Mrs. Fields, TCBY to get makeover as company pushes for growth across all brands

By Lisa Kerner

Charlotte, N.C., May 24 - Mrs. Fields Famous Brands LLC is now designed to allow for greater focus on areas vital to the company's growth. These areas include organic growth of each of its three brands and increasing the number of retail units and profitable sales, according to remarks made by company president and chief executive officer Steve Russo during a first-quarter earnings call on Thursday.

Russo noted that the company now reports results by three business units: Mrs. Fields, TCBY and Great American Cookies/Pretzel Time/Pretzelmaker.

Overall, first-quarter results for the company were mixed, with income from operations up $1 million, or 68%.

"We were disappointed in the continued downward trend in the net total number of our stores across all brands," Russo noted. The company is addressing issues with its franchisees, including lease expirations and reducing cost of goods sold.

The Mrs. Fields brand saw increased revenue and profit from its branded retail segment and the organization continues to improve the business model, Russo added.

A new cookie with an extended shelf life, as well as redesigned, more contemporary stores are expected to lead to growth.

"We are not pleased with the number of store closures in the Mrs. Fields business unit and hope the new cookie and new design will offset this," said Russo.

The TCBY stores will also get makeovers, with new pastel color schemes for a fresher, healthier feel.

At March 31, Mrs. Fields had $5.7 million of cash on hand, according to a 10-Q filing with the Securities and Exchange Commission.

During the next 12 months, the company expects its principal uses of cash will be for working capital, capital expenditures and semi-annual interest payments of $10.3 million on its 9% senior secured notes and 11½% senior secured notes.

Mrs. Fields is highly leveraged, with $195.7 million of long-term debt at the end of the first quarter .

The company said it has implemented plans to reduce operating costs, including its management reorganization plan. The cash currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next 12 months, the filing stated.

Mrs. Fields, based in Salt Lake City, has 2,100 franchised and licensed concept locations worldwide.

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