Wherehouse Second Quarter Sales Drop

Wherehouse Entertainment had sales for its fiscal second quarter, which ended July 31, of $115 million, vs. $150.8 million in the same period a year ago, according to the 10-Q quarterly report it filed Monday with the Securities & Exchange Commission. Net loss rose to $11.9 million, or $1.04 per share, from $6.1 million, or 55 cents per share. Comparable-store sales (excluding revenues from video and game rentals) fell 15.1%, due to CD burning, Internet piracy, a weak new-release schedule, and competition from mass merchants.

As of July 31, Torrance, Calif.-based Wherehouse had borrowed $49.9 million against its credit facility with Congress Financial. Meanwhile, in exchange for Wherehouse's principal shareholder, Cerberus Partners, guaranteeing $10 million of the chain's outstanding balance, Congress has increased the funds available by $10 million, for a total of $33 million. The retailer will be in default if the amount available falls below $15 million.

Wherehouse says that between its credit facility, cash on hand, expected cash flow, and the availability of lease financing, it can fund operations and planned capital expenditures for the rest of the current fiscal year.