NEW YORK — Sagging sales and special charges depleted ShopKo Stores Inc.’s bottom line in the fourth quarter.

For the three months ended Feb. 1, the Green Bay, Wisc.-based discount retailer said net income regressed 6.3 percent to $32.7 million, or $1.12 a diluted share, versus earnings of $34.9 million, or $1.21, in the prior-year quarter. Although ShopKo took a pre-tax $6 million restructuring charge, earnings per share did manage to beat the Wall Street estimate by 3 cents.

Sales for the period declined 4.5 percent to $961.4 million from $1 billion a year ago, as same-store sales fell 4.1 percent.

"We are pleased to report that the company delivered solid results, reflecting a significant improvement in our Pamida division and meaningful working capital management," said chief executive officer Sam Duncan in a statement. "I am particularly pleased that we reduced our net debt position by $182 million during fiscal 2002. This performance, along with last year’s $198 million net debt reduction, has significantly improved our balance sheet."

At the Pamida division, operating income soared more than sixfold, or 557.3 percent, to $11.6 million from $1.8 million a year ago, even though sales fell 5.1 percent to $222.2 million from $234.3 million last year. Comparable-store sales decreased 3.7 percent. The ShopKo segment saw operating income retreat 12.9 percent to $70.2 million from $80.6 million. Sales declined 4.3 percent to $736.2 million from $769.1 million, and comps dipped 4.3 percent.

In other operating indicators, a reduction in shrinkage expense and improved margin rates at Pamida allowed gross margins to expand to 26.9 percent of sales from 26.7 percent in the year-ago period.

Overall, for the full fiscal year, ShopKo recorded a net loss of $144.8 million, or $4.95. By comparison, the firm produced earnings of $28.2 million, or 98 cents, in fiscal 2001. Excluding a change in accounting principle in both years, income would have increased 68.5 percent to $39.6 million, or $1.35, versus $23.5 million, or 82 cents.

Sales for the year receded 4 percent to $3.25 billion from $3.39 billion a year ago. Excluding closed stores, sales declined a more modest 2.3 percent from $3.33 billion.In guidance, the company said first-quarter earnings per share are expected to land between break even and a loss of 5 cents. For the full fiscal year, earnings are forecast at $1.40 to $1.50 a share.

The results helped push ShopKo shares up 62 cents, or 6.1 percent, to close at $10.72 in New York Stock Exchange trading Thursday.

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