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Retail Ventures Inc. Reports Operating Results (10-Q)

December 15, 2009 | About:
10qk

10qk

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Retail Ventures Inc. (RVI) filed Quarterly Report for the period ended 2009-10-31.

Retail Ventures, Inc., headquartered in Columbus, Ohio, is a leading off-price retailer with stores in the Midwest, Northeast and Southeast. Retail Ventures Inc. has a market cap of $380.2 million; its shares were traded at around $7.77 with and P/S ratio of 0.3.

Highlight of Business Operations:

On April 21, 2009, Retail Ventures disposed of Filene’s Basement, Inc. and certain related entities to FB II Acquisition Corp., a newly formed entity owned by Buxbaum Holdings, Inc. (“Buxbaum”). Retail Ventures did not realize any cash proceeds from this transaction, will pay a fee of $1.3 million to Buxbaum, of which $0.7 million has been paid through October 31, 2009, and has reimbursed $0.4 million of Buxbaum’s costs associated with the transaction. Retail Ventures has also agreed to indemnify Buxbaum, FB II Acquisition Corp. and their owners against certain liabilities. Retail Ventures has recognized an after-tax gain of $76.1 million on the transaction as of October 31, 2009. On May 4, 2009, Filene’s Basement filed for bankruptcy protection. On June 18, 2009, following bankruptcy court approval, SYL LLC, a subsidiary of Syms Corp (“Syms”), purchased certain assets of Filene’s Basement. All references to “liquidating Filene’s Basement” refer to the debtor, formerly known as Filene’s Basement Inc., and its debtor subsidiaries remaining after the asset purchase by a subsidiary of Syms. All references to “New Filene’s Basement” refer to the stores operated by Syms. The Company negotiated with Syms to provide transition services in exchange for payment. As of October 31, 2009, the Company is still providing transition services to Syms.

Net Sales. Net sales for the three months ended October 31, 2009 increased $53.2 million, or 13.6%, to $444.6 million compared to $391.4 million for the three months ended November 1, 2008. The following table summarizes the increase in our net sales:

Gross Profit. Total gross profit increased $33.7 million from $172.4 million for the three months ended November 1, 2008 to $206.1 million for the three months ended October 31, 2009. Gross profit increased, as a percent of net sales, from 44.1% for the three months ended November 1, 2008 to 46.3% for the three months ended October 31, 2009. The increase in gross profit was primarily the result of a decrease in markdown activity.

Change in Fair Value of Derivative Instruments. During the three months ended October 31, 2009 and November 1, 2008, the Company recorded a non-cash charge of $9.1 million and a non-cash reduction of expenses of $10.8 million, respectively, representing the changes in fair value of the Conversion Warrants and Term Loan Warrants. During the three months ended October 31, 2009 and November 1, 2008, a non-cash charge of $21.6 million and $2.9 million, respectively, was recorded related to the change in the fair value of the conversion feature of the PIES. The change in the fair value of the derivatives is primarily due to the changes in the RVI and DSW stock prices.

Net Sales. Net sales for the nine months ended October 31, 2009 increased $85.2 million, or 7.6%, to $1,200.0 million compared to $1,114.8 million for the nine months ended November 1, 2008. The following table summarizes the increase in our net sales:

Gross Profit. Total gross profit increased $47.3 million from $486.2 million for the nine months ended November 1, 2008 to $533.5 million for the nine months ended October 31, 2009. Gross profit increased, as a percent of net sales, from 43.6% for the nine months ended November 1, 2008 to 44.5% for the nine months ended October 31, 2009. The increase in gross profit was primarily the result of a decrease in markdown activity.

Read the The complete Report

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