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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.

This story first appeared in the August 28, 2002 issue of WWD.  Subscribe Today.

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.