NEW YORK — Expense control and gross margin improvement boosted Goody’s Family Clothing earnings in the fourth quarter, despite sales shortfalls.
The Knoxville, Tenn.-based retailer of moderately priced apparel said Wednesday that income for the three months ended Feb. 1 was $3.9 million, or 12 cents a diluted share, reversing a loss of $7.7 million, or 24 cents, reached in the year-ago quarter. Results for the quarters in both years include pre-tax charges for property and equipment at underperforming stores of $3.5 million and $1.9 million, respectively, for 2002 and 2001. In addition, the fourth quarter of 2001 included a $1.3 million charge due to corporate restructuring.
Sales for the quarter slipped 1.5 percent to $357.5 million over $363.1 million and fell 0.4 percent on a comparable-store basis.
"Despite our progress, sales and financial results are not where we expect them to be, and the ongoing economic instability continues to make things difficult," Robert M. Goodfriend, chairman and chief executive, said on a morning conference call. "Careful inventory management and gross margin improvements and tight control in selling, general and administrative expenses allowed us to maintain our financial strength, while we try to regain market share."
Investors apparently agreed, lifting shares 67 cents, or 21.1 percent, to close at $3.84 in Nasdaq trading Wednesday. They rose another 33 cents, or 8.6 percent, on Thursday to end the day at $4.17.
Over the past year, Goodfriend said the retailer has made considerable progress in understanding its consumers and its competitive strengths and weaknesses. "We spent most of the year on the road listening to our customers and incorporating much of what we learned into our business strategy," he said.
To weather the current storms, Goodfriend said the retailer will focus on improving its merchandising of categories such as special sizes, knits and sportswear, men’s sportswear, shoes and handbags, as well as retool its advertising message to support these efforts.
It will also add brands that it believes will appeal to its middle-income consumer.
"We expect to continue to remain consumer-focused in merchandise by offering more balanced merchandise in tune with what shoppers are looking for," he said, adding he believes the retailer is doing a better job at meeting the style and sizing needs of shoppers on basic merchandise.For the year, income was $7.6 million, or 23 cents a diluted share, against a loss of $20.2 million, or 62 cents. Sales were virtually flat at $1.19 billion and comps were down 1.2 percent.
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