ShopKo Stores consolidated sales increased 3.8% to $735.0 million compared with $707.9 million last year. Consolidated comparable store sales for the first quarter increased 3.9%. Net loss for the first quarter was $2.4 million compared with a net loss of $1.1 million last year. Diluted loss per share was $0.08 compared with a loss per share of $0.04 last year.
Commenting on the quarter, ShopKo Stores, Inc. President and Chief Executive Officer Sam Duncan said, “Overall, first quarter earnings were in line with our expectations. We were encouraged by the continued improvement in comparable store sales. Our increased promotional efforts generated additional traffic and sales, and indicated that our merchandise initiatives are appealing to consumers.”
Consolidated gross margin as a percent of sales was 25.0 percent compared with 25.8 percent last year. This decrease is primarily attributable to increased promotional activity in the ShopKo division.
Consolidated selling, general and administrative expenses (SG&A) as a percent of sales for the first quarter were 21.9 percent compared with 22.0 percent last year. The SG&A rate decrease was primarily attributable to sales leverage and disciplined store expense management at the ShopKo division.
Other Factors
Inventory increased 7.1 percent, principally due to expanded merchandise assortments and deeper in-stock levels to support the merchandising and sales growth initiatives. Accounts payable increased by $39.4 million due to the higher levels of inventory and the timing of clearing of certain pharmacy payables, relative to the quarter end date.
Interest expense was $8.6 million compared with $10.6 million last year, a reduction of 19.4 percent, due primarily to lower debt levels. Debt declined by $56.2 million from the first quarter of 2003. The company expects part of the decline to reverse in the second quarter because of the payables timing noted above and growth in the rate of capital expenditures.
Capital expenditures were $10.4 million compared with $2.8 million last year. The increase is related to remodeling activity in both divisions and the Omaha distribution center expansion and consolidation. The company continues to expect capital expenditures of up to $100.0 million for the fiscal year.
Second Quarter/Fiscal 2004 Outlook
The company expects its consolidated comparable store sales increase for the second quarter ending July 31, 2004 to be in the mid single digits. Second quarter earnings are expected to be in the range of $0.24 to $0.29 per share.
For the fiscal year ending January 29, 2005, the company continues to expect its consolidated sales and comparable store sales to increase in the low single digits, and its earnings to be in the range of $1.33 to $1.48 per share.
Consolidated Sales Summary (dollars in millions)
First QuarterBusiness Segments 02/01/04- 02/02/03- Change Total** Change Comp*
05/01/04 05/03/03 (13 weeks vs.
(13 weeks) (13 weeks) 13 weeks)ShopKo $552.8 $530.5 4.2% 4.2%
Pamida 182.2 177.4 2.7% 3.3%
Consolidated $735.0 $707.9 3.8% 3.9%*Comparable store sales represent sales of those stores open during both
fiscal years and do not include sales from the ShopKo wholesale optical
lab.
**Pamida division total sales variance reflects sales in the prior year
periods from seven locations, which have been closed and not replaced,
and two new Pamida locations opened in fiscal year 2003.ShopKo Stores, Inc. and Subsidiaries
Consolidated Statements of Operations
First Quarter13 Weeks 13 Weeks
Ended Ended
May 1, May 3,
(In thousands, except per share data) 2004 2003Revenues:
Net sales $735,033 $707,917
Licensed department rentals and
other income 3,096 3,047
738,129 710,964
Costs and expenses:
Cost of sales 551,222 525,254Gross margin 183,811 182,663
Selling, general and administrative
expenses 160,738 155,921
Depreciation and amortization expenses 21,500 20,971
182,238 176,892Income from operations 4,669 8,818
Interest expense 8,568 10,635Loss before income taxes (3,899) (1,817)
Credit for income taxes (1,520) (722)Net loss (2,379) (1,095)
Net loss per share of common stock:
Basic: $(0.08) $(0.04)Diluted: $(0.08) $(0.04)
Weighted average number of common shares
outstanding:
Basic: 29,210 28,930Diluted: 29,210 28,930
