Retail Ventures Explores Profitability
By Don Hogsett -- Home Textiles Today, 9/13/2004
Columbus, Ohio— Steering toward a turnaround, helped by rising sales and stronger margins, Retail Ventures Inc. — parent of Value City and Filene's Basement — recorded a second quarter profit of $1.2 million, recovering from a prior-year loss of $3.6 million.
Sales at the off-price retailer increased 4.5 percent, to $631.7 million from $604.6 million the preceding year. But same-store sales drifted down 1.7 percent, held in check by a 5.6 percent decline at the core Value City Department Store franchise.
But two other retail formats both recorded improving comps. Same-store sales at DSW Shoe Warehouse rose 2.8 percent, compared with a prior-year gain of 4.5 percent; and same-store sales at Filene's Basement gained 5.1 percent versus a year-before gain of 0.3 percent.
In addition to rising sales, the retailer recorded licensing fees and other income of $1.6 million, a 2.1 percent improvement over $1.3 million during the same period a year ago.
Aiding the bottom-line recovery, average gross margin strengthened 200 basis points, or 2 percentage points, to 41.1 percent from 39.1 percent a year ago.
But acting as a drag and partially offsetting improving margins were higher costs. Measured as a percentage of sales; selling, general and administrative expenses rose 60 basis points, or six-tenths of a percentage point, to 39.5 percent from 38.9 percent a year ago.
Putting further downward pressure on earnings, stockpiles climbed faster than sales during the second quarter, rising 8.5 percent, to $517.5 million from $477.2 million, running ahead of a smaller sales gain of 4.5 percent.
Reflecting weakness earlier during the year, the retailer posted a small loss of $387,000 for the six months year to date, compared with a prior-year loss of $16.8 million. Sales for the six months increased 7.1 percent, to $1.3 billion from $1.2 billion, while same-store sales increased 1.2 percent, improving over a prior-year decline of 1.5 percent.
| Qtr. 7/31 (x000) | 2004 | 2003 | % change |
| Sales | $631,654 | $604,594 | 4.5 |
| Oper. Income (EBIT) | 10,305 | 1,481 | 595.8 |
| Net income | 1,160a | (3,648)a | -- |
| Per share (diluted) | 0.03 | (0.11) | -- |
| Average gross margin | 41.1% | 39.1% | -- |
| SG&A expenses | 39.5% | 38.9% | -- |
| Six months | 2004 | 2003 | % CHANGE |
| Sales | 1,277,954 | 1,193,126 | 7.1 |
| Oper. Income (EBIT) | 15,534 | (11,833) | -- |
| Net income | (387)b | (16,821)b | -- |
| Per share (diluted) | (0.01) | (0.50) | -- |
| Average gross margin | 40.6% | 38.0% | -- |
| SG&A Expenses | 39.4% | 39.0% | -- |
| (loss) a-Second quarter results include a $797,000 provision for income tax, compared with a year before income tax benefit of $2.6 million. b-Six month results include a $265,000 income tax benefit, compared with a prior-year income tax benefit of $11.9 million income tax benefit. |
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| 2004 | 2003 | |
| Value City Department Stores | -5.6% | 0.6% |
| DSW Shoe Warehouse | 2.8 | 4.5 |
| Filene's Basement | 5.1 | 0.3 |
| Total | -1.7 | 1.6 |
