Retail Ventures Explores Profitability
Don Hogsett -- Home Textiles Today, September 13, 2004
Steering toward a turnaround, helped by rising sales and stronger margins, Retail Ventures Inc. — parent of Value City and Filene's Basement — recorded a second quarter profit of $1.2 million, recovering from a prior-year loss of $3.6 million.
Sales at the off-price retailer increased 4.5 percent, to $631.7 million from $604.6 million the preceding year. But same-store sales drifted down 1.7 percent, held in check by a 5.6 percent decline at the core Value City Department Store franchise.
But two other retail formats both recorded improving comps. Same-store sales at DSW Shoe Warehouse rose 2.8 percent, compared with a prior-year gain of 4.5 percent; and same-store sales at Filene's Basement gained 5.1 percent versus a year-before gain of 0.3 percent.
In addition to rising sales, the retailer recorded licensing fees and other income of $1.6 million, a 2.1 percent improvement over $1.3 million during the same period a year ago.
Aiding the bottom-line recovery, average gross margin strengthened 200 basis points, or 2 percentage points, to 41.1 percent from 39.1 percent a year ago.
But acting as a drag and partially offsetting improving margins were higher costs. Measured as a percentage of sales; selling, general and administrative expenses rose 60 basis points, or six-tenths of a percentage point, to 39.5 percent from 38.9 percent a year ago.
Putting further downward pressure on earnings, stockpiles climbed faster than sales during the second quarter, rising 8.5 percent, to $517.5 million from $477.2 million, running ahead of a smaller sales gain of 4.5 percent.
Reflecting weakness earlier during the year, the retailer posted a small loss of $387,000 for the six months year to date, compared with a prior-year loss of $16.8 million. Sales for the six months increased 7.1 percent, to $1.3 billion from $1.2 billion, while same-store sales increased 1.2 percent, improving over a prior-year decline of 1.5 percent.
Retail Ventures Inc.
|Qtr. 7/31 (x000)||2004||2003||% change|
a-Second quarter results include a $797,000 provision for income tax, compared with a year before income tax benefit of $2.6 million.
b-Six month results include a $265,000 income tax benefit, compared with a prior-year income tax benefit of $11.9 million income tax benefit.
|Oper. Income (EBIT)||10,305||1,481||595.8|
|Per share (diluted)||0.03||(0.11)||--|
|Average gross margin||41.1%||39.1%||--|
|Six months||2004||2003||% CHANGE|
|Oper. Income (EBIT)||15,534||(11,833)||--|
|Per share (diluted)||(0.01)||(0.50)||--|
|Average gross margin||40.6%||38.0%||--|
2Q Same Store Sales By Segment
|Value City Department Stores||-5.6%||0.6%|
|DSW Shoe Warehouse||2.8||4.5|