Byline: Thomas J. Ryan

NEW YORK — The promotional behavior of many department stores proved little hindrance for Ross Stores and Bradlees Inc. On Tuesday, both reported solid fourth-quarter earnings gains.
Ross, the nation’s second-largest off-pricer, said it benefited from opportunistic buys in the market and sizzling demand for juniors, though home overall outpaced apparel.
Ross, based in Newark, Calif., announced plans to accelerate store openings in 2001 and 2002 to reach new markets. Bradlees said it was helped by strength in home and the exit of Caldor, and was prepared for Kohl’s entry into the Northeast.
Before a charge tied to a lawsuit, Ross’s earnings rose 10 percent to $48.2 million, or 54 cents a share, from $45.6 million, or 49 cents, a year ago, matching a projection made in early February.
The latest quarter included a $9 million charge, or 6 cents a share, related to a class action complaint alleging store managers and assistant managers in California were incorrectly classified as exempt from state overtime laws. Ross plans to settle the suit without admitting any wrongdoing. After the charge, net earnings were $42.7 million, or 48 cents.
Sales advanced 10.2 percent to $694.5 million, with same-store sales ahead 2 percent. Top categories were home, bed and bath, and juniors.
Vice chairman and chief executive Mark Balmuth noted on a conference call that improvement came despite a “more promotional climate at the department store sector” and was driven by better buying, strict inventory controls and improved sales productivity.
“The capacity both in moderate and better is certainly more than adequate right now for the off-price sector,” Balmuth told analysts. Ross’s merchant head count increased 15 percent to 180 last year, and another 10 percent should be added this year, Balmuth said. Most of the hires are former department store buyers.
In the full year, earnings gained 12.2 percent to $150.1 million, or $1.64 a share, but gained 21 percent to $155.6 million, or $1.70, excluding the charge. Sales increased 13.1 percent to $2.47 billion, and rose 6 percent on a comp basis.
Bradlees, the 104-unit discounter, based in Braintree, Mass., said earnings before interest and reorganization items climbed 21.3 percent to $25.1 million from $20.7 million. Net earnings reached $19 million, or $1.69 a share. The 1999 fourth quarter included a $311.3 million charge related to debt forgiveness associated with its emergence from Chapter 11 proceedings that led to net earnings of $320.5 million.
Sales advanced 8.5 percent to $467.3 million, with same-store sales ahead 7 percent.
Peter Thorner, chairman and chief executive, said the sales were led by home and seasonal categories. “Like the rest of the industry, we experienced a softening in the apparel business,” Thorner said, though plus sizes did well. Thorner said Bradlees planned to reduce apparel assortments by 3 to 5 percent and replace them with the more profitable home business. But he said most of the lost apparel space will come from “dress-up” apparel rather than casual.
Bradlees is forecasting only low single-digit same-store growth this year. An estimated 28 stores, predominantly Kohl’s and Target, will open within a five-mile radius of a Bradlees store this year. But Thorner overall expects only a “minimal impact” from the arrival of Kohl’s in the Northeast.
“They are targeting a more upscale customer with prices 30 to 50 percent above ours,” he said. “Importantly, Kohl’s does not carry commodities, and that’s an area that we use in discounting to drive traffic to our stores.”
In the full year, the net loss was $9.4 million. The year-ago net profit reached $285.9 million after the special gain. Sales gained 11.7 percent to $1.54 billion.

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