Retail Ventures Charts Negative Territory

By Don Hogsett -- Home Textiles Today, 12/13/2004 12:00:00 AM

Columbus, Ohio — —

Columbus, Ohio — Hobbled by falling same-store sales and sharply rising costs, Retail Ventures Inc., parent of Value City and Filene's Basement, recorded a $940,000 third quarter loss, compared with a prior-year profit of $901,000.

Helped by continued expansion, overall sales at the diversified retailer improved 2.8 percent, to $699.7 million from $680.6 million last year. But the crucial gauge of same-store sales slumped 4.1 percent, with all of the damage to comps done by a steep 7.8 percent slide at Value City Department Stores, which offset modest gains elsewhere.

Same-store sales ticked up 1.2 percent at Filene's Basement, and 0.7 percent at DSW Shoe Warehouse.

Putting the bottom line under heavy pressure, in addition to falling comps, were sharply higher costs, which more than offset gross margin improvement. Measured as a percentage of sales, costs shot up 240 basis points, or 2.4 percentage points, to 39.1 percent from 36.7 percent the prior year. Measured in absolute dollars, costs shot up 9.6 percent, to $273.6 million from $249.6 million a year ago.

Partially offsetting higher costs were stronger margins, which improved 160 basis points, or 1.6 percentage points, to 40 percent from 38.4 percent a year ago. Gross margin dollars increased 7.1 percent, to $280 million from $261.4 million.

Taking a modest bite out of the bottom line, interest expense climbed 3.8 percent, to $9.9 million from $9.6 million.

Adding to the shortfall at the bottom line was an inventory position that grew more rapidly than sales, climbing 6.8 percent, to $584.8 million, outpacing the 2.8 percent sales gain.

Retail Ventures Inc.

3Q Same-Store Sales By Segment