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Monday, November 10, 2003 11:36:46 AM
Anyone think we got it bad check out FAOO on a 1 week chart
FAO, Inc.
Quick Quote
Last 1.35
Change -0.38
% Change -21.97%
Previous Close 1.73
Day's Low 1.25
Day's High 1.77
Volume 773,214
UPDATE 2-FAO says gets default notice from lenders
November 10, 2003 10:36:00 AM ET
(Recasts, adds analyst comment, stock quote)
CHICAGO, Nov 10 (Reuters) - FAO Inc. (FAOO), the parent of FAO Schwarz toy stores, said on Monday it received notification from its lenders that it was in default, after it asked for more money to finance the holiday sales season.
The lenders said they no longer consider themselves obligated to make further loans or extend letters of credit, FAO said. The retailer said it was in discussions with the lenders but could give no assurances that the talks would be successful.
Shares of FAO tumbled 31 cents, or 17.9 percent, to $1.42 in morning trade on the Nasdaq.
"FAO sales are declining, meaning one source of capital is insufficient, and supplier credit from vendors was probably insufficient before today," said Richard Hastings, retail analyst with Bernard Sands, which advises vendors.
"Now they have no commitment from their banks, and that puts an end to vendor credit," he said. "Another bankruptcy filing is a possibility."
A spokesman for an outside public relations firm representing FAO was not immediately available to comment.
The company said on Friday that unless sales picked up it would not have enough liquidity to operate normally in November, the start of the holiday shopping season, typically the most important period of the year for toy retailers.
It also asked its banks for more money, and said the request for an overadvance might lead to a notice of default. An overadvance is a loan in advance of sales that allows a company to build inventory ahead of peak sales periods.
FAO, which also owns Zany Brainy and Right Start stores, said on Friday it was considering selling the company and needed more money after initial holiday sales came in well below its expectations. The company said it asked some vendors to reduce shipments and that it wants most of them to extend payment dates until the first of the year. REUTERS
FAO, Inc.
Quick Quote
Last 1.35
Change -0.38
% Change -21.97%
Previous Close 1.73
Day's Low 1.25
Day's High 1.77
Volume 773,214
UPDATE 2-FAO says gets default notice from lenders
November 10, 2003 10:36:00 AM ET
(Recasts, adds analyst comment, stock quote)
CHICAGO, Nov 10 (Reuters) - FAO Inc. (FAOO), the parent of FAO Schwarz toy stores, said on Monday it received notification from its lenders that it was in default, after it asked for more money to finance the holiday sales season.
The lenders said they no longer consider themselves obligated to make further loans or extend letters of credit, FAO said. The retailer said it was in discussions with the lenders but could give no assurances that the talks would be successful.
Shares of FAO tumbled 31 cents, or 17.9 percent, to $1.42 in morning trade on the Nasdaq.
"FAO sales are declining, meaning one source of capital is insufficient, and supplier credit from vendors was probably insufficient before today," said Richard Hastings, retail analyst with Bernard Sands, which advises vendors.
"Now they have no commitment from their banks, and that puts an end to vendor credit," he said. "Another bankruptcy filing is a possibility."
A spokesman for an outside public relations firm representing FAO was not immediately available to comment.
The company said on Friday that unless sales picked up it would not have enough liquidity to operate normally in November, the start of the holiday shopping season, typically the most important period of the year for toy retailers.
It also asked its banks for more money, and said the request for an overadvance might lead to a notice of default. An overadvance is a loan in advance of sales that allows a company to build inventory ahead of peak sales periods.
FAO, which also owns Zany Brainy and Right Start stores, said on Friday it was considering selling the company and needed more money after initial holiday sales came in well below its expectations. The company said it asked some vendors to reduce shipments and that it wants most of them to extend payment dates until the first of the year. REUTERS
If you don't have the time to do something right, where are you going to find the time to fix it?
-Stephen King
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