Body Central Corp. on Tuesday reported a fourth-quarter net loss, which was not a surprise, but the fashion retailer also said its cash flow problems are raising questions about its future and is postponing a planned move to a new North Jacksonville headquarters.
Body Central last year began renovation work on a 400,000-square-foot headquarters and distribution center at One Imeson Center, and the City Council approved $1.39 million in city and state incentives to help the company move from its current 179,000-square-foot headquarters at 6225 Powers Ave. on the Southside.
However, during the company’s quarterly conference call Tuesday, Chief Operating Officer and Chief Financial Officer Tom Stoltz said Body Central won’t move into the Imeson facility as planned this year because it can’t afford the additional capital and operating expenses.
“We will not do any more work on the distribution center in 2014. We won’t be moving into that new facility and that includes the office as well,” he said.
In response to questions about the plans, Stoltz said by email that the company will continue to pay rent on the new facility and it does plan to move there in 2015.
He also said the company has not yet received any of the incentive money.
Body Central on Tuesday reported a fourth-quarter net loss of $23.3 million, or $1.42 a share, its third straight quarterly loss.
“The net loss for the quarter and the year, along with a negative cash flow from operations, have had a negative impact on our liquidity and raised substantial doubt about our ability to continue as a going concern,” CEO Brian Woolf said in the conference call.
The “going concern” message is a standard legal disclaimer that public companies use when they experience financial problems. However, other than that statement, company officials did not signal any other danger signs and said they are taking steps to turn around the business.
“We have taken actions to increase our liquidity which we believe should be adequate to finance our working capital needs through 2014, if we are successful in executing our business plan,” Woolf said.
Actions already taken include cutting 10 positions “largely related to the delay of some capital projects,” Stoltz said.
He also said Body Central has closed 12 stores so far this year and plans to close five more. The company had a net increase of 18 stores in 2013, bringing its total to 294 at year-end.
Woolf joined Body Central a year ago to try and turn around a severe sales slump that began in the spring of 2012. He reiterated Tuesday that the company had been too focused on younger customers.
“We believe that we need to provide an assortment, with a better balance of fashion and core merchandise, to appeal to a broader customer base and bring back the mid-20s to mid-30s customers that we catered to during our periods of peak performance,” he said.
However, the company has a long way to go. Total fourth-quarter revenue, including in-store and online sales, dropped 18.3 percent to $66.2 million. Comparable-store sales (sales at stores open more than one year) plunged by 26 percent.
“Looking ahead to our first quarter, which is now substantially complete as of this date, sales trends have remained tough, with comparable sales trending down at a similar rate for the fourth quarter,” Stoltz said.
Woolf said the company had been looking for better results in the fourth quarter.
“While we have come a long way in the last year in building the team, the processes and procedures that we believed will help us grow our business, the retail environment remains extremely challenging, which increases the difficulty of a turnaround,” he said.
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