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Gottschalks gets 4Q boost from Lamonts

Don Hogsett -- Home Textiles Today, March 5, 2001

FRESNO, CA -Getting a big lift from strong same-store sales and 34 recently purchased Lamonts apparel stores, fourth-quarter profits before one-time items at Gottschalks Inc. shot up by 20.1 percent, to $10.4 million from $8.6 million the prior year.

For the 12-month fiscal year, earnings before one-time items jumped up by 35.1 percent, to $10.6 million from $7.8 million a year ago.

Lifted by the Lamonts buyout, sales at the West Coast chain advanced by 38.3 percent, to $258.9 million from $187.2 million last year. Same-store sales advanced a healthy 5.8 percent. For all of last year, sales moved up by 22.6 percent, to $663.9 million from $541.3 million the preceding year, while same-store sales moved up by 5.6 percent.

"Our record earnings were primarily the result of consistent comparable store sales increases throughout the year, which were among the highest in our industry," said Jim Famalette, president and ceo. "We are continuing to capitalize on the momentum we have created with our customer base by offering a strong moderate merchandise selection. Additionally, our loyalty programs continue to grow in importance, resulting in a positive impact on our average customer spending levels during the year."

While Gottschalks stores continued to be strong performers, the Lamonts Apparel units have been something of a disappointment, Famalette acknowledged. "While our comparable stores performed very well during both the quarter and the full fiscal year, the 34 newly acquired Lamonts Apparel stores, which were opened in September, performed below our expectations during their first five months of operation. We are actively modifying their operations as well as their merchandise assortments as we begin to learn more about these new market areas."

Pinpointing some of the problems, Famalette cited "slower than expected roll out of major cosmetics lines; a lower than expected initial Gottschalks credit card market penetration; and the short period of time available to prepare and execute our strategy for the holiday selling season. We expect the successful execution of our action plans will result in improvements in their contribution in fiscal 2001."

Looking ahead, Famalette said the retailer is targeting same-store gains of 3.0 percent above 2000 levels, and total sales gains of about 17 percent, reflecting a full-year of sales from Lamonts.

Gottschalks Inc.


Qtr. 2/3 (x000) 2001 2000 %CHG

Sales

$258,900

$187,234

38.3

Oper. income (EBIT)

20,976

17,121

22.5

Net income

10,381a

7,462a

39.1

Per share (diluted)

0.82

0.59

39.0

Average gross margin

33.5%

34.0%

-

SG & A expenses

25.8%

25.4%

-

12 months

2001

2000

%CHG

Sales

663,868

541,275

22.6

Oper. income (EBIT)

23,789

22,662

5.0

Net income

7,079b

6,636b

6.7

Per share (diluted)

0.56

0.53

5.7

Average gross margin

34.7%

34.6%

-

SG & A expenses

30.4%

31.0%

-


Average gross margin and SG & A expenses are calculated as a percentage of net retail sales, excluding credit revenues and leased department sales.

a-Fourth-quarter results include miscellaneous income of $361,000 vs. $453,000 in 2000; prior-year results include an asset impairment charge of $1.9 million.

b-12-month results include miscellaneous income of $1.4 million vs. $1.6 million a year ago; and a pre-tax charge of $5.6 million related to the reopening of stores acquired from Lamonts. Prior-year results include an asset impairment charge of $1.9 million.

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