CANTON, Mass.--Hills Stores Inc. reported a loss of $12.4 million in the second quarter ended Aug. 3, blaming high markdowns of summer merchandise.
In the year-ago quarter, the regional discounter lost $45.2 million after $43.3 million in costs related to a July 1995 change in control. In a proxy battle, Dickstein & Co., a New York investment firm, won control of Hills' board, triggering management resignations and severance payouts.
The loss in the latest quarter included a $2.6 million charge from the refinancing and redemption of the 10.25 percent senior notes. The 1995 charge includes severance, legal and other expenses.
Hills noted that earnings before interest, taxes, depreciation and amortization (EBITDA) rose 14 percent to $3.2 million from $2.8 million.
Sales dipped 0.3 percent to $388.6 million from $389.4 million, with same-store sales down 3.6 percent. "While sales trends were positive at the quarter's beginning and end, sales were very difficult from Memorial Day through July Fourth," said Gregory K. Raven, president and chief executive officer.
The resulting volume of summer merchandise that had to be marked down caused second-quarter margins to be lower than planned, he added..
For the six months, after a $11.7 million accounting charge and the debt extinguishment charge, Hills lost $27.1 million against a loss of $49.5 million, including the change in control costs. EBITDA slumped 34.1 percent to $8.9 million from $13.5 million.
Sales slipped 0.8 percent to $758.8 million from $452.3 million.

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