Byline: Evan Clark

NEW YORK — ShopKo Stores Inc.’s fourth-quarter results plummeted into the red, but managed to come in 8 cents better than Wall Street projected.
Investors seemed to like the results, pushing the firm’s share price up 58 cents to close at $8.58 on the New York Stock Exchange Thursday.
The net loss for the quarter was $47.3 million, or $1.65 a diluted share, compared to income of $49.4 million, or $1.66, a year ago. Before special items, which included a $125 million pre-tax restructuring charge in the most recent quarter, profits dropped 42.3 percent to $29.9 million, or $1.04 a diluted share. This compares to $51.8 million, or $1.74, a year ago and to Wall Street consensus estimates of 96 cents.
Sales for the quarter ended Feb. 3 were up 10.4 percent to $1.13 billion from $1.03 billion. Comparable-store sales at ShopKo stores fell 0.2 percent for the quarter.
William Podany, chairman, president and chief executive, noted in a statement, “This was a challenging year for the ShopKo team and, suffice to say, the results are unsatisfactory.”
During the year the firm sold its 64.5-percent stake in ProVantage Health Services and used the $110 million in proceeds to pay down debt. In the fourth quarter, ShopKo laid out a restructuring plan to close 23 of its underperforming stores and reduce its workforce by 2,500.
As a result, Podany said, “We are a smarter, leaner, more focused organization with a core set of stores.”
The ShopKo division experienced across-the-board softness with comps down in the low-single digits for apparel, as well as hardlines. Sales for the division rose 6.7 percent to $875.2 million in the fourth quarter.
In an effort to keep year-end inventories clean, heavy clearance activity in apparel pressured gross margins, which dropped to 24.5 percent of sales for the quarter, compared to 27.4 a year ago.
While the division isn’t changing its apparel mix, 2001 spring and fall receipts have been reduced by approximately 7 percent and 15 percent, respectively, to help ease margin erosion. Podany said on a conference call ShopKo will be “move value focused and more focused on driving traffic through our circulars.”
Fourth-quarter sales for the Pamida division jumped 24.9 percent to $258.6 million. The ceo said ShopKo was “too optimistic” in its targets for the division, which was acquired in June 1999.
For 2001, Pamida is going eliminate its juniors business and turn the space over to greater plus-size and misses assortments for the back-to-school season. The firm said there was a greater upside in the plus-size business than in juniors for the long term.
Podany told analysts on a conference call, though, that he was going to be bringing Pamida closer to its brother ShopKo division by striving for a “greater commonality in vendor structure between the two retail channels.”
Net loss for the year was $15.8 million, or 55 cents a diluted share. This compares to earnings of $102.2 million, or $3.57, a year ago. Excluding extraordinary items, earnings fell 56.7 percent to $33.1 million, or $1.14 a diluted share, from $76.4 million, or $2.67, a year ago. In addition to the fourth-quarter charge and other non-comparable items, results include pre-tax gains of $47.1 million and $56.8 million in fiscal 2000 and 1999, respectively, related to the sale of the ProVantage business.
Sales for the year jumped 15.4 percent to $3.52 billion from $3.05 billion a year ago. Comps at ShopKo stores rose 0.7 percent for the 12 months.
Last week, ShopKo reported that it secured $600 million in financing. Podany said in the statement, the extra funds provided ShopKo with “the flexibility to focus on our two highest priorities for the year, improving execution and operating results in our two retail formats and improving our cashflows to enable us to reduce debt.”
As reported, Skip Chustz last week resigned as senior vice president and general merchandise manager of ShopKo Stores after an eight-year stint.