NEW YORK--Stung by a big charge for selling Woolco stores and difficulties in Germany, Woolworth Corp. said Thursday its loss widened to $42 million in the second quarter ended July 30, from a loss of $10 million a year ago.
Woolworth's posted an operating loss of $7 million in the latest quarter. The loss included a $30 million provision for selling Woolco stores in Canada to Wal-Mart, partly offset by an $8 million gain from selling securities in Germany. A year ago, Woolworth's had a $14 million operating profit. Year-ago results were restated due to an investigation into accounting irregularities announced in March. Net figures for the year were unchanged, though quarterly results were adjusted. At the specialty group, which includes Foot Locker, Northern Reflections and Champ Sports, operating profits increased 23.1 percent to $32 million. The general merchandise division had an operating loss of $39 million, including the Woolco charge.
Woolworth's said its North American operations have improved since over 1,000 stores closed last year.
"They've bitten the big bullet as far as store closings, and the company continues to move away from the variety store format where it's difficult to compete against discounters," said Isaac Lagnado, of Tactical Retail Solutions. "Those are good strategic decisions." Total sales in the quarter dropped 18 percent to $1.9 billion from $2.3 billion, reflecting the closings.
--Fairchild News Service

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