Ames' 2Q off almost 20% vs. last year
Operations actually improved in every key measure but one — sales
By Don Hogsett -- Home Textiles Today, 9/3/2001 12:00:00 AM
ROCKY HILL, CT —
Hammered by sharply falling sales and burdened by a crushing takeover debt, Northeastern discounter Ames Department Stores Inc., slogging through its second bankruptcy in 11 years, posted a widening second-quarter loss of $26.4 million, up almost 20 percent from a year-ago loss of $22.1 million.
But it wasn't for want of trying hard or consistent execution — indeed, the beleaguered retailer recorded substantial improvement in virtually every key operational area but one, sales, as Kohl's and Target muscled into its trading area, grabbing market share.
Acting as a heavy drag on the bottom line, sales dropped off by 7.6 percent, to $806.0 million from $872.0 million last year, a costly shortfall of $66.0 million. Filing its sales and earnings report a week after its most recent bankruptcy filing, Ames did not break out same-store sales results.
Though the retailer remained mired in red ink, under successful prodding from chairman and ceo Joe Ettore it managed to improve several key operations during the second quarter, improving margins, cutting costs, radically reducing its inventories and reducing its trade payables as it paid its suppliers on time.
Despite a continued weak and increasingly promotional retail environment, Ames modestly strengthened its average gross margin by 20 basis points, to 27.9 percent from 27.7 percent a year ago.
When measured as a percentage of sharply falling sales, costs climbed higher by 80 basis points, to 29.3 percent from 28.5 percent a year ago. But that's only part of the story. Measured in real dollars, costs were actually whittled down by 4.8 percent, to $236.3 million from $248.2 million last year, a considerable cash savings of $11.9 million.
At the same time conserving cash, Ames slashed its stockpiles by 19.9 percent from year-ago levels, to $709.2 million from $885.9 million — a reduction of more than $176 million. And in spite of a sputtering cash flow, the discounter was paying its suppliers and had worked its trade payables down by 12.4 percent over the past six months, to $303.2 million from $345.9 million.
Ames Department Stores Inc.
|Qtr. 8/4 (x000)||2001||2000||% CHG|
a-Second-quarter results include an income-tax benefit of $16.2 million, compared with a year-before tax benefit of $13.6 million.
b-Six-month results include a tax benefit of $33.2 million vs. $31.4 million the prior year.
|Oper. income (EBIT)||(30,583)||(24,253)||—|
|Per share (diluted)||(0.90)||(0.75)||—|
|Average gross margin||27.9%||27.7%||—|
|Oper. income (EBIT)||(61,203)||(61,632)||—|
|Per share (diluted)||(1.84)||(1.74)||—|
|Average gross margin||28.3%||27.5%||—|
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