Byline: Thomas J. Ryan

NEW YORK — Parisian Inc. substantially lifted its profits in the third quarter ended Oct. 28, helping the Birmingham, Ala.-based department store chain return to the black in the nine months.
Parisian, which was taken private in a leveraged buyout in 1988, continues to file its numbers with the Securities and Exchange Commission because of publicly held debt in the company.
In the quarter, Parisian’s net earnings rose to $878,517 from $33,948 a year earlier, with operating earnings more than doubling to $4.9 million from $2.2 million. Sales rose 4.7 percent to $167.2 million from $159.6 million, but slid 4.6 percent on a same-store basis.
Parisian blamed the same-store decline on the continuing weakness in the apparel market, fewer sales of clearance merchandise and the discontinuation of certain lines of women’s apparel that had been losing money in recent seasons.
The overall sales gain reflected the opening of four stores in fall 1994, one in May 1995 and two in September 1995.
In the nine months, Parisian reported earnings of $2.8 million, rebounding from a loss of $3.2 million.
Sales advanced 8.7 percent to $455.7 million from $419.3 million. Same-store sales fell 4.1 percent. The bottom line was boosted by several organizational changes made since 1994 as well as cost reductions in payroll and other areas, according to Parisian. The changes included streamlining its buying organization, the implementation of a planner/distributor organization and installation of more-advanced inventory systems.
The company also changed its mixture of merchandise in order to increase its emphasis on moderately priced goods.
Gross margins in the quarter expanded to 37.1 percent from 36.6 percent, while selling, general and administrative expenses were trimmed to 25.8 percent of sales from 27.5 percent.
The company, which operates 38 stores, plans only one opening next year, in Columbiana Mall, Columbia, S.C., in March. In November 1995, Parisian sold its store in Sarasota, Fla., to Dillard Department Stores Inc. and received in return the right to the Columbia store location as well as other considerations.
Parisian said it might renovate and expand some locations over the next several years. After 1996, it expects to open one to three stores a year and is considering a total of 15 added units.
Filippe Goossens, a high-yield analyst at Moody’s Investors Service, said that while Parisian’s same-store sales are still soft, cost reductions, better inventory controls and strong micro-marketing capabilities have boosted margins. “That speaks well in today’s environment,” said Goossens.
However, Goossens pointed out that the company will have a difficult time competing in the long run against many larger department store competitors, such as Federated and May.
“I think Parisian has turned the corner, but I have to question whether they will be able to survive on their own in an industry that is consolidating,” Goossens said. “You can only squeeze costs so far.”
Goossens suspects that the company will eventually be mergeed with another department store chain so it can o better compete with the larger department store organizations, or that it will become an acquisition target of the larger chains.
— Fairchild News Service

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