MONTGOMERY WARD LOSES $38M IN PERIOD
NEW YORK — It was markdown mania at Montgomery Ward last quarter.
But the effort was made to trim assortments and make room for more casual clothing, which will hopefully lead to better business in the future.
The mass merchant logged a net loss of $38 million in the third quarter ended Sept. 28, slammed by $36 million in markdowns. The retailer, based in Chicago, said the loss stemmed from competitive pressures and “significant liquidation” sales in a company-wide effort to narrow assortments, according to its 10-Q.
Same-store sales tumbled 17 percent.
The net loss in the quarter compares with earnings of $2 million a year earlier.
Retail sales at its Montgomery Ward and Lechmere chains fell 12 percent to $1.38 billion from $1.56 billion. Sales of soft-lines dropped 12 percent, while hard lines fell 13 percent. Net revenues sank 8 percent to $1.56 billion from $1.7 billion.
The company said it is attempting to narrow its assortments to build a higher-margin business. As reported, a search is under way for a new chief executive officer to succeed Bernard Brennan, who plans to leave in January.
In apparel, the retailer is shifting toward casual lifestyle categories such as denim, activewear, team sports licensed products, and “topical” items such as Disney and Looney Tunes licensed goods, while exiting suits and separates. The company has recently added BUM, Champion and Converse apparel lines to supplement its dominant position in Lee, Bugle Boy and BIKE brands.
In hard lines, the company is emphasizing “exclusive values” on major branded merchandise while narrowing the number of computers on the shelves.
In the nine months, the net loss was $81 million against earnings of $7 million. Retail sales fell 10.3 percent to $3.98 billion from $4.4 billion, with same-store sales dropping 12 percent. Sales of soft lines fell 10 percent, and hard lines were off 8 percent. Net revenues were off 6.4 percent to $4.5 billion from $4.8 billion.