Jamesway refinances, shuts 11

Discount Store News, April 1, 1991

Jamesway Refinances, Shuts 11

SECAUCUS, N.J. -- In an effort to strengthen its financial position, Jamesway Corp. has secured a $40 million refinancing agreement and will close 11 unprofitable stores.

These decisions were announced at the same time the retailer released fourth quarter and year-end financial results, posting a loss in earnings for both periods.

Herb Fisher, chairman and chief executive officer, blamed the fourth quarter results on "a store closing reserve, a LIFO charge, a 4% comparable store sales decline, the cost of increased promotions and the overall difficult retail environment."

Following the store closings over the next 80 days, Jamesway will operate a total of 123 stores.

The two-year revolving loan agreement was signed with a group of banks including Marine Midland, First Fidelity and Harris Trust.

Despite the chain's difficulties, industry analysts maintained that, unlike many retailers, Jamesway has had very little in the way of long-term debt, a situation that bodes well for the chain's future.

Sales reporter for the fourth quarter were $275.3 million compared with $287.5 million for the fourth quarter ended February 2, 1990.

For the 1990 fiscal year (ended February 2,1991), the company reported a net loss of $17.6 million or $1.28 per share, which includes a provision for store closings of $11 million or $0.08 per sharee as well as a credit to income of $3.7 million or $0.27 per share from a change in accounting for income taxes.

Year-end results also included a LIFO charge of $4.3 million or $0.31 per share. Last year, the company reported net income of $5.8 million or $0.01 per share.

Fisher said the savings resulting from the store closings as well as tighter inventory controls, the refinancing and a new management team, "places us in an excellent position to return to profitability in the coming fiscal year."

The chain is still operating without a president, but had appointed a number of executives in the last few months.

In the midst of this news, Jamesway opened a new store in Rio Grande, N.J., March 22, one day after its initial announcement of the closings.

A spokesman for the retailer saidd the announced closings would not affect future plans for store openings.

Other plans will continue on schedule as well. Jamesway also plans to have universal point of sale scanning in place in all its stores by the end of April.

In a letter to its vendors and factors announcing these moves, Kevin Regan, executive vice president, noted that the retailers balance sheet remains strong, as the company is not highly leverage.

"Our inventory position at year-end declined, even though we increased our number of stores from last year. This year we have $192 million of merchandise on hand servicing 134 location versus $207 million last year servicing 130 stores," he said.

Jamesway also operates wodMy House housewares and domestics stores. The retailer does not break out sales separately for the My House division, but reported the closings would not affect the housewares' division's operations.