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The Walking Co. Holdings Inc. announced a financial restructuring on Monday and released its fourth-quarter results.
The financial plan, which includes the termination of 500 employees and salary cuts for every current employee, is estimated to reduce overhead costs by about 20 percent. The Santa Barbara, Calif.-based company said it will also ask its landlords for reductions on rent due for the remainder of the year.
Benefits from the restructuring were estimated to be about $10 million in annual cash savings and as much as $15 million in improved cash flow and credit.
"We believe the measures we have recently implemented give us the financial flexibility and wherewithal to navigate this negative retail environment,” CEO Andrew Feshbach said in a statement. “While 2009 and perhaps 2010 and beyond appear to be difficult years for retailers in general, we intend to find a way to come through this period and succeed in the long term."
For the fourth quarter, gross margin declined about 2 percent, a result of discontinuing the company’s small outlet business and liquidating the related inventory. Net sales for the quarter increased 4 percent to $79.6 million, compared to $76.6 million a year ago. Sales for the year also increased 4 percent to $241.5 million, from $233.3 million in 2007.
Comparative store sales increased 6.7 percent in the fourth quarter and 1.8 percent for the full year.
Feshbach said The Walking Co. attributed the increased comparative store numbers to strong sales of Ugg boots, increases in women's products overall, a perceived trend toward more versatile shoe styles and solid increases in the company's Internet initiatives.
“We are noting the declines coming more significantly from the areas of the country most affected by the distressed housing market and the more luxury-oriented malls in general," Feshbach said.
The company also said it planned to delist its stock from NASDAQ after becoming “increasingly illiquid and poorly traded.” Though the stock will continue to trade, it will not be listed with NASDAQ and the board of directors has been reduced.