As Linens 'n Things readies its quarterly report for release tomorow (March 20), the noise surrounding this company is getting louder. During Tuesday's Icahn Enterprises conference call, the WestPoint Home parent answered an analyst's direct inquiry by saying it had limited "balance sheet exposure" to LNT but that it was continuing to monitor the situation.
That, of course, has been what a lot of home textiles companies have been doing since well before winter market when some suppliers — for a moment, at least — found themselves holding the retailer's trade debt, alone, on a mountainside. It made some people uncomfortable, to say the least.
The economy doesn't help. Neither does the general retail malaise nor the evaporation of home sales. But the hit that financial markets have been taking can only be more bad news for a company already struggling. Indeed, Bloomberg, citing an internal letter by Apollo Management's Leon Black (a key LNT financial investor), noted that LNT's bond have lost 70% of their value in past year, tumbling to 30.5 cents on the dollar producing a 39.25% yield. The silver lining, if there is one, if that Apollo has turned its attention to distressed securities, including in some companies it already owns, the letter purported. No specific mention of LNT in that regard in the report, however.
For the record: As of Dec. 29, 2007, LNT operated 589 stores across 47 states and seven provinces in the United States and Canada.
To be sure, there are solutions — albeit, not always happy ones — to every problem. And if LNT's numbers show anything greater than slight declines, it might be time to start bracing for some fairly dramatic, and possibly painful short-term medicine.
The earnings release is due out tomorrow and the conference call is at noon EDT. It seems reasonable that more than a few sales and credit managers will be listening. Here's the link:
