ShopKo Continues Financial Turnaround
Home & Textiles Today Staff -- Home Textiles Today, March 14, 2005
Extending a turnaround begun earlier this year and putting up a third straight quarterly earnings gain, heartland discounter ShopKo Stores Inc. recorded a fourth quarter profit of $35.4 million, up more than 12 percent form $31.6 million last year.
Lifting the bottom line, the retailer beefed up margins and slashed interest expense, more than offsetting weaker sales and higher costs.
ShopKo sales fell off 4.5 percent, to $909.7 million from $952.9 million last year, while the crucial gauge of same-store sales was off almost as much, dropping 4.4 percent.
Driving the earnings growth, despite the lagging sales, ShopKo lifted its margins 210 basis points, or 2.1 percentage points, to 27.4 percent from 25.3 percent during the same period a year ago. Despite the lower level of sales, gross margin dollars improved 3.2 percent, to $249.1 million from $241.4 million the preceding year.
Margins gained strength at both operations, ShopKo Stores and the small-format Pamida chain. At the larger ShopKo operation, margins improved 250 basis points, or 2.5 percentage points, to 27.5 percent from 25 percent a year ago. And at Pamida, margins grew 40 basis points, or four-tenths of a percentage point, to 26.9 percent from 26.5 percent.
In another boost to profits, the retailer hacked away at its interest expense, reducing it 9.1 percent, to $7.9 million from $9.7 million last year, yielding a cash savings of $785,000.
Sam Duncan, president and CEO, commented, "The results reflect our continued focus on gross margin earnings and delivering profitable sales."
ShopKo Stores Inc.
|Qtr. 1/29 (x000)||2004||2003||% change|
|Oper. Income (EBIT)||63,499||60,126||5.6|
|Per share (diluted)||1.19||1.07||11.2|
|Average gross margin||27.4%||25.3%||—|
|Oper. Income (EBIT)||102,462||101,930||0.5|
|Per share (diluted)||1.46||1.33||9.8|
|Average gross margin||26.2%||25.7%||—|
4Q Segment Results
|Average gross margin||27.5%||25.0%||—|
|Average gross margin||26.9%||26.5%||—|