LNT revises 2Q earnings
August 20, 2001-- Home Textiles Today,
CLIFTON, NJ — Paying out $4 million to settle a wage-related lawsuit in a California court, Linens 'N Things has revised downward its previously announced second-quarter earnings, sharply reducing its quarterly profit and producing an overall earnings decline of almost 70 percent, far steeper than the 34 percent decline it had reported.
Last month, the superstore retailer recorded a second-quarter profit of $4.6 million, down more than a third, or 34.0 percent, from $6.9 million the prior year. Now, after the $4 million pre-tax payout, $2.5 million on an after-tax basis, the company reports that profits in the quarter actually fell by 69.6 percent, to $2.1 million from $6.9 million last year.
Linens 'N Things said the $4 million cash payout settles a class action lawsuit filed in a California state court by California store managers seeking overtime pay. It also settled a separate claim for accrued vacation pay on behalf of some former Linens 'N Things workers.
On Aug. 3, the retailer said, plaintiffs in the case offered a compromise proposal. Based on that settlement offer, Linens 'N Things said it is recording the $4 million, one-time, pre-tax charge, reducing diluted earnings per share by about 6 cents a share on an after-tax basis, to 5 cents a share rather than the 11 cents originally reported.
Even though it has settled the case, Linens 'N Things said it "does not admit any liability with regard to such class action and continues to defend the matter."
While it revised earnings downward to reflect the settlement, sales and other second-quarter data remain unchanged. Driven by rapid expansion, sales at the chain increased by 14.1 percent, to $387.7 million from $339.7 million a year ago.