Manny, Moe and Jack's Income Gets Gassed and News on Other Financially Challenged U.S. Companies for June 12

The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

Albertson’s LLC, a Boise, Idaho-based supermarket company, wants to cut 121 jobs at its warehouse and transportation operations in Plant City, Fla. The retailer recently announced it will sell forty-nine stores in Florida to Publix Super Markets Inc., a privately-held Lakeland, Fla. supermarket operator, for an undisclosed amount.

Chrysler LLC’s CEO, Robert Nardelli, warned that the automaker may reduce production further in the wake of a sharp drop in truck sales. Last month Chrysler’s sales in the U.S. plunged 25% from the year-earlier month partly because of a drop in sales of its Dodge Ram pickups. The company is looking at an option of trying to sell the Rams in overseas markets.

Gap Inc., the San Francisco, apparel retailer, said that it will shutter a small number of its standalone GapKids, GapBody and babyGap stores as part of a test consolidation of the Gap brand in a move to reduce square footage of retail space. That move is part of a broader plan to reconfigure its 3,100 stores to get right size and locations of its outlets. Gap, which also operates the Old Navy and Banana Republic chains, said that benefits from its consolidation could start coming next year.

Hooker Furniture Corp., Martinsville, Va., reported its first quarter net income declined 39%–to $2.6 million. Revenue declined 8%–to $71 million.

Interstate Bakeries Corp., the bankrupt Kansas City, Mo. maker of baked goods, closed on an amended and restated debtor-in-possession revolving credit facility to replace an earlier arrangement that had been scheduled to expire 6/2. The maturity date of the arrangement was extended and the amount under the agreement was increased from $200 million to nearly $250 million.

Legend Homes, a big homebuilder in Oregon, filed Chapter 11, following a series of expansion-minded land investments that were poorly timed. The company, which bought up properties in Oregon and California during the housing boom, listed assets and liabilities of between $100 million and $500 million each.

Lennar Corp.’s issuer default rating, senior unsecured rating and unsecured bank credit facility rating were lowered by Fitch Ratings from BBB to BBB-. In addition, Fitch lowered Lennar’s short-term IDR and commercial-paper rating from F2 to F3. Fitch also gave a negative outlook for the Miami-based homebuilder.

Luby’s Inc., a Houston, operator of cafeterias, reported its third quarter net income sank 76%–to $950,000, including extra charges of $114,000. Sales slipped 2%–to $74.6 million, including a 3% slide in same-store sales. The company’s results were hurt by crimped consumer spending and higher costs.

Pep Boys-Manny, Moe & Jack, the Philadelphia, based retailer of auto parts, reported its first quarter net income surged 47%–to $4.7 million, including a $5.5 million gain from a property sale/leaseback deal. Total sales fell 8%–to $498 million, and same-store sales fell 5.6%. The retailer has been engineering a turnaround by cutting costs at the same time as it overhauls its merchandise, shuts down underperforming stores and adds smaller neighborhood shops.

Perkins & Marie Callender’s Inc., a Memphis, Tenn. restaurant chain, reported a widened first quarter net loss of $7.6 million, more than double its loss in the year-earlier period. Sales rose 2%–to $182 million, thanks to opening eleven new eateries. Perkins, earlier known as The Restaurant Co., cited high costs for wages and commodities.

Sonic Solutions Inc., a Novato, Calif. producer of digital media production software, reported fourth quarter net income of $480,000, an improvement over its more than $800,000 loss in the year-earlier period. Revenue declined 8%–to $35 million. For the year, Sonic lost $5.5 million on an 11% revenue decline–to $133 million. The fiscal results included restructuring charges of nearly $3.2 million.

Thomas Built Buses, a unit of Daimler Trucks North America, announced that it will reduce its payroll by 190 workers at its operations in North Carolina, amid declining in bus orders. Back in April, Daimler Trucks, earlier known as Freightliner Co., announced plans to cut 1,300 jobs in North Carolina.

Westaff Inc., a Walnut Creek, Calif. staffing company, reported a widened second quarter net loss of $25.3 million, compared to a $660,000 loss in the year-earlier period. The recent results included a tax expense of more than $20 million. Revenue fell 14%–to $103 million, hurt by a drop in business in the U.S., although Westaff saw increased revenue at its New Zealand and Australian operations. Westaff added that it’s in default on a $50 million financing agreement with U.S. Bank.