Gymboree, Toys ‘R’ Us bonds rise despite wider losses; Logan’s Roadhouse debt gives back gains

By Stephanie N. Rotondo

Phoenix, June 12 – The distressed debt market ended on the softer side Thursday, but some news-driven names managed to buck that trend.

Gymboree Corp. and Toys ‘R’ Us Inc. reported earnings during the day. Though both companies reported a wider loss for the first fiscal quarter, their bonds actually managed to close in higher territory.

Gymboree bonds, for instance, were up as much as 4 points on the day, while Toys ‘R’ Us put on as much as 5 points. For its part, Toys ‘R’ Us did see a gain in same-store sales.

Gymboree reports wider loss

A trader said Gymboree’s 9 1/8% notes due 2018 were “rallying” after the company reported quarterly results.

He saw the notes closing at “71 and change.”

Another trader called the issue up 4 points, also in a 71 context.

For the first fiscal quarter ended May 3, the San Francisco-based retailer reported net sales of $272 million, down from $292.8 million the year before. Same-store sales were meantime down 10%, including online sales.

Net loss was $13.4 million, which compared to a loss of $2.5 million for the same quarter of fiscal 2013.

During the quarter, the company burned through $14.6 million of cash, leaving it with $24.8 million in its coffers.

The company also had $128 million available under its various credit facilities.

Gymboree also provided guidance for fiscal 2014, stating that it expects adjusted EBITDA to stay relatively in line with that seen for the whole of fiscal 2013. The company also said it believed it had sufficient liquidity for the year.

Over the course of the year, Gymboree plans to open about 50 new stores, while shuttering 25 to 30 other stores. Capital expenditures is expected to be in the range of $35 million to $40 million.

Toys’ sales improve

Toys ‘R’ Us also put out quarterly results on Thursday and, like Gymboree, its bonds were faring better despite a wider net loss.

One trader said the 7 3/8% notes due 2018 were up 3 to 4 points, trading around 76. Another market source pegged that issue at 78 bid, up 5 points on the day.

Yet another trader called the 10 3/8% notes due 2017 up almost half a point at 84.

For the quarter ended May 3, the Wayne, N.J.-based toy retailer posted consolidated net sales of $2.5 billion, a 2.9% gain year over year. Domestic same-store sales rose 4%, while international sales increased 1%.

Net loss was $196 million, versus a loss of $111 million the year before.

At the end of the quarter, the company had $1.5 billion of liquidity, including $372 million of cash and equivalents and $1.1 billion available under a committed line of credit.

Logan’s loses ground

In another consumer-driven sector, Logan’s Roadhouse Inc.’s 10¾% notes due 2017 gave back some of the gains incurred at midweek.

A trader called the issue down half a point at 81¾. Paper had been up about that much the day before after the parent company, LRI Holdings Inc., released its earnings.

For the fiscal third quarter ended April 27, LRI Holdings reported net sales of $169.12 million, down 3.3% year over year. Net loss widened to $1.73 million from $515,000 the year before.

Adjusted EBITDA came to $17.24 million, versus $21.38 million the year before.

Comparable restaurant sales fell 3.2%, but the average check increased 3.9%. Customer traffic was down 6.8%.

© 2015 Prospect News.
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