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Bradlees 3Q losses total $18M

Don Hogsett -- Home Textiles Today, November 27, 2000

BRAINTREE, MA -Struggling to find a solid financial footing after emerging from a painful bankruptcy last year, Northeastern discounter Bradlees Inc. reported a sharply widening third-quarter loss of $18.3 million, more than twice the size of last year's $7.6 million loss.

Sales declined by 2.9 percent, to $239.1 million from $240.9 million the prior year, while same-store sales fell back by 5.2 percent.

"We are disappointed in our third-quarter results," said Peter Thorner, chairman and ceo. "We believe there are a number of reasons for our sales and margin shortfall, including higher gas and heating oil prices, an uncertain economic environment, new competitive store openings and a more promotional retail environment."

Acting as a drag on the bottom line, average gross margin weakened by 200 basis points, to 28.5 percent from 30.5 percent the prior year. Gross margin dollars declined by 9.3 percent, to $95.4 million from $105.1 million.

Still hacking away at costs, Bradlees reduced its overhead by 0.6 percent, to $101.1 million from $101.7 million last year, a cash savings of $613,000. But with sales heading south, the expense ratio-costs measured as a percentage of sales-increased by 70 basis points, to 30.2 percent from 29.5 percent the previous year.

Said Thorner: "While we controlled expenses, this expense control was more than offset by seasonal clearance markdowns at the beginning of the quarter and margin pressure resulting from increased promotions by competition."

Taking another bite out of the bottom line, interest costs climbed sharply during the quarter, rising by 18.9 percent, to $9.3 million from $7.8 million.

BRADLEES INCORPORATED


Qtr. 10/28 (x000) 2000 1999 %CHG

Sales

$334,438

$344,347

(2.9)

Oper. income (EBIT)

(2,439)

6,816

-

Net income

(18,257)

(7,604)

-

Per share (diluted)

(1.83)

(0.76)

-

Average gross margin

28.5%

30.5%

-

SG & A expenses

30.2%

29.5%

-

NINE MONTHS

2000

1999

%CHG

Sales

$1,009,722

$1,025,831

(0.2)

Oper. income (EBIT)

(347)

14,383

-

Net income

(37,261)a

(28,348)a

-

Per share (diluted)

(3.74)a

(2.79)

-

Average gross margin

29.1%

30.4%

-

SG & A expenses

30.1%

30.0%

-


( ): Denotes loss

a-Results in the nine-month period include a $4.3 million credit from a contingency resolution and a $2.7 million gain on the sale of property; prior-year results included a $778,000 reorganization item and a $558,000 charge stemming form an accounting change.

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