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Gottschalk's wooing Hispanic market

FRESNO, Calif. — Back in black after an unprofitable 2002, Gottschalk's is moving into 2004 with plans to re-emphasize key brands, launch new private label initiatives in apparel and begin building a solid base of Hispanic customers, executives said during the company's fourth quarter conference call with analysts.

"The Hispanic initiative is a long-term for the company," said Jim Famalette, president and CEO. "We really think it's building a loyal customer to add to the existing Gottschalk's customers, one that will hopefully be there for a long time to come."

The retailer will roll out the program across the year in four stages: employee orientation improved signing; targeted marketing and targeting merchandising, he said.

Swinging back to profitability from a year-before loss, Gottschalk's recorded fourth-quarter earnings of $8.4 million, compared with a year-before loss of $4.6 million. The upturn came after closing unproductive stores, paying down debt and shucking off one-time charges that acted as a drag a year ago.

Sales at the West Coast retailer improved by 1.4 percent, to $227.6 million from $224.5 million last year, while same-store sales increased by 1.6 percent.

In a prop to the bottom line, Gottschalk's grew its average gross margin by 60 basis points, or six-tenths of a percentage point, to 32.6 percent from 32 percent the previous year. At the same time, costs were whittled down by 20 basis points, or two-tenths of a percentage point, to 25.1 percent from 25.3 percent.

"We're actually seeing lower market downs in the operation of our business," Famalette said during the call. "The key to that really in 2004 is an inventory turn. That will be one of the major focuses of the company this year."

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