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

This story first appeared in the March 14, 2003 issue of WWD. Subscribe Today.

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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