Instead of raising a glass at wine cataloger Geerlings & Wade (Nasdaq: GEER), its executives may need aspirin.
The Canton, MA-based company had a first-quarter net loss of $985,000 for the quarter ended March 31, compared with a net loss of $741,000 for the first quarter of last year. Sales fell 32%, to $5.0 million from $7.4 million.
As a result of its restructured fulfillment operation, the timing of product flow was altered, resulting in $750,000 worth of orders that were not shipped. According to a company release, this reduced net income by approximately $255,000.
If weaker sales and higher expenses aren’t bad enough, Geerlings & Wade violated certain financial covenants of the credit agreement with its outside directors during the quarter. In a release, the company said that “the directors have agreed to waive these covenant violations and any future financial covenant violations through May 2003, and the company intends to seek an amendment to the credit agreement to reflect new covenants based on revised financial projections.” Geerlings & Wade believes it will have enough cash flow to repay its loan to the directors upon the credit facility’s scheduled termination without significant adjustments to its business plan this year.