Destination Maternity Q1 profit up
Philadelphia — Destination Maternity, free of the restructuring charges that put a dent into profits last year, said its first-quarter net income more than quadrupled, easily topping Wall Street expectations. The chain reported earnings of $5.2 million from October to December, compared with $1.3 million for the same period in the prior year.
Revenue increased 1.2% to $135.4 million.
Destination has nearly completed is restructuring at a cost $3.9 million, of which $2.5 million was incurred in most recent quarter. The earnings report comes a day after the company announced a two-for-one stock split and initiated a dividend of 35 cents a share.
"We believe that the stock split, combined with the regular quarterly cash dividend, will make our stock even more attractive to a broader range of investors and may increase the trading liquidity of our stock," said CEO and president Ed Krell.
Home Depot shutters its last Beijing outpost
New York City — The Home Depot has closed its last store in Beijing, highlighting the difficulties that some western companies face when trying to transplant foreign business models into China.
Home Depot, which has closed five stores on the mainland in the past two years, is struggling to find the right business format for one of the world’s most difficult home-improvement markets, local analysts said.
Borders bailout carries store closure clause
Borders Group has secured a $550 million financial lifeline from GE Capital that will enable it to maintain operations, but there are plenty of strings attached, which stands to reason given GE has put half a billion dollar at risk.
Among the stipulations GE required is that Borders finalize a store closure program and close the identified units as soon as practicable. The company operates 674 stores under the Borders, Waldenbooks, Borders Express and Borders Outlet names and an additional 671 Borders branded airport stores, according to the company’s third quarter report for the period ended Oct. 31, 2010.
In addition to an undetermined number of stores closings, the $550 million credit facility requires Borders to obtain $125 million of financing by converting vendor payables to debt, a move deemed necessary to “provide Borders with the financial flexibility and an appropriate level of liquidity to move forward with its strategy to reposition its business model and the Borders brand.”
The GE credit facility will mature in 2014 and replaces the company’s existing revolving senior credit and term loan facilities.
"We are pleased that, after a thorough review of our business strategy and related long-term potential by GE Capital and outside experts, GE Capital is committing to put in place a new senior financing facility for the company,” said Mike Edwards, Borders Group president. “This is an important step for Borders toward implementation of its comprehensive plan to reposition itself as a vibrant national retailer of books and other related products to the consumer. We strongly believe that, based on our business strategy, Borders will be able to transform its business to capitalize on the evolving reading marketplace and perform as a best-in-class destination and shopping experience for consumers.”
The company’s business strategy includes the expansion and enhancement of the Borders Rewards Plus program, aggressively growing Borders.com and e-book market shares, cost reduction, strategic information technology investments and an expansion of non-book product offerings to enhance the product mix.