Aca Joe Will Sell Stake in Firm and Close Some Stores

Scrambling for cash, Aca Joe--a fast-growing retailer and licensor of colorful casual wear for men--said Monday that it had agreed to sell a stake in the company to a Vermont ski wear maker. It also announced plans to sell or close 39 stores.

The San Francisco company also reported a much larger than expected $11.9-million loss--including the costs of closing unprofitable stores--for fiscal 1986. And, as expected, Aca Joe said its independent auditors have qualified its financial reports because of uncertainty regarding “the company’s ability to continue as a going concern.”

To shore up its finances, Aca Joe said it would sell a minority stake in the firm to privately held CB Sports Inc., based in Bennington, Vt., in exchange for $3 million in cash and an $18-million line of credit to purchase merchandise for the fall. CB would also gain the right to elect a majority of Aca Joe’s directors.

Although it will operate as a separate company, Aca Joe could consolidate certain operations, such as distribution and administration, with CB Sports to cut costs, said Aca Joe President Harry R. Kraatz.

Aca Joe, which posted revenue of $23 million last year, currently owns and licenses 112 stores nationwide. Kraatz said the company plans to close six money-losing stores and sell 33, mostly in the eastern part of the country.

Auditors qualified Aca Joe’s financial statements after the company’s debt exceeded certain levels spelled out in agreements with Aca Joe’s banks and bond holders. Technically, Aca Joe could be held in default, but its lenders have said they are willing to work with the company, according to Kraatz.