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HOUSE OF FABRICS REPORTS SECOND QUARTER RESULTS

 SHERMAN OAKS, Calif., Sept. 8 /PRNewswire/ -- House of Fabrics Inc. (NYSE: HF) experienced a loss in the second quarter ended July 31, 1993, which historically has been the quarter with the lowest operating profit.
 The net loss for the second quarter amounted to $4,032,000, equal to 29 cents per share, compared with a net loss in the corresponding quarter a year ago of $415,000, or 3 cents per share. Second quarter sales were $129,240,000, an increase of 2 percent from $126,617,000 in the prior year.
 For the first half, the net loss amounted to $4,725,000, equal to 34 cents per share, compared with net income of $2,236,000, or 16 cents per share, in the prior year. First-half sales were $257,221,000, compared with $252,933,000 one year ago.
 Gary L. Larkins, president and chief executive officer, said: "The environment for the retail fabrics business continues to be difficult and challenging due to overstoring and intense competition. Our margins have been hurt by the discounting and promotional activities which have been instituted in response to current competitive pressures. In addition, we continue to feel the impact of severe recessionary conditions on the West Coast, and particularly in California, where many of our stores are located.
 "While the sales trend continues weak overall, we did note some improvement in second quarter store-for-store sales which showed a 2.1 percent decrease, compared with a 5.8 percent reduction in the first quarter. In the current environment, we continue to control costs and keep operations as lean and efficient as possible.
 "In view of excess store capacity in the industry, we have chosen, like many of our competitors, to substantially reduce new store openings. The conversion of the company's operations to large superstores from smaller mall-based units is going forward, but at a much slower pace.
 "In the second quarter, we opened 11 new superstores while closing 21 older locations. For the first half, 20 new superstores were opened, and 40 older locations were closed. In the fiscal year ending Jan. 31, 1994, the company expects to open 25 new superstores while closing 65 older locations, primarily in malls."
 Larkins concluded: "While economic and competitive factors continue to create near-term uncertainties, we are optimistic about the company's longer-term future. House of Fabrics expects to emerge from the present industry shakeout in an improved competitive position."
 House of Fabrics Inc. is one of the nation's leading chains of company owned and operated retail fabric stores with 667 currently in operation.
 HOUSE OF FABRICS INC.
 Summary of Consolidated Operations
 (Unaudited, Thousands of Dollars)
 Three Months Ended July 31, 1993 1992
 Sales $129,240 $126,617
 Expenses
 Cost of sales 71,277 66,326
 Selling, general and administrative 61,504 59,036
 Operating profit (loss) (3,541) 1,255
 Interest expense 1,709 1,403
 Intangible amortization 324 324
 Income (loss) before income taxes (5,574) (472)
 Income taxes (benefit) (1,542) (57)
 Net income (loss) ($4,032) ($415)
 Net income (loss) per share ($.29) ($.03)
 Average shares outstanding 13,846,163 13,988,750
 Six Months Ended July 31, 1993 1992
 Sales $257,221 $252,933
 Expenses
 Cost of sales 138,967 129,747
 Selling, general and administrative 121,415 115,819
 Operating profit (loss) ($3,161) 7,367
 Interest expense 2,894 2,668
 Intangible amortization 647 649
 Income (loss) before income taxes (6,702) 4,050
 Income taxes (benefit) (1,977) 1,814
 Net income (loss) ($4,725) $2,236
 Net income (loss) per share ($.34) $.16
 Average shares outstanding 13,869,934 14,058,157
 HOUSE OF FABRICS INC.
 Summary Balance Sheet Information
 (Unaudited, Thousands of Dollars)
 July 31, July 31,
 1993 1992
 Inventories $292,086 $278,396
 Property - net $71,108 $62,043
 Total assets $431,305 $398,770
 Bank debt $133,646 $113,290
 Other liabilities $122,470 $109,153
 Total liabilities $256,116 $222,443
 Shareholders' equity $175,189 $176,327
 -0- 9/8/93
 /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-MF -- LA012 -- 9648 09/08/93 09:06 EDT
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Publication:PR Newswire
Date:Sep 8, 1993
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