For those physical stores that do survive, Stewart said fresh formats are being implemented to create openness and so-called "power zones" where hot or seasonal items dominate the space. "We made great strides in visual merchandising last year, and we should do nothing but improve on that in 2007," said Stewart, who estimated the average store size at between 8,000 sf and 9,000 sf.

Bombay also plans to examine its overall product line to ensure the brand is keeping up with evolving tastes. A concerted effort was made to clear out fading fashions late last year, said Stewart, who also cited work re-introducing the company's line of furniture as another self-improvement campaign.

Besides engaging DJM for the real estate assessment, Bombay has hired William Blair & Co. to look at the firm's total financial picture and consider ways to improve liquidity.

"We plan to evaluate all alternatives, including raising equity in order to continue to execute our strategic plan, return to positive cash flow and achieve long-term growth," Stewart said. Bombay reported $39.3 million in short-term borrowing to address operating losses, higher inventory levels and lease restructuring costs. Bombay had no short-term borrowing the year prior.

Stewart kept an upbeat tone despite Bombay's recent difficulties, insisting that the firm's turnaround plan is yielding results. "I want to reaffirm my belief in the brand and its value," he said of the company, which trades on New York Stock Exchange under the symbol BBA.