Footwear retailer Bakers Footwear
Bakers can be firmly placed in a category of retailers teetering on the edge of survival. Sharper Image
Bakers continues to see dire trends; earlier this week it announced an 11% drop in total second-quarter sales, as comps fell an alarming 18.3%. Management attributed the weakness to a consumer "disenchantment" with its product assortment, meaning that mall traffic is avoiding the stores since shoppers aren't finding anything in the storefront displays to tempt them to go inside. It cited sandal footwear as particularly troublesome, which contributed to a nearly ninefold bottom-line loss of $1.35 for the quarter.
Investors are increasingly giving up on Bakers, and the stock is now trading for less than $4 per share. Insiders are jumping ship; the president just resigned; and the company withdrew any further guidance for the year, as it expects to take a number of charges to get to where it can turn a profit in the fourth quarter. It also has no plans to open any new stores during the balance of the year.
In other words, it's damage-control time at Bakers. The past three years have seen a wide disparity between operating cash flow and capex, meaning it must tap outside markets for capital to remain afloat. Refraining from opening new stores definitely helps, but it does little to indicate that Bakers is a viable retail concept for long-term investors. Next.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.