SG&A squeezes ShopKo profits
December 1, 2003-- Home Textiles Today,
A 120-basis point increase in selling, general and administrative expenses (as a percentage of sales) brought a 17 percent fall in operating profit to ShopKo Stores Inc. in the third quarter. However, the discount department-store company took advantage of a 40 percent reduction in interest expense to finish the quarter with a 10 percent gain in net income, which reached $964,000.
Third-quarter sales for ShopKo slipped 1.4 percent, to slightly more than $758.4 million. Combining both the ShopKo and Pamida divisions, the company's same-store sales dropped 1.3 percent.
The company saw sales at its ShopKo stores drop 2.7 percent in the quarter on both an actual and a same-store basis, to $568.5 million. Sales at the Pamida division picked up 2.4 percent on an actual basis, to $190 million, and 3.3 percent on a comp-store basis. "Pamida posted its third consecutive quarter of positive comp sales as customers frequent our convenient pharmacies and embrace our Hometown Values offerings," said Sam Duncan, president and ceo.
For the year to date, ShopKo's net income fell 11.5 percent (discounting the effect of a change in the company's accounting procedures from last year), to $7.6 million.
ShopKo's forecast for the fourth quarter calls for flat comp-store results vs. the same period last year. The company says its outlook remains cautious despite the improving U.S. economy.
ShopKo Stores Inc.
|Qtr. 11/1 (x000)||2003||2002||% chg|
|Earnings per share||0.03||0.03||0.0|
|Average gross margin||25.2%||24.7%||—|
|Nine months||2003||2002||% chg|
|Earnings per share||0.26||-6.07||—|
|Average gross margin||25.7%||25.1%||—|
|a: Reflects the effect of a change in accounting procedures. Without this change, ShopKo's net income for the first nine months of 2002 was $8,554,000.|