FORT WORTH, TX-Troubles continue to mount for the Bombay Co., Inc. And its falling fortunes are not limited to this year’s first-quarter continuing slides in revenue and comp-store sales.

NYSE Regulation Inc. has twice notified management that the company is not in compliance with the New York Stock Exchange continued listing requirements. That’s because the retailer’s common stock dropped below $1 a share over a consecutive 30-day trading period and average market capitalization and stockholders’ equity fell below $75 million.

During a May 25 conference call, Bombay said that within 10 days it plans to submit a business plan demonstrating its ability to achieve compliance. If the plan is not accepted, or if Bombay can’t gain compliance, management said it would try to have its stock quoted on the Over-the-Counter Bulletin Board or another quote system.

It had previously engaged William Blair & Co. to study investment and other strategic alternatives. In an announcement following release of first-quarter financials, Bombay issued a statement saying William Blair had received non-binding offers to buy the company.

The offers are “at prices that are a premium to yesterday’s (May 24) closing price,” it said in the statement. On that day, shares were trading in a range of from $0.62 and $0.72 a share. Shares closed the following Friday at $0.99 a share, up from a low of $0.54 a share on May 8, which compares with a 52-week high of $2.90 a share on June 9, 2006.

Bombay’s board said it was “encouraged” by the offers. Substantial due diligence lies ahead, and there’s no assurance the offers would lead to a transaction. At the same time, the board said it had obtained a new $10-million secured term loan facility from a fund managed by GB Merchant Partners LLC. It joins an existing $125-million secured credit facility and improves liquidity, the company said.

For the 13 weeks ended May 5, the locally based home furnishings chain’s total revenue was $104.6 million, down 11.9% from $118.7 million in the opening quarter of 2006. Same-store sales declined 10.2% during first-quarter 2007, and revenue from stores dropped to $95.6 million, versus $107.2 million in the prior-year quarter.

The retail decline comes from both the same-store sales drop and a lower store count now compared with the store count in first-quarter 2006. During first quarter it closed 24 units and opened two, taking the total to 419.

Direct-to consumer sales via the internet and mail order reached $8.5 million, up from $6.6 million, due primarily to increased online sales. In the past month Bombay launched in-store pick-up for online customers, a service designed to improve its growing internet business.

“The offering is tracking well and has experienced significant growth,” said David Stewart, CEO, during a conference call. “We believe our internet strategy continues to present an excellent opportunity to leverage our expense base into meaningful profitable growth.”

He acknowledged disappointment in the quarterly results, “which continue to be affected by softness in the retail home sector,” he said. “We remain focused on our continued effort to return Bombay to positive cash flow and long-term growth,” Stewart concluded.

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