Retail Ventures Back in Black
December 12, 2005-- Home Textiles Today,
Retail Ventures Inc., the parent of Value City and Filene's Basement, broke back into the black — with a highly qualifying asterisk — reporting a first quarter profit of $54.2 million, compared with a year-before loss of $1.3 million.
But it wasn't really a cash profit generated by its diversified retail portfolio, rather the results stemmed entirely from a $64.8 million, non-cash paper gain reflecting an increase in the value of warrants. Pull that paper gain out of the equation, and the retailer recorded an operating loss of $6.7 million, compared with a prior-year operating profit of $6 million, as operating costs exceeded what the company took in after it paid for goods sold.
Putting operating results under heavy pressure, average gross margin weakened substantially, thinning 200 basis points, or 2 percentage points, to 38 percent from 40 percent a year ago. Operating costs improved slightly, 30 basis points, or three-tenths of a percentage point.
Sales at Retail Ventures climbed 6.6 percent, to $746.1 million from $699.7 million a year ago. Same-store sales rose 1 percent, a big gain over a 4.1 percent drop during the same period a year ago.
Same-store sales were mixed. Comps declined 1 percent at Value City Department Stores, but that marked a big improvement from a 7.8 percent decline the year before. Same-store sales rose 3.5 percent at the DSW shoe retailing operation, improving on a smaller 0.8 percent gain a year ago. Filene's Basement built its comps 2.1 percent, an improvement over last year's 1.1 percent gain.
Retail Ventures Inc.
|Qtr. 10/29 (x000)||2005||2004||% change|
a. Third quarter results include $64.8 million in non-cash income, stemming from the increase in the fair value of warrants; an income tax benefit of $1.8 million, compared with $646,000 last year; and a $4.0 million loss form a minority interest.
b. Nine month results include a $31.1 million non-cash loss stemming from a decrease in the value of warrants; an income tax benefit of $1.6 million vs. $911,000 the year before; and a $3.3 million loss from the company's minority interest in an investment.
|Oper. income (EBIT)||(6,735)||6,000||—|
|Per share (diluted)||0.88||(0.04)||—|
|Average gross margin||38.0%||40.0%||—|
|Oper. income (EBIT)||(23,860)||20,729||—|
|Per share (diluted)||(1.90)||(0.07)||—|
|Average gross margin||38.8%||40.4%||—|
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