ShopKo rebounds with $34M profit in 4Q
March 18, 2002-- Home Textiles Today,
Green Bay, WI — Climbing back on track after a sweeping restructuring and the shutdown of 23 stores, heartland discounter ShopKo Stores Inc. widened margins, cut costs and paid down debt to generate a fourth-quarter profit of $34.9 million, recovering from a year-ago loss of $47.3 million, when its bottom line was weighed down by more than $37 million in restructuring and special charges.
Weakened by store closings and a broadly soft retail environment, ShopKo sales fell of by 11.5 percent in the closing quarter, to $1.0 billion from $1.1 billion last year. Sales in ShopKo stores fell off by 4.2 percent, to $769.1 million from $802.9 million. But harder hit was the smaller-format Pamida Stores division, where sales dropped off by 9.4 percent, to $234.3 million from $258.6 million.
Despite the drop-off in sales, ShopKo expanded its margins by 240 basis points, to 26.7 percent from 24.3 percent a year ago, gaining, the company said, on improved inventory management, resulting in less clearance, and lower distribution costs, including freight.
In another big operational improvement, ShopKo slashed its operating costs by 6.5 percent, to $173.8 million from $185.9 million last year, a cash savings of $12.1 million. But given the lower level of sales, costs climbed somewhat higher when measured as a percentage of sales, to 17.3 percent from 16.4 percent the prior year.
Fueled by stronger margins and lower costs, the retailer's fourth-quarter operating profit advanced at a double-digit pace, climbing by 10.4 percent, to $75.4 million from $68.3 million.
The company's debt load was reduced by 24.3 percent, to $203.3 million, resulting in sharply lower interest costs, down 21.3 percent, to $14.4 million from $18.3 million last year, a savings of $3.9 million.
Bill Podany, president and ceo, commented, "While we fell short of our initial operating performance targets, due in part to a difficult economic environment and under-performance at our Pamida division, we achieved and, in some cases, exceeded a number of critical financial objectives for the year, resulting in improved liquidity."