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L.A. GEAR REPORTS FIRST QUARTER LOSS

 SANTA MONICA, Calif., April 8 /PRNewswire/ -- L.A. Gear Inc. (NYSE: LA) today announced for the first quarter ended Feb. 28, 1993, a net loss and a loss applicable to common stock of $11.6 million ($.50 per share) and $13.6 million ($.59 per share), respectively, compared to a 1992 first quarter net loss and a loss applicable to common stock of $6.3 million ($.32 per share) and $8.2 million ($.42 per share), respectively. Net sales for the 1993 first quarter were $76.3 million, compared to $109.6 million in the prior-year period. The first quarter results were in line with management's expectations.
 The company, however, is gratified by the positive initial response by retailers and international distributors to its 1993 Back-to-School line which will begin shipping in June 1993. At March 31, 1993, the total backlog of orders for shipments during the next five months reached $148.4 million -- $97.2 million of which represents "future orders" for new in-line products scheduled to ship during the company's 1993 third fiscal quarter. The backlog of orders for the same period of 1992 was approximately $155.1 million -- $107.0 million of which represented orders scheduled for shipment during the 1992 third fiscal quarter. The 1992 backlog included a large number of orders for discontinued, older styles which were sold at reduced prices as part of the company's 1992 inventory reduction program. The current "futures" program is intended to complement the company's "at once" ordering program. Accordingly, shipments and sales for future periods depend, among other things, on the combination of "futures" and "at once" orders.
 Sales of the company's children's shoes continue to be strong, including L.A. LIGHTS(TM), GALACTICA(TM) for boys and L.A. TWILIGHT(TM) for girls. Together these styles have become one of the largest selling children's shoe collections in the company's history. Since June of 1992 through March 31, 1993, approximately 2.0 million pairs of L.A. LIGHTS had been shipped, and the March 31, 1993, backlog includes approximately 1 million pairs scheduled to ship during the next five months.
 The company also has adopted a strategic plan to increase its investment in the international component of its business. This new international business strategy should allow the company to implement more competitive marketing and distribution programs abroad. As part of this new direction, the company announced on March 26, 1993, that it had acquired all of the outstanding capital stock of American Fashion & Footwear Agency GmbH (AFFA), the exclusive distributor of the company's products in Germany since 1988. AFFA ranked among the company's top three international distributors during each of the company's last two fiscal years.
 The 30 percent decline in the 1993 first quarter net sales from the prior-year period was due primarily to a 26 percent drop in the number of pairs sold worldwide. The number of pairs sold was adversely affected by increased competition at lower price points because of price reductions by the company's principal competitors. Net sales were also negatively impacted by lower average selling prices due to a shift in product mix to less expensive styles.
 The gross margin was 27 percent for the first quarter of 1993 vs. 29 percent for the same period in the prior year. As previously announced, the company experienced delays in obtaining samples of its products for the 1993 spring season. Management believes that these delays reduced the amount of "futures" orders placed by retailers for the spring line. As a result, the company implemented a promotional pricing policy for the spring line, which contributed to the reduction in gross margin. In addition, the gross margin was adversely affected by the company's continuing efforts to gradually sell certain slower moving styles at reduced prices.
 The company noted that selling, general and administrative expenses decreased 21 percent to $32.0 million, compared to $40.6 million during the same period in 1992, primarily as a result of cost control and containment efforts, including reductions in media and advertising expenditures.
 L.A. Gear is a leading designer, developer and marketer of a broad range of quality athletic and casual/lifestyle footwear.
 L.A. GEAR INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
 (In thousands, except per share amounts)
 (Unaudited)
 Three months ended
 Feb. 28, Feb. 29,
 1993 1992
 Net sales $76,327 $109,557
 Cost of sales 55,951 77,450
 Gross profit 20,376 32,107
 Selling, general and
 administrative expenses 31,978 40,642
 Interest expense 732 773
 Interest income (772) (35)
 Loss before income taxes (11,562) (9,273)
 Income tax benefit --- (2,942)
 Net loss (11,562) (6,331)
 Dividends on mandatorily
 redeemable preferred stock (2,042) (1,875)
 Loss applicable
 to common stock ($13,604) ($8,206)
 Loss per common share:
 Net loss ($.50) ($.32)
 Loss applicable
 to common stock ($.59) ($.42)
 Weighted average shares
 outstanding 22,902 19,543
 L.A. GEAR INC. AND SUBSIDIARIES
 Selected Consolidated Balance Sheet Data
 (In thousands)
 Feb. 28, Nov. 30,
 1993 1992
 (Unaudited)
 Cash and cash equivalents(A) $94,389 $83,982
 Accounts receivable, net 63,655 57,011
 Inventories 79,884 61,923
 Working capital 203,674 168,049
 Convertible subordinated
 debentures 50,000 ---
 Mandatorily redeemable
 preferred stock 100,000 100,000
 Accumulated deficit (53,867) (40,263)
 Total shareholders' equity 74,087 87,451
 (A) Cash and cash equivalents includes $33.1 million at Feb. 28, 1993, and $29.0 million at Nov. 30, 1992, respectively, of collateralized cash.
 -0- 4/8/93
 /CONTACT: Michael Sitrick or Sandra Sternberg of Sitrick And Co., 310-788-2850, for L.A. Gear/
 (LA)


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

JL-MS -- LA014 -- 4083 04/08/93 09:05 EDT
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Publication:PR Newswire
Date:Apr 8, 1993
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