ShopKo rebounds with $34M profit in 4Q
March 18, 2002,
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.
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."