Value City rebounds in 4Q

By Staff -- Home Textiles Today, 4/21/2003 12:00:00 AM

COLUMBUS, OH —

Building sales, slashing costs and bulking up margins, Value City Department Stores Inc., climbed back on track during the fourth quarter, recording a profit of $5.3 million, recovering from a year-before loss of $8.7 million.

Sales at the off-price retailer — which operates Value City Department Stores, DSW Shoe Warehouse and Filene's Basement stores — climbed by 7.2 percent, lifted by continued expansion, to $678.8 million from $632.9 million last year. But the acid test of same-store sales dropped off by 4.8 percent vs. 0.9 last year.

In a big lift to the bottom line, average gross margin widened substantially, by 250 basis points, or 2.5 percentage points. Gross margin dollars shot up by 14.7 percent, to $256.2 million from $223.5 million, driven by the combination of stronger sales and margins.

In another big assist, costs were pared back sharply, by 270 basis points, or 2.7 percent, to 35.2 percent of sales from 37.9 percent the preceding year. Measured in absolute dollars, costs were whittled down by 0.3 percent, generating a cash savings of $696,000.

Helped by the stronger margins and lower costs, the retailer put up an operating profit of $17.2 million, bounding back from last year's $16.3 million operating loss.

Additionally, the retailer kept a watchful eye on stockpiles, and inventories declined by 1.8 percent, or $7.0 million from the year-before level.

However, the retailer's interest expense more than doubled in the closing quarter, rising by 106.7 percent, to $9.5 million from $4.6 million last year, an increase of almost $5 million.

Value City Department Stores Inc.