Gottschalks Narrows Its Loss
June 6, 2005-- Home Textiles Today,
Fresno, Calif. — Helped by a solid home business, deep cuts in interest expense and lower costs, Gottschalks Inc. reported a modestly narrowed first quarter loss of $2 million, improving on a prior-year deficit of $2.4 million.
Sales at the regional department store chain were virtually flat, off 0.3 percent, to $144.4 million from $144.5 million last year. Same-store sales declined 0.6 percent.
Putting pressure on the bottom line, average gross margin thinned 50 basis points, or five-tenths of a percentage point, to 33.9 percent from 34.4 percent a year ago. But acting as an offset, Gottschalks whittled its costs 20 basis points, or two-tenths of a percentage point, to 33.8 percent from 34 percent the preceding year. Measured in absolute dollars, costs declined 0.8 percent, to $48.7 million from $49.1 million last year, generating a savings of $395,000.
In a further boost to the bottom line, the retailer slashed its interest expense 32.9 percent, to $1.9 million from $2.9 million a year ago, yielding a cash savings of $945,000.
In another big savings, Gottschalks capped its stockpiles, with inventories declining 3.7 percent, to $178.1 million from $185 million last year, a savings of $5.9 million.
Jim Famalette, president and CEO, said a fine-tuned home business helped drive a stronger quarter. “As a result of the merchandising initiatives we set in place late last year, our home store division generated solid sales for the quarter, and we anticipate this trend will continue for the balance of 2005.”
Famalette said, “We were able to drive sales and increase our bottom line for the quarter despite the more difficult comparison against the first quarter of 2004 when we launched our 100th year anniversary promotions. We opened a new store in Oregon, which contributed to our total sales for the quarter and strengthens our presence in the northern West Coast markets.”
Looking forward to continued improvement throughout the year, Famalette said he expects same-store sales for all of 2005 will rise about 2 percent, generating earnings per share in the range of 59 to 65 cents.
|Qtr. 4/30 (x000)||2005||2004||% change|
a. First quarter results include miscellaneous income of $353,000, compared with $462,000 during the same period a year ago; and an income-tax benefit of $1.2 million, compared with $1.4 million last year. Results in the 2004 first quarter include a $20,000 loss on discontinued operations.
|Oper. Income (EBIT)||(1,625)||(1,222)||—|
|Per share (diluted)||(0.15)||(0.17)||—|
|Average gross margin||33.9%||34.4%||—|
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