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ShopKo sales and profits dip in 4Q

Fourth-quarter profits at ShopKo Inc. slipped by 6.3 percent, to $32.7 million from $34.9 million, as sharply stronger profits at the retailer's rebounding Pamida division were offset by weaker returns at the larger ShopKo Stores unit.

Taking a further bite, ShopKo rang up $6.0 million in pre-tax restructuring costs stemming from an earlier operations overhaul.

Sales dipped by 4.5 percent, to $958.4 million from $1.0 billion last year, partly the result of store closings over the past 12 months. Same-store sales fell by 4.1 percent.

Average gross margin widened modestly, to 26.9 percent from 26.7 percent last year. And, hampered by falling sales, operating costs, when measured as a percentage of sales, inched up slightly, to 17.4 percent. But measured in real dollars, costs actually came down by 4.2 percent, to $166.6 million from $173.8 million last year.

Both debt and interest expense were cut back. Interest expense was reduced by 9.5 percent, to $13.1 million from $14.4 million, as the retailer worked down its debt by $198.0 million last year.

The Pamida division reaped the benefits of a turnaround, driving operating profits up to $11.6 million from $1.8 million, despite a 5.1 percent decline in sales.

But operating profits slipped at the larger ShopKo Stores division, falling by 12.9 percent, to $70.2 million from $80.6 million. Sales in ShopKo Stores slipped by 4.3 percent, to $736.3 million from $769.1 million.

ShopKo Stores Inc.

Qtr. 2/1 (x000) 2002 2001 % change
Sales $958,444 $1,003,390 -4.5
Oper. income (EBIT) 67,266 75,379 -10.8
Net income 32,679 34,886 -6.3
Per share (diluted) 1.12 1.21 -7.4
Average gross margin 26.9% 26.7%
SG&A expenses 17.4% 17.3%
12 months
Sales 3,240,187 3,373,935 -4.0
Oper. income (EBIT) 120,646 115,597 4.4
Net income (144,819)a 28,217
Per share (diluted) (4.95) 0.98
Average gross margin 25.7% 23.9%
SG&A expenses 19.6% 18.1%
a-12-month earnings include a one-time, non-cash accounting charge stemming from a change in accounting. Excluding the one-time item, earnings rose by 46.1 percent, to $41.2 million from $28.2 million.

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