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SERVICE MERCHANDISE ANNOUNCES SALES AND EARNINGS

 SERVICE MERCHANDISE ANNOUNCES SALES AND EARNINGS
 NASHVILLE, Tenn., Jan. 23 /PRNewswire/ -- Service Merchandise


Company, Inc. (NYSE: SME) today announced sales and earnings for the fourth quarter and year ended Dec. 28, 1991.
 For the Quarter Ended December 28, 1991
 Net earnings for the fourth quarter ended Dec. 28, 1991 increased 7.7 percent to $88,670,000, or $1.32 per share, from $82,328,000, or $1.26 per share, for the same quarter last year. The increase in net earnings was primarily attributable to reduced interest expense and improved gross margin.
 Net sales for the fourth quarter of 1991 were $1,387,811,000, compared to $1,402,458,000 for the fourth quarter of 1990, a decrease of $14,647,000 or 1.0 percent. Comparable store sales declined 4.9 percent for the quarter. The Company has added a net of 13 stores since the fourth quarter of last year.
 Gross margin for the fourth quarter of 1991, after taking into account buying and occupancy expense, was 27.4 percent of net sales, compared to 26.4 percent for the same quarter last year. The gain in margin was a result of enhanced inventory tracking and control systems, which resulted in lower inventory losses. The gain was partially offset by a decline in higher margin jewelry sales as a percentage of total net sales.
 Selling, general and administrative expenses as a percentage of net sales increased to 14.0 percent for the fourth quarter of 1991 from 13.7 percent for the fourth quarter of 1990. The increase was due primarily to lower sales and increased employee benefit costs.
 Interest expense on debt and capitalized leases decreased $5.0 million, or 15.1 percent, compared to the fourth quarter of 1990. The lower interest expense was due to the reduction of recapitalization debt, which included a prepayment of $52.8 million in the first quarter of 1991 and the favorable impact of lower interest rates on variable rate debt.
 Total long-term debt, including current maturities, decreased to $714.3 million at Dec. 28, 1991 from $825.9 million at Dec. 29, 1990 -- a reduction of 13.5 percent. The decrease was a result of scheduled payments and prepayments.
 Year Ended Dec. 28, 1991
 Net earnings for the year ended Dec. 28, 1991 increased $15,368,000, or 25.3 percent to $76,080,000, or $1.14 per share compared to net earnings of $60,712,000 or $.92 per share, for the prior year. The increase in net earnings for the year was due primarily to increased gross margins and reduced interest expense. The lower interest expense was attributable to reduced debt levels and lower interest rates.
 For the year ended Dec. 28, 1991 net sales were $3,399,752,000 compared to $3,435,037,000, for the year ended Dec. 29, 1990, a decrease of $35,285,000, or 1.0 percent. Comparable stores decreased 4.8 percent.
 Raymond Zimmerman, President and Chairman of the Board, stated, "We are pleased to report higher net earnings which reflect lower interest expense and reduced inventory losses. These results demonstrate the Company's ability to effectively manage in a difficult retail environment. Our earnings performance will allow us to prepay $27 million of the $500 million recapitalization term loan debt in addition to regularly scheduled payments in the first quarter of 1992."
 Service Merchandise Company, Inc., "America's Leading Jeweler," operates 359 catalog stores in 36 states.
 SERVICE MERCHANDISE COMPANY, INC. (N)
 (in thousands except per share data)
 Three Months Ended Twelve Months Ended
 Dec. 28, Dec. 29, Dec. 28, Dec. 29,
 1991 1990 1991 1990
 Net Sales $1,387,811 $1,402,458 $3,399,752 $3,435,037
 Net Earnings $88,670 $82,328 $76,080 $60,712
 Net Earnings Per Share (A) $1.32 $1.26 $1.14 $0.92
 Weighted Average Common
 Shares and Common Share
 Equivalents
 Outstanding (A) 67,341 65,539 66,984 65,685
 Comparable Store Sales
 Decrease (4.9) pct. (4.8) pct.
 (A) All per share data has been restated to reflect the five-for-four common stock split effected in the form of a 25 percent stock dividend on May 17, 1991.
 -0- 1/23/92
 /CONTACT: S.P. Braud, Corporate Vice President-Treasurer-CFO, Service Merchandise Company, Inc., 615-660-3300/
 (SME) CO: Service Merchandise Company, Inc. ST: Tennessee IN: REA SU: ERN


CM -- CH007 -- 2970 01/23/92 16:00 EST
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Date:Jan 23, 1992
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