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ShopKo Set for Heady Expansion

NEW YORK — With strong second-quarter profits under its belt, ShopKo Stores Inc. is looking toward retail expansion in 2004.<br><br>Net income climbed 177.8 percent to $7.2 million, or 25 cents, during the quarter, from $2.6 million, or 9 cents,...

NEW YORK — With strong second-quarter profits under its belt, ShopKo Stores Inc. is looking toward retail expansion in 2004.

Net income climbed 177.8 percent to $7.2 million, or 25 cents, during the quarter, from $2.6 million, or 9 cents, a year ago. Excluding the amortization of goodwill and other intangible assets a year ago, profits surged almost 85 percent compared with profits of $3.9 million, or 13 cents a share, in the second quarter of 2001.

Revenues for the period ended Aug. 3 dipped 1 percent to $786.6 million from $794.5 million in the year-ago period. Comparable-store sales declined 0.6 percent.

The Green Bay, Wis.-based firm’s ShopKo division saw operating profits pick up 15.7 percent to $28.6 million, while revenues rose 1.1 percent to $586.1 million during the quarter. Same-store sales inched up 1.1 percent.

While the Pamida unit’s revenues slid 6.5 percent to $200.4 million, it drove operating earnings up 99.9 percent to $3.7 million. Comps slid 5.2 percent.

“With a solid financial foundation in place, we believe that we are now positioned to reengage in planning for long-term growth,” said Jeff Girard, interim chief executive and vice chairman of finance and administration, in a statement. The firm’s board green-lighted a capital expenditure budget for 2003 of $80 million that focused on store remodels, systems and planning for new stores.

After the effects of an accounting change, losses for the half widened to $178.4 million, or $6.10 a diluted share, from $1.5 million, or 5 cents, a year ago. Effective at the beginning of the fiscal year, the firm reduced goodwill arising from its Pamida acquisition by $186.1 million. Without this non-cash charge, ShopKo managed profits of $7.7 million, or 26 cents a diluted share.

Sales for the six months faded 3.9 percent to $1.51 billion from $1.57 billion a year ago.

For the third quarter, ShopKo is looking for losses, excluding charges, of 8 to 12 cents a share. The bottom-line expectations for the full year swing to a profit of $1.35 to $1.45 a share, before charges.