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Though web sales are up 7% over last year, it`s not enough to offset a downward trend. Spiegel files Chapter 11 and secures $400 million in financing to keep operations running during reorganization.
The Spiegel Group`s web sales rose 7% in 2002 over last year, but, beset by sales that have been on a general decline across other categories in its three brands, The Spiegel Group has filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code. The company has listed its total assets at $1.737 billion and liabilities at $1.703 billion.
The company says it has secured $400 million in financing to supplement its current cash reserves and income from operations to ensure that all of its sales channels remain operational during the reorganization.” All of our operations are up and running, as they have been,” says a company spokeswoman.
In January, The Spiegel Group reported that total sales for 2002, including store, catalog and web site operations for Eddie Bauer, Newport News and Spiegel Catalog, dropped 18% from a year ago. Eddie Bauer`s total sales for the year were down 11%, Newport News was down 25%, and Spiegel Catalog was down 41%. Spiegel attributed the steep declines in part to a reduction in catalog mailings and more restrictive credit-granting policies in its private-label credit cards.
“This filing is an important step in a controlled process that we expect will allow The Spiegel Group to address its immediate liquidity needs, restructure its debt obligation and other financing arrangements to improve its prospects for future growth and profitability,” says William C. Kosturos, interim CEO of The Spiegel Group.
The company also has announced it will no longer honor private-label credit cards issued to its customers by its bank subsidiary, First Consumers National Bank. As previously announced, the bank is being liquidated. With plans to enable its brands to issue new private-label credit cards as soon as possible, the company is seeking a third party service provider to finance and service receivables.