HILLS OPERATING NET UP 10.9% IN 3RD QUARTER
CANTON, Mass. — Hills Stores Co. said third-quarter operating earnings before a special charge rose 10.9 percent to $30.1 million from $27.1 million.
In the quarter ended Oct. 29, a $2.2 million charge reduced operating earnings to $27.9 million. The charge related to a consent solicitation by Dickstein Partners Inc. Sales in the quarter rose 3.7 percent to $457.2 million from $440.8 million, and same-store sales were up 2.6 percent. As reported, Hills reached a settlement in September with Dickstein to end Dickstein’s hostile takeover bid. Dickstein agreed to support Hills’ proposal to repurchase 3 million common shares at $25 a share. Dickstein holds 12.6 percent of Hills’ common stock.
William K. Friend, vice president and secretary, said there are 14.1 million shares outstanding, against 14 million a year ago. Net earnings in the latest quarter were $12.9 million. After a $258 million special gain on debt forgiveness, earnings in the year-ago quarter totaled $269.1 million. Hills, which operates 150 discount stores, emerged from Chapter 11 in October 1993.
Michael Bozic, president and chief executive officer, said in a statement that improvement in operating profit reflected stable gross margins and consistent control of selling, general and administrative expenses.
He said apparel sales were hurt by unseasonably warm weather, but noted year-to-date operating earnings and sales were ahead of last year’s.
Friend said the company expects to have a strong holiday season, and has not taken markdowns on apparel yet. In the nine months, operating earnings after a $4.5 million gain from eliminating pension obligations rose 60.7 percent to $39.7 million from $24.7 million. Net earnings totaled $7 million against $252.5 million after the debt-forgiveness gain.
Sales rose 5.3 percent to $1.19 billion from $1.1 billion, and same-store sales rose 5.3 percent.
— Fairchild News Service