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Nasdaq Delists Spiegel

The Spiegel Group, Downers Grove, IL, said that Nasdaq delisted the company's Class A common stock as of the open of business yesterday.

Dow Jones reported that the decision was based on late filings of financial reports caused by delayed efforts to sell its credit-card business and restructure its bank facilities. Spiegel delayed the filing of its annual Form 10-K report for fiscal 2001 and its 10-Q report for the first quarter, having missed a mid-April target to restructure $750 million in revolving credit. The new bank deal has been held up by a delayed effort to sell its troubled credit-card business, which includes First Consumers National Bank, said Dow Jones.

The company said that it intends to and is prepared to file its Form 10-K for the 2001 fiscal year and its first-quarter 2002 Form 10-Q upon reaching an agreement with its bank group to restructure its existing credit facilities. The company thinks that by having the new credit facilities in place prior to filing its financial statements for the 2001 fiscal year, it will receive an unqualified audit opinion from its outside auditor.

The company also said that its majority shareholder — Germany's Otto family — continues to provide financial support, ensuring that it has adequate liquidity to operate normally, including making timely payments to all vendors.

Management said it will make every effort to create a liquid market in the stock.

The company posted sales of $167 million for the four weeks ended April 27, a 19 percent drop from $205.4 million during the period ended April 28, 2001. During the 17 weeks ended April 27, total sales fell 14 percent to $704 million from $817.1 million in the year-ago period. The company also reported that comparable-store sales for its Eddie Bauer division dropped 14 percent for the four-week period and 15 percent for the 17-week period ended April 27. The shift of the Easter holiday into March this year from April last year hurt the sales comparison. Sales results in April included a decline of 9 percent at Eddie Bauer, 33 percent at Newport News and 27 percent at Spiegel Catalog. The sales decline at Newport News and Spiegel Catalog primarily reflects the effect of more-restrictive credit-granting policies implemented as these divisions look to attract and retain higher-quality credit customers.

Sales from the Group's e-commerce channel posted an 11 percent increase during the month. Total direct sales fell 22 percent, and the Group's retail store sales decreased 14 percent.

“The key here is they need to get the [stock] relisted [and] to get their credit facility done,” said Eric Beder of investment bank Ladenburg Thalman & Co., New York. “They are close to getting it done. I would hope sometime this month. The delisting is a short- term problem. But the company must sell or liquidate [its] credit division.

“They must revitalize the Eddie Bauer and Catalog divisions. With Eddie Bauer … you'll start to see better numbers in the second half [of the year]. In some cases, a majority of sales in Catalog were in credit card, so there is a big hole they will have to fill. There are also some signs of life in Eddie Bauer in terms of turning the corner.”

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