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Spiegel gets OK to sell Newport

Embattled catalog retailer Spiegel Inc., working its way through a painful bankruptcy and a gradual dismembering of its retail operations, has received a green light from a U.S. Bankruptcy Court judge to sell its Newport News women's fashion unit.

Spiegel said it's selling the Newport News unit to Pangea Holdings Ltd., an investment company, for $28.6 million.

Separately, in a further winding down of operations, Spiegel put up for sale its profitable Eddie Bauer division.

The bankrupt retailer reported a narrowed first-quarter loss of $100.5 million, down from a year-before loss of $114.2 million, as it slashed costs and put behind it a $71.9 million loss from discontinued operations that pulled down the bottom line a year ago.

Spiegel retail sales tumbled 25.9 percent, to $264.4 million from $356.7 million last year, a shortfall of almost $100 million.

Working to cut its losses, Spiegel whittled its costs 27.7 percent, to $139.8 million from $193.2 million, yielding a savings of more than $53 million.

Measured as a percentage of shrinking sales, costs declined to 52.9 percent from 54.2 percent. Average gross margin contracted to 35.5 percent from 36.8 percent.

Taking a big bite out of the bottom line, bankruptcy costs amounted to $11.9 million, up 51.6 percent from $7.8 million the preceding year.

Spiegel Inc.

Qtr. 4/3 (x000) 2004 2003 % chg
(loss)
a-Retail sales, excluding $25.1 million in other revenues, down 28.9 percent from $35.2 million a year ago. Total revenues declined 26.2 percent, to $289.4 million from $391.9 million during the same period in 2003.
b-First-quarter results include $11.9 million in bankruptcy costs, compared with $7.8 million last year; a $6.5 million loss from discontinued operations, compared with a $71.9 million year-before loss; and an expected loss on the sale of discontinued operations of $58.7 million.
Sales $264,350a $356,694a -25.9
Oper. income (EBIT) (20,942) (26,837)
Net income (100,543)b (114,234)b
Per share (diluted) (0.76) (0.87)
Average gross margin 35.5 36.8
SG&A expenses 52.9% 54.2%


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