Shocking Profit Drop for Casual Male and News on Other Financially Challenged U.S. Companies

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.

Casual Male Retail Group Inc., a Canton, Mass. apparel retailer, reported its first quarter net income plunged 91%–to $100,000. Sales fell 3%–to $108 million.

C.C. Myers Inc.’s golf course in Winchester County, Calif. was foreclosed on by Wachovia Bank. Also included in the foreclosure were 137 undeveloped lots.  C.C. Myers, a builder of highways and bridges, was unable to set up a partnership to retain ownership of the assets.

Ditech Networks Inc., a Mountain View, Calif. maker of noise-cancellation equipment, reported a fourth quarter net loss of $68.6 million on a 60% drop in revenue–to nearly $7.8 million. For the year, Ditech lost $94.7 million on a 58% decline in revenue–to $35.1 million. The results included extra charges of $1.3 million and $17.7 million in the quarter and year respectively.

Encore Acquisition Co., a Fort Worth, Texas, producer of oil and gas, retained Lehman Brothers Inc. to advise it on strategic alternatives, including putting itself up for sale.

Glenns Falls Hospital in the Albany, N.Y. area will cut sixty-five management and administrative jobs out of its workforce of 2,100. For the first four months of the year the firm had an operating deficit of nearly $1 million.

McClatchy Co., the Sacramento, Calif. newspaper company, said that ad revenue in April sank nearly 15% from the year-earlier month, largely because of weakness at its Florida and California operations. Total revenue for the month was also down almost 15%–to $192 million.

Mesa Air Group Inc., Phoenix, Ariz., saw further deterioration in its stock price after it recently warned that it could face a bankruptcy filing if it loses a regional carrier arrangement it has with Delta Air Lines Inc. Mesa is currently taking court action to prevent Delta from canceling a contract under which Mesa provides regional service. Reportedly, the Delta contract accounts for as much as 20% of Mesa’s annual revenue.

Sears Holdings Corp., Hoffman Estates, Ill., is expected to report this week that first quarter earnings tumbled 90% from the year-earlier period, with same-store sales expected to slide by about 8%.  While many retailers have seen weak first quarter results, Sears compounded its problem because it fattened its inventories in expectation that sales might actually improve. The retailer tried to use markdowns to move inventory, but at the same time Sears cut its marketing spending by about $200 million. Some observers have criticized the firm, which runs both the Sears and Kmart chains, for not responding quicker to economic conditions.

Tousa Inc., a bankrupt homebuilder, won approval from the U.S. Bankruptcy Court for an extension for filing its Chapter 11 reorganization plan until 10/25.

Vallejo, Calif., as expected, has now filed Chapter 9 in the U.S. Bankruptcy Court for the Eastern District of California. The municipality, facing serious operating challenges and a $16 million deficit, reportedly owes its biggest creditor, the California Public Employees Retirement System, $135 million.  

Westell Technologies Inc., an Aurora, Ill. manufacturer of modems and routers, reported a fourth quarter net loss of $61.5 million on a 25% drop in revenue–to $44.7 million. For the year Westell lost $65.6 million on a 20% slide in revenue–to $208 million. The quarter and year included restructuring charges of $1.9 million and $6.2 million respectively. Results were also hurt by $9.7 million in goodwill-impairment charges.

Wilsons The Leather Experts Inc., the Brooklyn Park, Minn.-based seller of wallets and other leather goods, reported a first quarter net loss of $22.4 million on a 14% drop in sales–to $36.4 million.