Coldwater Creek bankruptcy filing expected soon
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Posted: Tuesday, April 8, 2014 10:00 am
By CAMERON RASMUSSON Staff writer | 9 comments
www.bonnercountydailybee.com
SANDPOINT — Uncertainty is rising and stock prices are falling at Coldwater Creek as business reporters and insiders are predicting the company will soon file for bankruptcy.
In an article published March 31, The Wall Street Journal reported that the Sandpoint-based women’s clothing retailer was preparing to file bankruptcy-court protection in light of its many financial struggles. The information originated from unnamed sources identified only as “people familiar with the matter.”
The questions only increased Monday when Bloomberg News published an article indicating officials are planning to liquidate its assets after a bankruptcy filing is complete. The news publication also attributed its information to unnamed sources.
Company officials have remained silent following the news reports, even when stock prices nose-dived as publications picked up the story. Stock value fell last Monday from around $0.80 per share to $0.16. Later in the week, it crept upward, nearing $0.40 Thursday before declining yet again. Prices finished out Monday sitting at $0.20.
Coldwater Creek employees said the reports have provoked a great deal of in-office anxiety and speculation. Either way, they anticipate having a clearer idea of the company’s plans by Wednesday.
Quiet corporate leadership isn’t the only thing the experts are finding worrisome. According to stock analyst Jeff Van Sinderen of B. Riley and Co., the company has not yet released Q4 earnings, which typically arrive toward the end of March. With company liquidity and cash flow a major problem and few options readily apparent for the company, B. Riley terminated its coverage of Coldwater Creek.
Too many underperforming and overhead-creating retail locations headed up Van Sinderen’s concerns in his final Coldwater Creek report. According to plans announced at the end of Q3, the company intended to close between 10 and 15 retail locations in the 2014 fiscal year. B. Riley analysts, on the other hand, saw the need for much more aggressive cost-cutting plans.
“In our opinion, there may be some value in the brand and direct business, but one way or another, the real estate issues need to be resolved,” Van Sinderen’s report states.
“Since the company has not completed a financial restructuring, at this juncture, closing stores would be facilitated under bankruptcy,” he later added.
In October, Coldwater Creek attempted to cut costs by reducing 20 percent of its corporate workforce expenses. The action occurred following an announcement that officials were exploring strategic alternatives, including the potential sale of the company. Based on the latest news reports, however, many believe strategic restructuring efforts failed to bear fruit.
