THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, October 8, 1994 TAG: 9410080256
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: Medium: 63 lines
Hofheimer's Inc., the Chesapeake-based chain of shoe stores that bounced back from bankruptcy, is hurting again and may be looking for another savior.
A cash-flow shortage has forced the company to cut back, President Aubrey L. Layne Jr. said. The company has shifted personnel to avoid layoffs and has cut workers' hours. It hopes to save about $750,000 annually.
There were no immediate plans for layoffs among the 550 employees in the company's 69 stores in Virginia and North Carolina.
``We believe we're going to be successful in getting capital,'' Layne said.
But if Hofheimer's doesn't get an influx of cash in the next month, he said, layoffs are possible.
Hofheimer's announced the cash-flow shortage Friday, saying it was concerned about rumors within the retail industry and among employees.
Revenue slumped 10 percent from the same time last year, Layne said, although he wouldn'trelease the exact sales figures. Last year, Hofheimer's had about $40 million in sales.
Layne blamed a combination of increased competition from discounters and department stores, and soft sales during the back-to-school season.
``People just are not buying the way they used to do,'' he said. ``If they come, we'll staff up. But I have no confidence the Christmas selling season will be any better.''
Officials would not comment on whether the chain is seeking a buyout. But three sources familiar with Hofheimer's operations said its management has met with several potential suitors, although it's not clear where those discussions stand now.
Hofheimer's financial problems resurfaced just as it had lured back many of the shoe vendors who had shied away from the company even after it emerged from court bankruptcy projection. Brand names like Evan Picone and Timberland are back on display.
The company also spent $900,000 on a computer system that tracks sales so popular shoes can be shipped quickly and kept on the shelves.
But the signs of financial strain seem similar to those that first appeared in 1991, a year before Hofheimer's filed for protection from its creditors under Chapter 11.
Recently, shoe manufacturers have begun complaining about Hofheimer's late payments. Some are holding onto their boxes of shoes.
``Some are working with us, and some are not,'' Layne said.
Hofheimer's, founded in 1885, was family-owned until it was sold for $23.5 million to the Ward White Group PLC, a British conglomerate. In 1988, Ward White sold the chain in a $29 million leveraged buyout to a management group led by Anthony V. Beechey, who had headed the shoe chain for Ward White.
After Hofheimer's filed for bankruptcy, Shore Enterprises, an Eastern Shore retail chain headed by Duncan McDuff, stepped in as a savior in 1992 and bought the company. ILLUSTRATION: STAVE EARLY/Staff file
Aubrey L. Layne Jr.
President of Hofheimer's
by CNB