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Hancock profits up double digits

—Helped by wider margins and stronger sales, second-quarter profits at fabric and crafts retailer Hancock Fabrics grew by 12.6 percent, to $4.2 million from $3.8 million last year.

Sales increased by 3.7 percent, to $96.1 million from $92.7 million a year ago. Same-store sales rose by 3.8 percent, up against a difficult comparison with a year-ago increase of 7.3 percent.

Operating costs inched up slightly, to 47.4 percent of sales from 47.3 percent a year ago. Larry Kirk, ceo, said, "The duplicate costs of operating two distribution centers for a time, as well as increased insurance and pension expenses, offset much of the improvement in sales, gross margin and other expense categories."

Getting ready for the holiday season, Hancock began building its stockpiles, which rose by 6.1 percent, ahead of the current rate of sales, to $150.8 million from $142.1 million. "Store inventories are at a pre-season peak in preparation for the big fall and holiday periods, and we believe that we have the necessary breadth and depth of product for the all-important second half of the year," said Kirk.

Surveying operations, Kirk noted, "Even with a net decline of 70 stores since we began our store repositioning process, overall square footage has increased almost 5 percent with the transition to larger, better-spaced locations. As store closings return to a more routine level, we are looking to accelerate expansion of an improved store model into new areas and into existing markets that are under-served. We continue to be interested in acquisitions of multiple spaces as well. At this point in time, we are expecting to open about 20 new stores in the second half of the year while moving or closing about 15 locations," said Kirk.

Hancock Fabrics Inc.

Qtr. 8/3 (x000) 2003 2002 % change
Sales $96,103 $92,676 3.7
Oper. income (EBIT) 4,225 3,751 12.6
Net income 1,577 1,485 6.2
Per share (diluted) 0.9 0.8 12.5
Average gross margin 51.8% 51.3%
SG&A expenses 47.4% 47.3%
Six months
Sales 203,739 196,730 3.6
Oper. income (EBIT) 12,144 10,906 11.4
Net income 5,648 5,176 9.1
Per share (diluted) 0.31 0.27 14.8
Average gross margin 51.3% 50.9%
SG&A expenses 45.3 45.3%

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