In a statement released by the Naperville, IL party supplier, the firm said that the board of directors initiated an external process to explore "strategic alternatives" that include acquisitions, stock repurchases, joint venture mergers and the company's potential sale. The firm also cautioned that its decision does not assure any transactions will result from the analysis.
"The board has consistently evaluated various ways of improving shareholder value. Today's announcement to engage an investment banker reflects their ongoing commitment to achieving that goal," Gary Rada, Factory Card & Party's CEO said in a statement.The retailer said it would not make any further statements on its strategic alternative findings until the study is completed or it executes a definitive agreement.
The company, which operates 191 stores in 20 states and is the largest publicly traded retail party supply chain in the country, filed for Chapter 11 bankruptcy protection in 1999 but emerged from it in 2002. The chain offers value-priced party supplies, gift wrap, balloons, greeting cards and seasonal and special occasion merchandise.
News of the company's plans came as the party supplier announced it had narrowed its losses for the fourth quarter to $17,000, or one cent a share, from $1.2 million, or 39 cents per share, a year earlier. The scaled-back losses were largely due to improved merchandise margins and better expense management, Rada said.
A 6% drop in selling general and administrative costs shaved nearly $1 million from the retailer's expenses with those costs dropping from $21.1 million in last year's third quarter to $19.9 million this year. Quarterly revenue for the period was up 2% from $56.2 million last year to $57.1 million, despite lackluster Halloween sales, the company said. Sales at stores open at least a year were relatively flat, gaining just 0.1%.
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