GOODY’S FORESEES 3RD-QUARTER LOSS; LOWER MARGIN SALES ARE BLAMED
KNOXVILLE, Tenn. — Hit by lower margin sales, Goody’s Family Clothing will post an operating loss in the range of $300,000 to $700,000, or 2 cents to 4 cents a share, for the third quarter. In addition, the company will take a pretax charge of $2.5 million to $3 million mainly for legal expenses, further reducing after-tax earnings by 10 to 12 cents a share.
As reported, Goody’s — which operates 165 stores — has been embroiled in a struggle between its majority shareholder, Robert M. Goodfriend, who has indicated he wants to take the firm private, and its directors, who adopted a poison pill last month.
Goodfriend, who holds a 63.2 percent stake, remains on a leave of absence as chief executive officer while the board assesses the seriousness of his intentions to purchase the firm.
Goody’s also had to take a reserve for the anticipated settlement of a class action suit related to an accounting scandal that broke last November. The transaction involved a corporate investment that was not properly recorded in the firm’s books.
The charge also covers costs of establishing a special committee of the board and related expenses including legal fees. In addition, Goody’s has struggled with weak apparel sales and continuing margin pressure. In August the firm said it did not expect to meet projections for third quarter results. Sales in the quarter rose 19.3 percent to $147.4 million from $123.6 million, while same-store sales increased 2.3 percent.
Sales in the nine months rose 21.2 percent to $404.1 million from $330.9 million. Same-store sales were up 4.9 percent.
Complete third-quarter results are expected in mid-November.
— Fairchild News Service