Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, September 8, 1993 TAG: 9309080126
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: From The Associated Press and staff reports
DATELINE: HENDERSON, N.C. LENGTH: Medium
"Without the Chapter 11 filing, there would be no Christmas for Rose's," said Kenneth Gassman, a securities analyst with Davenport & Co. in Richmond.
The 215-store discount chain, which has 49 stores in Virginia, will receive a $125 million loan from GE Capital Corp., subject to court approval.
"We will make solid progress rapidly as restocking of our stores should begin within a few days. We look forward to a fully stocked Christmas season," George Jones, the company's chairman and chief executive officer, said in statement.
The company closed four stores this year and 15 in 1992, said Bob Gorham, a Rose's spokesman. Gassman said he expected Rose's to close more stores in 1994.
The company does not plan to close any stores the rest of this year, said Jones. "Our object is to return existing stores to acceptable levels of profitability."
Rose's announced last month a loss of $11.6 million in the second quarter of 1993, or 62 cents per share, compared to a loss of $5.7 million in the second quarter of 1992, or 31 cents per share, Gorham said.
For the first half of 1993, Rose's suffered a loss of $10.4 million, or 56 cents per share, compared to a loss of $11.8 million, or 91 cents per share for the first half of 1992.
Support from vendors, which had been strong, eroded when those results were released Aug. 23, Jones said.
"We have had a strong relationship with our vendors and look forward to working with them in every way possible to place their products in the hands of our customers," he said.
Gassman said he visited several Rose's stores recently.
"I found empty shelves and very few customers," he said. "It was clear to me that the company was going to have to file Chapter 11 if it was going to have any merchandise on its shelves for the all-important Christmas-selling season."
The company filed for Chapter 11 protection in U.S. Bankruptcy Court in Raleigh, N.C. In a financial reorganization, the court allows companies to delay outstanding payments and often to repay only a fraction of what they owed before entering bankruptcy court.
Analysts have said that Rose's did not respond quickly enough to the challenge by stores such as Wal-Mart.
It wasn't until two years ago that the company, still controlled by the descendants of founder Paul Rose, brought in someone from outside the family to run the company.
Rose's operates Western Virginia stores in Abingdon, Bedford, Blacksburg, Pulaski, Rocky Mount, Galax, Wytheville, Richlands and Wise.
by CNB