GADZ...doesn't sound good---->>
Gadzooks struggling to stay in business
Thursday December 18, 3:49 pm ET
NEW YORK, Dec 18 (Reuters) - Teen clothing retailer Gadzooks Inc. (NasdaqNM:GADZ - News) is discounting aggressively in an effort to stay in business, and a J.P. Morgan analyst says the chain's failure would benefit other retailers catering to teens.
Gadzooks in July quit selling men's clothes and converted to an all-female strategy. In the subsequent quarter, sales at stores open at least a year fell 31.4 percent.
The retailer said in a regulatory filing on Tuesday that without a "substantial improvement" in operating results, it may need to seek additional funding.
And without additional funding, it may have to consider alternatives, including possible reorganization under Chapter 11 of the U.S. bankruptcy code, Gadzooks said.
Gadzooks' year-to-date losses total $34.1 million and its third-quarter cash balance was $1.72 million.
The chain is aggressively cutting prices to lure consumers and generate cash. It is currently promoting an offer for consumers to buy one item and get a second item of equal or lesser value for $5.
"A move to shut down the entire chain would be viewed by us as a small step towards the teen retail landscape becoming slightly less competitive," apart from the short-term damage that a liquidation sale might do, J.P. Morgan analyst Brian Tunick said in a research note.
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