CLEVELAND - June 8, 1998 - BridgeStreet Accommodations, Inc. (NASDAQ:BEDS), announced today that it will not meet analysts' earnings-per-share estimates for the second quarter ended June 30, 1998, and for calendar 1998. The Company also announced the realignment of its senior management and a one-time charge against earnings of approximately 10 cents per share.
The Company said it expects second-quarter earnings from operations and before the one-time charge to be about eight cents below analysts' consensus estimate of 14 cents per share, and full-year earnings from operations and before the one-time charge to be about 20 cents short of the analysts' 47-cent estimate. The Company attributed the shortfall primarily to underperforming markets and to overcapacity of available apartments.
The Company anticipates a shortfall in sales from analysts' projections of approximately 7 to 9 percent for the quarter and approximately 7 percent for the year. The one-time charge against earnings in the second quarter is primarily attributable to severance and other charges.
"Demand simply has not met our expectations, particularly in key regions such as Columbus, Dallas and Baltimore," said William N. Hulett, president and chief executive officer.
"We are taking vigorous steps to address this situation, including reviewing our apartment leasing practices and occupancy targets to ensure our ability to match supply with demand going forward."
Mr. Hulett said BridgeStreet's aggressive acquisition strategy has produced the desired results of revenue growth, a presence in key markets and a strengthening of the Company's international brand.
Under the new management alignment:
|Mr. Hulett remains a director and becomes vice chairman and will continue to execute the Company's founding vision and mission.|
|John E. Danneberg, an experienced service-sector executive, joins BridgeStreet as president and chief executive officer.|
|Rocco DiLillo, chief operating officer, will be resigning to pursue other business interests but will remain on the Company's board and serve as a consultant.|
"Having guided the Company through a period of rapid growth and initial public status, Bill Hulett has concluded that it is now time for new leadership to guide the Company through its next phase of growth," said Paul Verrochi, non-executive chairman.
"Going forward, BridgeStreet and its shareholders will greatly benefit from the experience John Danneberg provides in taking once-entrepreneurial businesses to the next level. John has significant operating experience, and throughout his career he has been a proven leader in integrating and operating acquisitions both domestically and internationally."
Mr. Danneberg, 52, most recently was chief executive officer of Sonitrol Security, a $40 million division of ADT Ltd.
Earlier in his career, Mr. Danneberg was owner and CEO of a large regional
commercial plant sales and services company that was later purchased by
Rentokil Group of the U.K. Before that, he was president and CEO of the
security division of Hawley Group Limited, which later became ADT, where
he was responsible for multiple
acquisitions and integrating their operations. He graduated with honors from Rutgers University, where he earned a bachelor's of science in accounting.
Mr. Verrochi pointed out, "Bill Hulett's vision of BridgeStreet as the preeminent brand for corporate apartments and the preferred consolidator in our market niche remains our clear focus. As vice chairman, he will continue to offer experience and insight that will be an important resource for management and the rest of the board."
The Company also announced the resignations of two directors, James M. Biggar and Robert R. Mesel.
BridgeStreet offers upscale, fully furnished apartments, townhouses and condominiums primarily for business travelers and relocating corporate executives who need lodging for one night up to several months or more. The Company's diverse customer base centers on Fortune 2000 corporations, professional firms, professional athletes and travel-wise individuals.
This release contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly
from results discussed in the forward-looking statements due to a number
of important factors, including, but not limited to, the Company's planned
rapid expansion, risks related to acquisition financing, dependence on
third parties, market acceptance of the Company's brand name, and factors
affecting travel. These factors are more fully discussed in the Company's
Registration Statement on Form
S-4 filed with the Securities and Exchange Commission (File No. 333-39187).