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HOUSE OF FABRICS POSTS FIRST QUARTER LOSS

 SHERMAN OAKS, Calif., May 27 /PRNewswire/ -- House of Fabrics Inc. (NYSE: HF) reported a loss in the first quarter of fiscal 1994, reflecting continued recessionary pressures affecting its industry as well as the economy.
 For the three months ended April 30, 1993, sales increased to $127,981,000, from $126,316,000 in the like period a year ago. A net loss of $693,000, equal to 5 cents per share, was recorded, compared to net income of $2,651,000, or 19 cents per share, in last year's first quarter.
 Gary L. Larkins, president and chief executive officer, commented, "The recession, with a continuing lack of consumer confidence, has hurt fabric retailers across the nation. In House of Fabrics' case, a high percentage of our stores are on the Pacific Coast, especially in California, an area which has been particularly hard hit by the recession. Also, in February and March, bad weather in various parts of the nation cut into our sales, as it did for many other retailers. Although we reported slightly higher revenues, our same store sales were down in the first quarter.
 "In addition, the rapid expansion of stores in the last two to three years has created excess capacity in our industry. This has intensified competitive pressures and hurt margins, as promotional discounts have spread throughout the business.
 "In spite of these difficulties, we expect to see some positive trends in our business. Results improved in April, following the poor weather, and we anticipate some easing of the promotional pricing that has squeezed margins throughout the industry.
 "As for the excess capacity in fabric retailing, the most that can be said is that there have been few additions to the base of stores in recent months and we expect a sharp decline in openings in the second half of the year. In the first quarter of last year, for example, House of Fabrics opened 20 new superstores and closed 18 of its older stores. In the first quarter of this fiscal year, however we opened nine superstores, all of which had previously been scheduled, and closed 19 older stores. In fiscal 1993, we opened 91 superstores and closed 63 older locations. Our current plans for 1994 call for opening approximately 25 superstores while closing approximately 65 older stores, mostly in malls."
 Larkins concluded: "House of Fabrics is pursuing efforts to cut costs wherever possible. We are moving forward with the introduction of a new point-of-sale system that should speed customer check outs, and will enhance each store's ability to track its sales and inventory.
 "While we do not expect a sharp turnaround in our business in the short term, we have the financial strength and the management team to carry us through the difficult months ahead, as our industry goes through a restructuring phase."
 House of Fabrics Inc. is one of the nation's leading chains of company-owned and operated retail fabric stores with 687 currently in operation.
 HOUSE OF FABRICS INC.
 Summary of Consolidated Operations
 (Unaudited)
 Three Months Ended
 April 30,
 1993 1992
 Sales $127,981,000 $126,316,000
 Expenses:
 Cost of sales $67,690,000 $63,421,000
 Selling, general
 and administrative $59,911,000 $56,783,000
 Operating profit $380,000 $6,112,000
 Interest expense $1,185,000 $1,265,000
 Intangibles amortization $323,000 $325,000
 Income (loss) before
 income taxes ($1,128,000) $4,522,000
 Income taxes ($435,000) $1,871,000
 Net income (loss) ($693,000) $2,651,000
 Net income (loss) per share ($0.05) $0.19
 Average shares outstanding 13,893,208 14,127,711
 Summary Balance Sheet Information
 (Unaudited)
 April 30, Jan. 31,
 1993 1993
 Inventories $279,537,000 $254,262,000
 Property $72,233,000 $68,260,000
 Total assets $411,611,000 $383,132,000
 Bank debt $97,289,000 $79,403,000
 Other liabilities $135,133,000 $124,137,000
 Total liabilities $232,422,000 $203,540,000
 Shareholders' equity $179,189,000 $179,592,000
 -0- 5/27/93
 /CONTACT: Gary L. Larkins, president of House of Fabrics, 818-995-7000/
 (HF)


CO: House of Fabrics Inc. ST: California IN: REA SU: ERN

JL-BP -- LA008 -- 2779 05/27/93 08:31 EDT
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Publication:PR Newswire
Date:May 27, 1993
Words:700
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