UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
--------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-24178
--------------
BEST PRODUCTS CO., INC.
(Exact name of registrant as specified in its charter)
Virginia 54-0853592
(State or other jurisdiction (I. R. S. Employer Identification No.)
of incorporation or organization)
1400 Best Plaza, Richmond, Virginia 23227-1125
(Address of principal executive offices) (Zip Code)
(804) 261-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of August 30, 1996, the registrant had 31,019,969 common shares
outstanding. Additionally 322,360 common shares will be issued upon the
settlement of certain claims which are currently unresolved.
<PAGE>
BEST PRODUCTS CO., INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1: Financial Statements Pages
Statements of Operations for the thirteen weeks ended August 3, 1996 and July 29, 1995 3
Statements of Operations for the twenty-six weeks ended August 3, 1996 and July 29, 1995 4
Balance Sheets as of August 3, 1996 and February 3, 1996 5
Statements of Cash Flows for the twenty-six weeks ended August 3, 1996 and July 29, 1995 6
Notes to Financial Statements 7-8
ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings 12
ITEM 3: Defaults Upon Senior Securities 12
ITEM 4: Submission of Matters to a Vote of Security Holders 12
ITEM 6: Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE>
BEST PRODUCTS CO., INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen weeks ended
----------------------------------------------------
August 3, July 29,
1996 1995
------------------ -------------------
(Dollar amounts in thousands, except per share amounts)
<S> <C>
Net sales $ 267,963 $ 311,841
Cost of goods sold 210,578 237,378
------------- -------------
Gross margin 57,385 74,463
Selling, general and administrative expenses 76,296 78,648
Depreciation and amortization 5,297 3,634
Interest expense, net 7,313 4,101
------------- -------------
Loss before income tax benefit (31,521) (11,920)
Income tax benefit - 4,769
------------- -------------
Net loss $ (31,521) $ (7,151)
============= ==============
Net loss per common share $ (1.01) $ (0.23)
============= ==============
Weighted average common shares outstanding 31,342,329 31,630,029
============= ==============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
BEST PRODUCTS CO., INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six weeks ended
----------------------------------------------------
August 3, July 29,
1996 1995
------------------ -------------------
(Dollar amounts in thousands, except per share amounts)
<S> <C>
Net sales $ 537,754 $ 584,600
Cost of goods sold 422,188 443,545
------------- -------------
Gross margin 115,566 141,055
Selling, general and administrative expenses 156,073 150,860
Depreciation and amortization 10,800 7,252
Interest expense, net 14,859 8,295
------------- -------------
Loss before income tax benefit (66,166) (25,352)
Income tax benefit - 10,142
------------- -------------
Net loss $ (66,166) $ (15,210)
============= ==============
Net loss per common share $ (2.11) $ (0.48)
============= ==============
Weighted average common shares outstanding 31,342,219 31,645,369
============= ==============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
BEST PRODUCTS CO., INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
August 3, February 3,
1996 1996
--------------- --------------
(Dollar amounts in thousands)
(Unaudited)
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,580 $ 29,003
Merchandise inventories 467,281 481,847
Other current assets 23,244 19,796
---------------- ----------------
Total current assets 492,105 530,646
Property and equipment, net 168,674 173,239
Other assets, net 9,144 12,755
---------------- ----------------
Total Assets $ 669,923 $ 716,640
================ ================
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 68,662 $ -
Current maturities of long-term debt
and capital lease obligations 22,820 20,895
Accounts payable 105,167 128,834
Accrued expenses and other 44,236 44,426
Accrued insurance 11,857 10,870
Accrued restructuring charges 16,408 28,400
---------------- ----------------
Total current liabilities 269,150 233,425
Long-term debt 119,571 129,833
Capital lease obligations 77,500 83,312
Other liabilities 14,634 14,996
---------------- ----------------
Total Liabilities 480,855 461,566
---------------- ----------------
Stockholders' Equity
Common stock 31,342 31,345
Additional paid-in capital 297,646 297,643
Accumulated deficit (136,740) (70,574)
---------------- ----------------
192,248 258,414
Loans under Stock Purchase Loan Plan (3,180) (3,340)
---------------- ----------------
Total Stockholders' Equity 189,068 255,074
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 669,923 $ 716,640
================ ================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
BEST PRODUCTS CO., INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six weeks ended
---------------------------------
August 3, July 29,
1996 1995
--------------- ---------------
(Dollar amounts in thousands)
<S> <C>
Cash Provided By (Used For):
Operating Activities
Net loss $ (66,166) $ (15,210)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 10,800 7,252
Deferred income taxes - (10,142)
Deferred finance cost amortization 2,729 -
Changes in operating assets and liabilities:
Merchandise inventories 14,566 (10,165)
Other current assets 445 (8,800)
Accounts payable (23,667) 17,809
Accrued expenses and other (9,034) (13,284)
Other, net 3,347 (1,186)
---------------- --------------
Net cash used for operating activities (66,980) (33,726)
---------------- --------------
Investing Activities
Purchases of property and equipment (8,633) (14,406)
Proceeds from sales of property and equipment 891 109
Other investing activities (780) (4,994)
---------------- --------------
Net cash used for investing activities (8,522) (19,291)
---------------- --------------
Financing Activities
Short-term borrowings, net 68,662 -
Net payments on capital lease obligations (5,505) (3,683)
Payments on long-term debt (8,456) (1,135)
Payments for deferred financing costs and other (6,622) -
---------------- --------------
Net cash provided by (used for) financing activities 48,079 (4,818)
---------------- --------------
Decrease in cash and cash equivalents (27,423) (57,835)
Cash and cash equivalents at beginning of period 29,003 136,770
---------------- --------------
Cash and cash equivalents at end of period $ 1,580 $ 78,935
================ ==============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
BEST PRODUCTS CO., INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Company
Best Products Co., Inc. (the "Company") is a specialty retailer
offering category-dominant assortments of jewelry and home furnishings and
operates 169 stores in 23 states. The home furnishings category includes
ready-to-assemble furniture, housewares/tabletop, leisure/juvenile/fitness and
electronics.
2. Opinion of Management
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring accruals and
accounting estimates) considered necessary to present fairly the Company's
financial position as of August 3, 1996 and February 3, 1996 and its results of
operations for the thirteen and twenty-six weeks ended August 3, 1996 and July
29, 1995 and its cash flows for the twenty-six weeks ended August 3, 1996 and
July 29, 1995. The accompanying unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all disclosures normally required by generally accepted accounting principles
nor those normally disclosed in the annual financial statements; however,
management considers the disclosures adequate to make the information presented
not misleading.
The accompanying financial statements should be read in conjunction
with the annual financial statements and notes thereto filed in the Company's
annual report on Form 10-K for the fiscal year ended February 3, 1996.
3. Contingencies
Due to the continuing decline in sales and earnings and the
deterioration of vendor support, the Company is reviewing all options available
to it. A filing for relief under chapter 11 of Title 11 of the United States
Bankruptcy Code may be imminent. The Company has suspended certain payments to
vendors and suppliers and has stopped receiving certain merchandise shipments.
The financial statements have been prepared on a going concern basis of
accounting which assumes continuity of operations and the realization of assets
and liquidation of liabilities in the ordinary course of business. Such
financial statements, consequently, do not reflect any adjustments that may
result should the Company be unable to continue as a going concern. The
continued appropriateness of the Company's use of the going concern basis is
dependent upon, among other things, its ability to comply with current financing
agreements, its ability to achieve profitable operations as a result of attempts
to restructure the business, and its ability to generate sufficient cash from
operations to meet its obligations.
If the Company is involved in a bankruptcy proceeding, it may sell or
otherwise realize proceeds upon disposition of assets and liquidate or settle
liabilities for amounts other than those reflected in the financial statements.
Further, a plan of reorganization could materially change the amounts currently
recorded in the financial statements. The financial statements do not give
effect to any adjustment to the value of assets, or amounts and classifications
of liabilities that might be necessary as a consequence of these matters.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS".
4. Interim LIFO Estimates
Quarterly estimates of the last-in, first-out ("LIFO") provision are
based on estimates of year-end inventory levels, the inflation rate, purchases
and sales for a fiscal year.
5. Per Share Information
Per share amounts have been computed based upon the weighted average
shares of common stock currently outstanding. Stock options and warrants issued
are not considered for purposes of computing per share amounts since their
effect would be anti-dilutive.
6. Seasonality
Operating results are subject to significant seasonal fluctuations. Net
earnings (loss) of any quarter are seasonally disproportionate to sales since
many operating expenses are relatively constant throughout a year. As a
consequence, interim results should not be relied upon as necessarily indicative
of results for any entire year.
7
<PAGE>
BEST PRODUCTS CO., INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. Accrued Restructuring Charges
During the fourth quarter of fiscal 1995, the Company decided to close
10 underperforming stores, exit unprofitable merchandise categories and
terminate or assign the leases for nine stores previously intended to open
during 1996 and 1997. Some of the costs associated with these activities were
recorded as accrued restructuring charges, which had a balance of $28.4 million
as of February 3, 1996. In addition, a $6.1 million reserve for inventory
disposition losses was reflected as a reduction of merchandise inventories as of
February 3, 1996. Approximately $1.1 million of the $35.6 million restructuring
charge was paid in fiscal year 1995. Amounts applied to accrued restructuring
charges and the inventory loss reserve for the first and second quarters of
fiscal 1996 include the following:
<TABLE>
<CAPTION>
Charges for Charges for
thirteen thirteen
Balance at weeks ended weeks ended Balance at
February 3, May 4, August 3, August 3,
1996 1996 1996 1996
--------------- --------------- --------------- ---------------
(Dollar amounts in thousands)
<S> <C>
Inventory disposition losses $ 12,000 $ 31 $ 2,690 $ 9,279
Fixed asset disposition costs 8,500 - 3,108 5,392
(primarily non-cash)
Settlement of lease obligations 6,600 850 1,620 4,130
Real estate carrying costs 4,800 588 2,523 1,689
Termination benefits 2,050 699 477 874
Other 550 150 - 400
--------------- --------------- --------------- ---------------
Total $ 34,500 $ 2,318 $ 10,418 $ 21,764
=============== =============== =============== ===============
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Due to the continuing decline in sales and earnings and the
deterioration of vendor support, the Company is reviewing all options available
to it, including the filing for relief under chapter 11 of Title 11 of the
United States Bankruptcy Code. The Company has suspended certain payments to
vendors and suppliers and has stopped receiving certain merchandise shipments.
See "NOTES TO FINANCIAL STATEMENTS - 3. Contingencies".
As of August 3, 1996, the Company's cash and cash equivalents were $1.6
million compared to $29.0 million as of February 3, 1996. Net cash used for
operating activities was approximately $67.0 million for the twenty-six weeks
ended August 3, 1996 compared to a use of $33.7 million for the same period of
fiscal 1995. The decrease in cash and the higher use of cash is primarily
attributed to the decline in same store sales and margin during the first half
of fiscal 1996, the recent deterioration of vendor support, and normal seasonal
trends in cash balances and capital expenditures.
Seasonality. As a retailer, the Company's business is very seasonal,
with approximately 34% of its annual net sales occurring in the nine-week period
of November and December. As a result, substantially all of the Company's
operating earnings, if any, occur in the fourth fiscal quarter. Similar to many
other retailers, the Company's performance is sensitive to the overall U.S.
economic cycle and related economic conditions which influence consumer trends
and spending patterns. Net earnings (loss) for any quarter are seasonally
disproportionate to net sales since many operating expenses are relatively
constant throughout the fiscal year. As a consequence, interim results should
not be relied upon as necessarily indicative of results for an entire fiscal
year.
Working Capital Facility. The Company has an agreement for a $300.0
million revolving credit facility (the "1996 Working Capital Facility"). The
1996 Working Capital Facility is used to support general corporate and working
capital requirements and to issue import and standby letters of credit. The 1996
Working Capital Facility is scheduled to expire on August 6, 1997 and bears
interest at 1.0% over the prime rate or, at the Company's option, 3.0% over the
Eurodollar rate. The 1996 Working Capital Facility is secured by a first and
exclusive lien on all unencumbered assets of the Company, including inventory
and general intangibles. As of August 3, 1996, the Company had outstanding
borrowings and letters of credit in the amount of $68.7 million and $71.7
million, respectively. The availability of loans under the 1996 Working Capital
Facility is governed by a weekly borrowing base calculation with an effective
advance rate of approximately 50% of eligible inventory as defined under the
agreement. There is a $100.0 million sublimit for the issuance of letters of
credit. Financial covenants include (i) minimum cumulative operating performance
as defined in the agreement, (ii) minimum and maximum levels of inventory and
(iii) limitations on capital expenditures. Other restrictions include
limitations on (i) the amount of indebtedness, (ii) the sale of certain assets,
(iii) the opening and closing of stores, (iv) dividends or other distributions
of assets to stockholders, (v) the acquisition of capital stock and (vi) the
creation of liens on Company assets.
As of September 23, 1996, the date of this filing, the Company was in
compliance with the above covenants. However, the Company believes it is at risk
in the short term of defaulting on certain covenants.
Summary. The Company's liquidity has been adversely affected by the
continued decline in sales and earnings, and the deterioration of vendor
support. The Company believes that cash, cash equivalents and cash provided by
operations will not be sufficient to meet the Company's needs for working
capital. Although the Company is currently in compliance with the covenants
under the 1996 Working Capital Facility, the remaining borrowing capacity under
that facility is inadequate to meet the Company's needs for additional cash,
and, in any event, the Company expects it will be in default in the near future.
The Company is evaluating all options available to it but believes that filing
for relief under chapter 11 of Title 11 of the United States Bankruptcy Code may
be imminent.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the results of operations for the
thirteen and twenty-six weeks ended August 3, 1996 and July 29, 1995, expressed
in dollars and as a percentage of net sales:
<TABLE>
<CAPTION>
(Unaudited)
Thirteen weeks ended Twenty-six weeks ended
-------------------------------------------------- ----------------------------------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
----------------------- ---------------------- ----------------------- -------------------
(Dollar amounts in millions, except per share amounts)
<S> <C>
Net sales $ 268.0 100.0% $ 311.8 100.0% $ 537.8 100.0% $ 584.6 100.0%
Cost of goods sold 210.6 78.6% 237.3 76.1% 422.2 78.5% 443.5 75.9%
--------------- ----- --------------- ----- --------------- ----- --------- -----
Gross margin 57.4 21.4% 74.5 23.9% 115.6 21.5% 141.1 24.1%
Selling, general and
administrative expenses 76.3 28.5% 78.7 25.2% 156.1 29.0% 150.9 25.8%
Depreciation and
amortization 5.3 2.0% 3.6 1.2% 10.8 2.0% 7.2 1.2%
Interest expense, net 7.4 2.7% 4.1 1.3% 14.9 2.8% 8.3 1.4%
--------------- ----- --------------- ----- --------------- ----- --------- -----
Loss before income
tax benefit (31.6) (11.8)% (11.9) (3.8)% (66.2) (12.3)% (25.3) (4.3)%
Income tax benefit - 0.0% 4.8 1.5% - 0.0% 10.1 1.7%
--------------- ----- --------------- ----- --------------- ----- --------- -----
Net loss $ (31.6) (11.8)% $ (7.1) (2.3)% $ (66.2) (12.3)% $ (15.2) (2.6)%
=============== ===== =============== ===== =============== ===== ========== =====
Net loss per common
share $ (1.01) $ (0.23) $ (2.11) $ (0.48)
=============== =============== =============== =========
Weighted average common
shares outstanding 31,342,329 31,630,029 31,342,219 31,645,369
=============== =============== =============== ==========
</TABLE>
Comparison of thirteen and twenty-six weeks ended August 3, 1996 and
July 29, 1995
Net sales. Net sales for the thirteen and twenty-six weeks ended August
3, 1996 decreased $43.8 million and $46.8 million, respectively, primarily due
to 16.1% and 11.6% decreases in same store sales compared to the same periods of
fiscal 1995. The Company attributes most of the decrease in same store sales to
a weaker promotional program and competitive market pressures.
Gross margin. Gross margin decreased $17.1 million and $25.5 million
for the second quarter and first half of fiscal 1996, respectively, compared to
the same periods of fiscal 1995. This decrease is primarily due to lower same
store sales and lower margin rates experienced in conjunction with the exiting
of selected categories of merchandise and a higher percentage of sales occurring
at promotional prices.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased to 28.5% and 29.0% of sales for the second
quarter and first half of fiscal 1996, respectively, compared to 25.2% and 25.8%
for the same periods of fiscal 1995. The increase is primarily due to lower same
store sales and higher expenses associated with 15 new stores that opened in the
later part of fiscal 1995. Expenses were reduced by $3.5 million in the second
quarter of fiscal 1996 compared to the first quarter of fiscal 1996.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Depreciation and amortization. Depreciation and amortization expense
increased $1.7 million for the second quarter and $3.6 million for the first
half of fiscal 1996 over the same periods of fiscal 1995. The increases are
primarily attributable to depreciation on 15 new stores placed in service in the
later part of fiscal 1995.
Interest expense, net. Interest expense, net increased $3.3 million for
the second quarter and $6.6 million for the first half of fiscal 1996 over the
same periods of fiscal 1995. The increase is due primarily to interest expense
on short-term borrowings in the first half of fiscal 1996 and deferred financing
costs under the Company's 1996 Working Capital Facility. See "--LIQUIDITY AND
CAPITAL RESOURCES".
Income tax benefit. No current or deferred income tax expense or
benefit was recorded for the second quarter and first half of fiscal 1996 due to
the uncertainty regarding the ability of the Company to realize pretax income
for fiscal 1996. Income tax benefits of $4.8 million and $10.1 million were
recognized for the second quarter and first half of fiscal 1995, respectively,
in anticipation of the Company earning income for fiscal 1995.
Net loss and net loss per share. The Company's net loss for the
thirteen weeks ended August 3, 1996 was $31.6 million or $1.01 per share
compared to a net loss of $7.1 million or $.23 per share for fiscal 1995. The
Company's net loss for the twenty-six weeks ended August 3, 1996 was $66.2
million or $2.11 per share compared to a net loss of $15.2 million or $.48 per
share for fiscal 1995. The increased loss is attributed primarily to the
decrease in same store sales, lower gross margin rates, and higher interest,
depreciation and amortization during the first half of fiscal 1996 compared to
the same period of fiscal 1995, and higher selling, general and administrative
expenses in the first quarter of fiscal 1996 compared to the first quarter of
fiscal 1995.
11
<PAGE>
BEST PRODUCTS CO., INC.
Part II - Other Information
ITEM 1: Legal Proceedings
On September 18, 1996, Sharp Electronics filed a complaint in the U.S.
District Court for the Eastern District of Virginia (the "Court") seeking
reclamation, injunctive and other relief relating to certain products shipped to
the Company and for which payment has not been made. On September 20, 1996, the
Court ordered the Company to escrow the proceeds from the sale of certain
products shipped by Sharp Electronics Corporation to preserve the status quo
pending trial, which is scheduled for September 26, 1996. On September 20, 1996,
another of the Company's vendors, O'Sullivan Industries, Inc., filed a similar
complaint with the court, and on September 23, 1996 the court entered an order
similar to that described above. The Company has received reclamation claims
from numerous other vendors as well and expects that additional suits will be
filed shortly.
ITEM 3: Defaults Upon Senior Securities
As of September 23, 1996, the date of this filing, the Company was in
compliance with the covenants under the 1996 Working Capital Facility. However,
the Company believes it is at risk in the short term of defaulting on certain
covenants. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES".
ITEM 4: Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held on August 22, 1996 to elect
seven directors to hold office until the next Annual Meeting of Shareholders is
held and their successors are elected. The following directors were elected as
follows:
Votes For Votes Withheld
---------------- -----------------
Daniel H. Levy 27,049,524 172,522
Donald D. Bennett 26,933,533 288,513
Margaret A. McKenna 26,932,638 289,408
Robert E. Northam 26,920,057 301,989
Robert A. O'Connell 26,936,043 286,003
Denis J. Taura 26,917,299 304,747
Marshall B. Wishnack 26,925,996 296,050
ITEM 6: Exhibits and Reports on Form 8-K
a. Exhibits
None.
b. Reports on Form 8-K
1. A Current Report on Form 8-K for June 18, 1996 was filed with the
Securities and Exchange Commission on June 18, 1996 to report, under item 5, a
discussion of strategic initiatives for 1996.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEST PRODUCTS CO., INC.
Date: September 23, 1996 /s/ Daniel H. Levy
------------------
Daniel H. Levy
Chairman and Chief Executive Officer
(Duly authorized officer)
September 23, 1996 /s/ Sharyn P. Hunt
------------------
Sharyn P. Hunt
Vice President and Controller
(Principal accounting officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> AUG-03-1996
<CASH> 1,580
<SECURITIES> 0
<RECEIVABLES> 8,776
<ALLOWANCES> 676
<INVENTORY> 467,281
<CURRENT-ASSETS> 492,105
<PP&E> 197,586
<DEPRECIATION> 28,912
<TOTAL-ASSETS> 669,923
<CURRENT-LIABILITIES> 269,150
<BONDS> 197,071
0
0
<COMMON> 31,342
<OTHER-SE> 157,726
<TOTAL-LIABILITY-AND-EQUITY> 669,923
<SALES> 537,754
<TOTAL-REVENUES> 537,754
<CGS> 422,188
<TOTAL-COSTS> 422,188
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,859
<INCOME-PRETAX> (66,166)
<INCOME-TAX> 0
<INCOME-CONTINUING> (66,166)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,166)
<EPS-PRIMARY> (2.11)
<EPS-DILUTED> (2.11)
</TABLE>
