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Gottschalks halves last year's loss

Don Hogsett -- Home Textiles Today, May 31, 2004

Helped by a combination of stronger same-store sales, improving margins and lower costs, Gottschalks Inc. reported a sharply narrowed first quarter loss of $2.1 million, lower by 47 percent than a year-before loss of $4 million.

Excluding results of stores shuttered earlier as part of an overhaul of operations, same-store sales at the West Coast independent department store chain increased 4.8 percent, to $144.5 million from $137.9 million.

Steadily improving its operations, Gottschalks bolstered margins 60 basis points, or six-tenths of a percentage point, to 34.4 percent from 33.8 percent a year ago. At the same time tweaking expenses, the retailer reduced its costs, when measured as a percentage of sales, to 34.1 percent from 34.9 percent, an improvement of 80 basis points, or eight-tenths of a percentage point.

Further trimming its losses, the retailer narrowed its loss on discontinued operations to $20,000 from $424,000 the preceding year.

Keeping a tight grip on stockpiles, Gottschalks reduced its inventories 1.5 percent, to $185 million from $187.8 million.

Jim Famalette, president and CEO, commented, "We are very pleased with the strong year-over-year improvement we achieved in our bottom line for the quarter." Gottschalk's 100th anniversary promotion, he said, "was successfully launched in March and contributed to our positive sales trend for the quarter. We continue to focus on improving our merchandise flow through better planning and allocation. We also benefited from the growing utilization of our automatic inventory-replenishment system, and, as a result, we increased our inventory turn."

Gottschalks Inc.

Qtr. 5/1 (x000) 2004 2003 % chg
(loss)
a-Net retail sales, excluding credit revenues of $839,000, down 43.1 percent from $1.5 million last year; and net leased department revenues of $752,000, down .03 percent from $754,000 the prior year.
b-First-quarter results include miscellaneous income of $2.4 million versus $3 million a year ago; an income-tax benefit of $1.4 million, compared with $2.1 million last year; and a loss of $20,000 from discontinued operations, down from a year-before deficit of $424,000.
Sales $144,533a $137,915a 4.8
Oper. income (EBIT) 2,064 674 206.2
Net income (2,108)b (3,897)b
Per share (diluted) (0.16) (0.31)
Average gross margin 34.4% 33.8%
SG&A expenses 34.1% 34.9%


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