its second quarter ended May 31, 1993, the company reported a net loss and a loss applicable to common stock of $13.2 million ($0.57 per share) and $15.0 million ($0.66 per share), respectively, compared to a 1992 second quarter net loss and a loss applicable to common stock of $24.4 million ($1.19 per share) and $26.4 million ($1.29 per share), respectively. Net sales for the 1993 second quarter were $84.6 million compared to $104.7 million in the prior year period. The 1992 losses include a $13.87 million ($0.68 per share) after-tax charge for the settlement by the company of the claims against it in three separate consolidated shareholder class action lawsuits.
 As reported previously, demand from retailers for the company's 1993 Back-to-School products, scheduled for shipment during its third fiscal quarter, will be critical to the company's financial performance during the balance of its current fiscal year. Entering the Back-to-School season, the company had a combined domestic and international order backlog of approximately $128.6 million at May 31, 1993, primarily for new in-line products scheduled to ship during the June, July and August 1993 period. The third quarter backlog at May 31, 1992 was approximately $135.1 million but was comprised primarily of discounted, older merchandise. To meet anticipated seasonal demand for product in the company's third and fourth quarters, inventories increased during the six months ended May 31, 1993.
 The gross margins on the May 31, 1993 backlog are expected to be higher than those realized in the latter half of 1992 as a result of the company's continued efforts to improve relations with and increase shelf space at full-margin retailers and reduce deep-discount distribution. The prospects for a return to profitability in the second half of 1993 are largely dependent upon "at once" orders augmenting existing "future" orders, and may be adversely affected by the sluggish domestic retail environment, anticipated cautious ordering from retailers for the Holiday season and expected increased pricing competition.
 Stanley P. Gold, Chairman and Chief Executive, and Mark R. Goldston, President and Chief Operating Officer, noted that, "Recently, industry media sources have indicated that the footwear industry has experienced a shift away from more expensive athletic performance footwear to more moderately priced fashion athletic and casual, lifestyle shoes. L.A. Gear had recognized this trend and shifted its product focus to offer approximately 90 percent of its current in-line styles at suggested retail prices below $65, and introduced several new products in its Lifestyle category for Back-to-School, which will be featured in its `Sport of Style' print and television campaigns during the latter part of summer. In addition, L.A. Gear will continue to support the successful children's L.A. LIGHTS(TM) product line and the adult L.A. Tech light GEAR(TM) cross-running shoe with TV ads throughout the Back- to-School season."
 The company's continuing efforts to refocus distribution, coupled with a higher sales volume in 1992 generated by its price discount and inventory reduction program, resulted in a 25 percent decline in net sales and the number of pairs sold worldwide during the first six months of fiscal 1993 from the comparable prior year period. Margins for the second quarter, as well as for the first six months of 1993, however, improved to 28.9 percent and 27.9 percent, respectively, from 21.5 percent and 25.5 percent during comparable 1992 periods. These improvements were achieved even though a promotional pricing program was offered on the company's Spring 1993 product lines, and were primarily due to the discontinuance of deep price discounts given as part of the company's 1992 inventory reduction program.
 The company noted that selling, general and administrative expenses decreased by 12.1 percent to $69.1 million during the six months ended May 31, 1993 from the respective period in 1992. This decrease is primarily a result of lower bad debt expense and cost control and containment efforts, partially offset by, among other things, increased product sourcing and royalty fees.
 In line with the company's strategic plan to increase its investment in the international component of its business, in June 1993, the company completed the acquisition of the business and certain assets of All American Footwear Corp. Ltd. ("AAFC"), the exclusive distributor of the company's products in the United Kingdom since 1988. AAFC ranked among the company's leading international distributors during each of the company's last two fiscal years.
 L.A. Gear is a designer, developer and marketer of a broad range of quality athletic and casual/lifestyle footwear.
 L.A. GEAR, INC. AND SUBSIDIARIES
 Consolidated Condensed Statements of Operations
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended Six Months Ended
 May 31, May 31,
 1993 1992 1993 1992
 Net sales $84,572 $104,727 $160,899 $214,284
 Cost of sales 60,115 82,190 116,066 159,640
 Gross profit 24,457 22,537 44,833 54,644
 Selling, genera
? and administrative
 expenses 37,125 37,980 69,103 78,623
 Litigation settlements --- 19,475 --- 19,475
 Interest expense, net 491 172 451 910
 Loss before income
 taxes (13,159) (35,090) (24,721) (44,364)
 Income tax benefit --- (10,642) --- (13,585)
 Net loss (13,159) (24,448) (24,721) (30,779)
 Dividends on mandatorily
 redeemable preferred
 stock (1,875) (1,915) (3,917) (3,790)
 Loss applicable to
 common stock ($15,034) ($26,363) ($28,638) ($34,569)
 Loss per common share:
 Net loss ($0.57) ($1.19) ($1.08) ($1.54)
 Loss applicable to
 common stock ($0.66) ($1.29) ($1.25) ($1.73)
 Weighted average common
 shares outstanding 22,921 20,473 22,911 20,011
 L.A. GEAR, INC. AND SUBSIDIARIES
 Selected Consolidated Balance Sheet Data
 (In thousands)
 May 31, Nov. 30,
 1993 1992
 (Unaudited)
 Cash and cash equivalents(A) $70,207 $83,982
 Accounts receivable, net 57,495 57,011
 Inventories 100,292 61,923
 Working capital 185,675 168,049
 Convertible subordinated
 debentures 50,000 ---
 Mandatorily redeemable
 preferred stock 100,000 100,000
 Accumulated deficit (68,901) (40,263)
 Total shareholders' equity 59,670 87,451
 (A) Cash and cash equivalents include $43.6 million at May 31, 1993
 and $29.0 million at Nov. 30, 1992, respectively, of
 collateralized cash.
 -0- 7/14/93
 /CONTACT: Richard Brodrick or Les Kumagai, Hill and Knowlton, 213-937-7460, for L.A. Gear/
 (LA)


CO: L.A. Gear Inc. ST: California IN: TEX SU: ERN

LS-JL -- LA007 -- 1218 07/14/93 08:50 EDT
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Date:Jul 14, 1993
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