Hampshire Group, Limited (Pink Sheets: HAMP.PK) today announced that it has initiated a restructuring and cost reduction plan (the “Plan”). The Plan is designed to significantly reduce the Company’s fixed cost structure, improve its return on invested capital, increase its operating efficiency and better position the Company for the long term.
The components of the Plan include a net reduction of 75 employees, or approximately 24% of the Company’s global workforce, across all levels of the organization at all of its U.S. and Asian locations, a compensation reduction program applicable to senior-level employees, the elimination of the 401(k) matching contribution, the reorganization of certain operating functions and the consolidation of all of the Company’s New York operations into one location. The reduction in workforce is necessitated by reduced sales volume and the outsourcing of certain functions. When completed, the Company expects to achieve annualized savings from selling, general and administrative expenses in excess of $6.6 million, or approximately 14% of the Company’s normal selling, general and administrative expenses.
The initial phase of the Plan will commence in the second quarter of 2009, with the final phase being completed during the third quarter of 2009. As a part of the Plan, Michael S. Culang resigned as the President and Chief Executive Officer of the Company, effective April 15, 2009. As a result of these actions outlined in the Plan, the Company anticipates incurring one-time costs of approximately $3.8 million with the majority of the costs being recognized during the second quarter of 2009. These costs consist primarily of termination benefits of $2.8 million and costs associated with further consolidation of our New York operations.
“The challenging economic environment has continued to weigh heavily on our industry and our financial performance,” said Richard Mandell, the recently appointed President and Chief Executive Officer of Hampshire Group. “The restructuring and cost reduction plan announced today substantially reduces our selling, general and administrative expenses. These actions are designed to streamline our operations, improve overall efficiency and refocus resources on our core businesses. We believe these actions will help us to effectively navigate through these difficult times and better position the Company for future growth when economic conditions stabilize.”
Other Information
The Company is currently party to a merger agreement with NAF Holdings II, LLC and NAF Acquisition Corp. Subject to the terms and conditions of the merger agreement, NAF Acquisition Corp. has commenced a cash tender offer to purchase all of the outstanding shares of common stock of the Company at $5.55 per share, net to the holders thereof and without interest, in cash. This tender offer is scheduled to expire at 12:00 midnight, New York City time, on April 24, 2009. Following the consummation of the tender offer and subject to the satisfaction or waiver of the conditions set forth in the merger agreement, NAF Acquisition Corp. would merge with and into the Company, with the Company continuing as the surviving corporation. Investors should consult the Company’s SEC filings, including, without limitation, its Schedule 14D-9 filed on March 3, 2009, as amended on March 10, 2009, March 23, 2009, March 30, 2009, April 1, 2009, April 2, 2009, and April 20, 2009 and its Form 8-K filed on February 24, 2009, for more information regarding the tender offer and merger.
About Hampshire Group
Hampshire Group, Limited is a leading U.S. provider of women’s and men’s sweaters, wovens and knits, and a designer and marketer of branded apparel. Its customers include leading retailers such as Macy’s, Kohl’s, JC Penney, Dillard’s, Bloomingdale’s and Nordstrom, for whom it provides trend-right, branded apparel. Hampshire’s owned brands include Spring+Mercer®, its newly-launched “better” apparel line, Designers Originals®, Hampshire’s first brand and still a top-seller in department stores, as well as Mercer Street Studio®, Requirements®, and RQT®. Hampshire also licenses the Geoffrey Beene® and Dockers® labels for men’s sweaters, both of which are market leaders in their categories, and recently acquired licenses for classification labels of the Joseph Abboud® and Alexander Julian® brands for men’s tops and bottoms.
Cautionary Disclosure Regarding Forward-Looking Statements
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect the Company's current views with respect to future events. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. Readers are urged to review and consider carefully the various disclosures made by the Company in its Form 10-K and other Securities and Exchange Commission filings, which advise interested parties of certain factors that affect the Company's business. Risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward looking statements include, but are not limited to, the following: the inability to obtain an amendment and waiver for non-compliance with a credit facility covenant; economic cycles that affect consumer spending; the market price of our common stock if we are not acquired; decreases in business from or the loss of any of our key customers; financial instability experienced by our customers; loss or inability to renew certain licenses; the ability to anticipate consumer trends; use of foreign suppliers to manufacture our products; failure to deliver quality products in a timely manner; potential problems with our distribution system; labor disruptions; chargebacks and margin support payments; reliance on technology; failure to successfully compete; challenges integrating businesses we have or may acquire; unanticipated results from the resolution of tax matters; future defaults under our credit facility; loss of certain key personnel; investigations by the SEC and United State Attorney; material potential future restatements of our financial statements; the stockholders’ rights plan; and global, political and economic conditions.
Contacts:
Berns Communications Group, LLC
Jessica Liddell/Melissa Jaffin,
212-994-4660