Goldner Hawn Heads $45M Wilsons Infusion

NEW YORK – Wilsons The Leather Experts is to receive a $45 million cash infusion from an investment group led by Goldner Hawn Private Equity through a private placement.

Goldner Hawn will invest $35 million of the total, with Peninsula Investment Partners and Quaker Capital Management putting up the balance. In exchange the parties will receive preferred stock, initially convertible into 30 million shares of common stock at a price of $1.50 a share, and warrants to purchase up to 15 million shares of Wilsons common stock at an exercise price of $2.00 a share for five years following the closing.

Wilsons, based in Minneapolis, indicated that it would use the funds “for general working capital purposes” and to cover fees related to the transaction. Goldner Hawn is also based in Minneapolis.

The news, released Monday, helped pushed shares of Wilsons up $0.13, or 9.4%, to close at $1.51 in Nasdaq trading, their highest close since the $1.54 conclusion of April 9.

Wilsons’ stock price has steadily declined throughout the year as it’s weathered mounting losses and rapidly declining sales, with traffic and transactions in retreat. In the first quarter ended May 5, its loss reached $21.3 million, and sales declined 22.9% to $57.6 million. While figures for May are expected to be reported later this week, its same-store sales in April fell 20%.

The company has conceded that a move away from branded outerwear and towards its own private labels had contributed to its sales troubles, and last month chief executive Michael Searles, in announcing the first quarter losses, conceded that discounting had failed to contain the erosion.

“It is clear from our transaction volume, which is down significantly to last year, the ‘price only customer’ has opted out,” Searles said.

Wilsons’ stock price was a relatively robust $4.13 last June 29, when it hit its 52-week high.

Wilsons operates 414 stores – 284 mall-based, 116 outlets and 14 in airports – in 45 states.