Liberty House
losses mounting

The retailer, however,
is optimistic despite its
$8.9 million loss since
filing for bankruptcy

By Peter Wagner
Star-Bulletin

Liberty House has suffered a net loss of $8.9 million since filing for bankruptcy in mid-March, according to a financial report recently filed by the company in U.S. Bankruptcy Court.

But despite the losses -- including a $2.6 million net income drop in June -- the company says it is performing above expectations.

"The important thing to remember, although it shows a loss, is we're running 11 percent ahead of our earnings projections for the year," said Liberty House President John Monahan. "We're actually doing better than projected."

The June financial report shows a cumulative loss of $8,895,456 since the company's March 19 bankruptcy filing.

Liberty House early in its bankruptcy predicted a rocky road ahead. Facing economic turmoil in Asia, dwindling tourism, and Hawaii's continuing doldrums, Liberty House several months ago projected a large drop in 1988 sales.

In court documents supporting the company's bid for $50 million in emergency financing, Liberty House predicted a 10 percent drop in sales to residents and a 50 percent decrease in sales to tourists this year. Sales at the company's stores at Ala Moana Center, Waikiki and Kahala were expected to drop off an additional 5 percent to 10 percent.

Monahan yesterday said the company's ongoing restructuring -- store closures, layoffs, inventory adjustments and other cost-cutting efforts -- were expected to take a toll on profits.

"We've closed a lot of stores, so sales are going to decrease," he said. "Our restructuring is to get rid of unproductive businesses, which will show a short-term loss in sales. But there are a lot of expenses associated with those business and we expect to reduce our expense load."

Monahan said the company hopes to weather the initial storm to emerge from bankruptcy in the black. "Our whole focus now is reducing our expenses, stabilizing the business and getting some growth as we formulate our plan to recapitalize the company."