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Home suffers slightly at Gordman's over 2Q, but brightens during BTS/BTC season

Omaha, Neb. - Gordman's home department was hit with a comp decline during the second quarter, and the textiles category was among the culprits.

Along with accessories, home fashions posted a low single-digit comp sales decline for both the quarter and the year-to-date period. While home decor "generated solid performances" in gourmet food and candy, housewares, and floral and garden," noted president and ceo Jeff Gordman, these gains were "offset by softness in wall decor, home accents, accent furniture, picture frames, toys, candles, decorative lighting, and textiles."

But the performance of some home textiles segments in fiscal August over the back-to-school/college selling season were better, as "kitchen trends, accent furniture, decorative pillows, food and candy, and home gifts all had comparable store sales increases," Gordman later added.

And for the all-important fourth-quarter season, Gordman's has some new efforts lined up for home to help spur sales.

"In home overall, we feel that we have several very exciting opportunities that we are in the process of leveraging, starting with holiday home," Gordman said. "One of our many big ideas to drive sales in the fourth quarter is called ‘Cool Yule,' which is based on a very vibrant, neon-based color palette. It's very differentiated and has a very contemporary theme. Other themes include wine, celebrity chef cookware sets, and a variety of other initiatives to drive the business in the fourth quarter. There's a lot happening from a theme and motif perspective. Everything from a lot of texture, three dimensional, abstract floral placements and print, lacquer in wall decor in particular, a lot of stone mosaics, anything from an animal-print perspective - zebra in particular. So, we remain confident with respect to home decor, which is definitely one of our destination businesses, not only from a contemporary perspective but also transitional so that we're going after guests who are similar in lifestyle and attitude that we are targeting from an apparel perspective."

For the Midwestern regional department store with 72 units in 16 states, quarterly net sales increased 3.4% to $117.0 million from $113.1 million for the same period last year. This translated into a 0.4% comparable store sales gain.

Gordman explained the comp result was "in line with the guidance that we provided," and the total sales increase "was primarily attributable to two new stores that we opened in Minneapolis, a new market for our company, in the first quarter of this year."

Worst off in the 13 weeks was net income, which dipped 12% to $2.9 million, or $0.15 per diluted share versus $3.3 million, or 20 cents per diluted share in last year's same quarter. This was largely due to pre-opening expenses for stores that opened late in the second quarter or will open in the third quarter, Gorman explained.

Year-to-date results included: a 4.3% increase in net sales to $234.7 million from $225.0 million a year ago; a 0.7% comparable store sales gain; and a 5.9% boost in net income to $10.2 million, or $0.53 per diluted share compared to $9.7 million, or $0.60 per diluted share last year.

Gordman's outlook for the second half calls for sales to be consistent with the comparable store sales trend experienced in the first half of the year.

For the fiscal year ending January 28, 2012, management expects net sales to be between $553 million and $557 million, which reflect a slight comparable store sales increase. On that basis, diluted earnings per share are projected to be in the range of $1.22 to $1.27 (using a diluted share count of approximately 19.4 million).

For the third quarter, ending October 29, the company expects net sales to be between $133 million and $135 million, which reflect comparable stores sales trends similar to the first half of 2011. And it projects diluted earnings per share in the range of $0.18 to $0.19 for the third quarter (using a diluted share count of approximately 19.4 million).

For the fourth quarter, ending January 28, Gordman's is forecasting total sales to be between $185 million and $187 million, which reflect a continuation of the comparable store sales trend, and is projecting earnings per share in the range of $0.51 to $0.55 (using a diluted share count of approximately 19.5 million shares).

"Over the last few months we have refined our merchandising, marketing and inventory management strategies in an effort to drive comparable store sales growth in the current environment," Gordman summed.


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