SHEBOYGAN, Wis. -- Fresh Brands here said it may have to explore strategic alternatives to secure additional capital if the value proposition it introduced at its stores in November is not successful.
Writing in its 10-K filing with the Securities and Exchange Commission, the company said strategic alternatives could include the sale of some assets, including stores; the outsourcing of various operations; a corporate restructuring; or a business combination with another company.
It also said it could opt to issue additional shares, options or warrants to obtain equity or debt capital.
"'Strategic alternative' is often a euphemism for putting a for-sale sign around one's neck," Gary Giblen, senior vice president and director of research for C L King Associates, New York, told SN, "and that doesn't bode well because it means the company would be selling from a position of weakness, not strength."
Fresh Brands operates 21 corporate stores and two convenience stores and has 79 franchised stores. It had sales of $673.1 million -- a gain of 11.2% -- for the fiscal year ended Jan. 1. However, the company had a loss of $3 million, following a loss of $473,000 in 2003.
The company said in the filing that the new value program focuses on customer service and community involvement, plus "the best perishables offering in the marketplace" and everyday low prices in grocery, general merchandise and health and beauty care items -- a program designed "to make us more price competitive ..., increase comparable store sales, achieve an improved sales mix, increase our ability to leverage fixed store expenses and continue to control other store operating expenses."
The company said in late February the pricing and marketing program was having a positive impact on sales.
