Sales, Comps Suffer At Hancock

Hancock Fabrics, Inc. reported sales for the second quarter decreased 7.3 percent, to $83.2 million from $89.8 million last year. Comps dipped 8.1 percent.

The company also saw a net loss of $5.4 million compared with a loss of $2.7 million last year.

For the year-to-date, Hancock saw sales dip 7 percent to $181 million from $195 million a year ago.

Hancock stated that the earnings comparison with last year was negatively affected by an increase in the government's Producer Price Index that the company uses to measure inflation in inventories, which resulted in higher LIFO charge to cost of sales this year.

In commenting on the results, Jane Aggers, CEO, stated, “A decline in comparable-store sales of 8.1 percent was the overriding factor weighing on the second quarter's results, although the effect was partially mitigated by a higher gross margin and control of expenses. Even with the much higher non-cash LIFO charge, gross margin increased over the previous year's second quarter, representing the first quarterly increase in margin since 2003.

“Also, selling, general and administrative expense dollars continued to be well controlled, despite having 13 more stores, incurring incremental costs in connection with the ongoing store makeovers and contending with normal expense inflationary pressures,” Aggers said.

She added that the company has been actively developing a strategy to better connect with customers as merchants look to enhance Hancock's offerings.

Hancock Fabrics, Inc.

Qtr. ended 7/30 (x000) 2004 2003 %change
Sales $83,244 $89,767 -7.27%
Oper. Income (EBIT) -8,446 -4,210 --
Net income -5,380 -2,682 --
Per share (diluted) -0.29 -0.15 --
Average Gross Margin 48.73% 48.42% --
SG&A expenses 55.40% 50.92% --
26 Weeks ended 7/30 (x000)
Sales 181,084 194,856 -7.07%
Oper. Income (EBIT) -13,631 -2,928 --
Net income -8,683 -1,866 --
Per share (diluted) -0.47 -0.1 --
Average Gross Margin 48.19% 49.24% --
SG&A expenses 52.71% 48.80% --

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