Spiegel in spiral

By Don Hogsett -- Home Textiles Today, 2/10/2003 12:00:00 AM

DOWNERS GROVE, IL —

Problems are increasing at direct-mailer The Spiegel Group — it's losing money, squabbling with creditors, in violation of debt covenants, the government is asking about late financial reports, it just lost its cfo, and now its own auditor is publicly questioning its ability to survive.

KPMG LLP, Spiegel's auditor, said in a 10-K that it now questions the retailer's ability to continue as a going concern, citing its inability to negotiate a new line of credit with its lenders. KPMG also pointed to Spiegel's failure to obtain an amended settlement with the insurer of its asset-backed securitization transactions, MBIA Insurance.

Spiegel said it's now the subject of an investigation by the SEC because of late filing of financial reports of its 2001 annual report and its 2002 quarterly reports. Spiegel only last week finally filed the 2001 annual report.

Lastly, Spiegel's cfo and executive vp, James Cannataro, resigned to take a job in another industry. He leaves Feb. 12, and the company is looking for a successor.