From Home Furnishing Business
Bombay Form 10-K Raises Doubt
By Home Furnishings Business in Furniture Retailing on May 2007
The Bombay Co. Inc., Ft. Worth, Texas, announced Friday that it has filed its Form 10-K with the Securities and Exchange Commission, in which it expects a loss for fiscal 2007. The report included a statement from its independent accounting firm raising substantial doubt about the retailers ability to continue as a going concern.
The company had disclosed the possibility of such an opinion in an April 20 filing with the SEC.
In the second quarter of fiscal 2006, Bombay undertook a program to reduce expenses, increase revenue, and improve liquidity. While the company has successfully reduced expenses since undertaking the program, it hasnt reversed declining sales.
Management has identified a series of additional activities that it believes will be critical to returning to profitability and positive cash flow, inlcuding reducing inventory levels and returning to historical levels of inventory turnover, exiting its dedicated BombayKIDS business and improving the productivity of the square footage previously dedicated to it, closing selected underperforming stores, enhancing its merchandise assortment, allocation and presentation and other initiatives, some of which would require capital over the next three to five years.
The company is currently in negotiations with potential lenders on a supplemental facility that would provide additional liquidity.
To address those challenges, Bombay has already engaged the investment banking firm William Blair & Co., and is evaluating a range of strategic alternatives that include continuing as an independent public company; seeking a strategic partner or acquirer; seeking a financial partner to make a substantial equity investment; or some combination of the foregoing.
In April 2007, a confidential descriptive memorandum was distributed to potentially interested investors and the company is aggressively pursuing options. Bombay does not expect to disclose further developments regarding the process until the review of strategic alternatives has been completed.
The Bombay Co. Inc. designs, sources and markets home accessories, wall decor and furniture through more than 400 retail outlets and through its Web site, www.bombaycompany.com.