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GOTTSCHALKS ANNOUNCES SECOND QUARTER RESULTS

 GOTTSCHALKS ANNOUNCES SECOND QUARTER RESULTS
 FRESNO, Calif., Sept. 4 /PRNewswire/ -- Gottschalks Inc. (NYSE: GOT)


announced a net loss from operations of $668,000, or 6 cents per share for the second quarter ended Aug. 1, 1992. In addition, the company incurred a $2.0 million charge to net income reflecting the previously reported $1.5 million settlement with the U.S. Attorney's Office. The additional $.5 million on an after tax basis reflects legal and advisory fees associated with the government investigation. The company has yet to determine the cost of a potential assessment from the Internal Revenue Service related to this settlement.
 James Clifford, executive vice president, chief financial officer stated, "Over the last several weeks we have been reviewing the company's accounting policies and procedures in order to ensure that costs are properly recognized in the appropriate interim period. As a result of this review, we have changed the timing of when the company recognizes certain costs primarily related to the company's July 'Secret Sale' promotion and to annual bonuses paid to approximately 90 buyers, store managers and other members of management. Historically, the company recorded the cost of the July 'Secret Sales' promotion in August. A portion of the bonus expense was historically recognized, subsequent to payment, over the succeeding quarters within a given fiscal year. The company now records these costs in the period in which they occur or are paid. Operating results for the quarter ended Aug. 1, 1992 reflect this change in timing between quarters. Neither the company's prior methodology, nor this change, affects results for the year. In order to reflect this change and to facilitate comparisons, the company will revise its financial statements for the second quarter of 1991."
 According to Clifford, "These changes reduce pre-tax income to a loss of $337,000, producing a net loss of $210,000 for the second quarter last year compared to a previously reported net profit of $677,000. While these changes will have a corresponding benefit on the third and fourth quarters last year, the company is still reviewing those quarters. The changes in policy could result in other revisions to the third and fourth quarters of last year. These changes are not expected to affect reported results for the year."
 Clifford continued, "The net loss from operations for the second quarter this year of $668,000 is $402,000 greater than last year's revised quarter. The higher loss reflects a slightly lower gross margin, higher corporate occupancy cost and the partial year results of three new stores."
 Contrasting the loss this quarter to revised results last year, Joe Levy, chief executive officer commented, "Although we enjoyed an overall increase in sales of nearly 6 percent for the quarter, comparable store sales were slightly negative. The consumer is currently very cautious and reacts only to strong values intensifying the promotion environment. We are carefully monitoring our inventories and believe we are well positioned. The resolution of the budget crisis in California, although not a pleasant prospect, should at least settle the uncertainty which has caused some concern."
 For the six months, according to Clifford, "The company had a net loss from operation, before the one time provision, of $1.1 million, compared to revised profit of $183,000 for the first half last year. Last year's results included a pre-tax gain from the sale of real estate of $986,000."
 Gottschalks is a regional department store chain, currently operating 25 department stores and 22 specialty apparel stores in California; Tacoma, Wash. and Klamath Falls, Ore. Gottschalks offers moderate to upper moderately priced brand-name fashion merchandise.
 Second Quarter First Half
 13 weeks ended 26 weeks ended
 Aug. 1, Aug. 3, Aug. 1, Aug. 3,
 1992 1991 1992 1991
 (All amounts in thousands except per share data)
 Net sales $ 75,000 $ 70,901 $142,251 $133,831
 Service charge & other
 income 2,384 2,496 4,984 6,098
 Total 77,384 73,397 147,235 139,929
 Costs & Expenses:
 Cost of sales 50,682 47,766 95,902 89,772
 Selling, general &
 admin. expenses 24,961 22,953 47,607 43,427
 Depreciation &
 amortization 1,335 1,448 2,578 2,871
 Interest expense 1,493 1,567 2,984 3,566
 Income (loss) before
 taxes and provision for
 government settlement (1,087) (337) (1,836) 293
 Provision for government
 settlement and
 assessments 2,358 --- 2,358 ---
 Income (loss) before
 income taxes (3,445) (337) (4,194) 293
 Income taxes (749) (127) (1,037) 110
 Net income (loss) (2,696) (210) (3,157) 183
 Earnings (loss) per
 common share (0.26) (0.02) (0.30) 0.02
 Weighted average number
 of common shares
 outstanding 10,374 10,302 10,392 9,195
 Net loss (2,696) --- (3,157) ---
 Provision for government
 settlement and
 assessments, net
 of taxes 2,028 --- 2,028 ---
 Net loss before
 provision (668) --- (1,129) ---
 -0- 9/4/92
 /CONTACT: Jim Clifford of Gottschalks, 209-434-4744/
 (GOT) CO: Gottschalks Inc. ST: California IN: RET SU: ERN


TB -- SF007 -- 7151 09/04/92 19:05 EDT
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