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Gottschalks trims back home

Fresno,Calif.Gottschalks is trading down its weaknesses in favor of its strengths – which translate to home goods and apparel, respectively – going forward as the 60-unit western regional department store chain looks to reinvigorate after several sluggish seasons.

“We want to focus on the strengths of our company and those appear to be in soft lines and not the home lines,” said Jim Famalette, president and ceo, during the company’s fourth quarter and yearend earnings call.

In contrast, its soft lines – including apparel, fashion accessories, and shoes – proved to be bright spots. As a result, the retailer is taking floor space away from home goods, including home textiles, to spotlight the more popular merchandise.

The onset of the 2007 holiday season is when most of these shifts are projected to be completed, with only some spilling over to next year.

The company reported net income for fiscal 2006 of $2.6 million, half of prior year income of $5.2 million. A sizeable portion of the drop in income stemmed from a 2006 pre-tax charge of $810,000 relating to the expensing of stock-based compensation. Sales for the year rose 1.0% to $683.9 million, while comps edged up 0.6%.

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