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SERVICE MERCHANDISE COMPANY, INC. ANNOUNCES RESULTS

 NASHVILLE, Tenn., Jan. 27 /PRNewswire/ -- Service Merchandise Company, Inc., (NYSE: SME), today announced results for the fourth quarter and the year ended January 2, 1993.
 For the Quarter Ended January 2, 1993
 Net sales for the fourth quarter of 1992 were $1,568,425,000, compared to $1,387,811,000 for the fourth quarter of 1991, an increase of $180,614,000, or 13.0 percent. With the fiscal year ending January 2, 1993 versus December 28, 1991, the fourth quarter had four additional selling days. Adjusting for the additional selling days to a comparable 13 week basis, comparable store sales increased by 8.1 percent for the quarter. The Company believes growth in comparable store sales is indicative of the early stages of a recovery in consumer spending. In addition, sales in hurricane damaged areas of Florida and Louisiana were particularly strong. The Company has added a net of 13 new stores since the fourth quarter of 1991.
 Net earnings for the fourth quarter ended January 2, 1993 increased from $88,670,000 to $89,570,000, or $.88 per share, equivalent to the fourth quarter per share amount last year. Gross margin for the fourth quarter of 1992, after taking into account buying and occupancy expense, was 25.0 percent of net sales compared to 27.4 percent for the same quarter last year. The reduced gross margin rate is a result of the combination of strong favorable customer response to the Company's more aggressive pricing on selected categories of merchandise, higher sales increases in hardgoods as compared to jewelry and a slight reduction in both hardgoods and jewelry margins. Hardgood sales typically lead jewelry sales as an initial indicator of increased consumer spending. Another factor affecting gross margin comparability was a lower than anticipated inventory loss in the fourth quarter of 1991. Inventory losses in the fourth quarter of 1992 closely matched accrued levels.
 Selling, general and administrative expense as a percentage of net sales was 13.2 percent as compared to 14.0 percent for the same quarter in 1991, reflecting continued efforts to control expenses.
 Interest expense on debt and capitalized leases decreased by $3.7 million, or 13.0 percent, compared to the fourth quarter of 1991. The lower interest expense was due to the favorable impact of lower interest rates on variable rate debt and reduction of recapitalization debt, which included a prepayment of $27.6 million in the first quarter of 1992.
 Total long-term debt, including capitalized leases and current maturities, decreased $70.4 million to $747.8 million at January 2, 1993.
 Year ended January 2, 1993
 For the year ended January 2, 1993, net sales were $3,712,790,000 compared to $3,399,752,000 for the year ended December 28, 1991, an increase of $313,038,000, or 9.2 percent. Comparable store sales increased 5.2 percent for the year, based on a comparable 52 week basis.
 Net earnings for the year ended January 2, 1993 increased $8,415,000, or 11.1 percent, to $84,495,000, or $.83 per share, compared to net earnings of $76,080,000, or $.76 per share, for the prior year. Gross margin for the year declined from 25.8 percent to 24.4 percent. The reduced gross margin rate is a result of the combination of strong favorable customer response to the Company's more aggressive pricing on selected categories of merchandise, higher sales increases in hardgoods as compared to jewelry and a slight reduction in both hardgoods and jewelry margins. The increase in net earnings for the year was due primarily to reduced interest expense and reduced selling, general and administrative expenses as a percentage of net sales from 17.4 percent to 16.8 percent. The lower interest expense was attributable to lower interest rates and reduced debt levels.
 Raymond Zimmerman, President and Chairman of the Board, stated: "Our strong sales performance is indicative of steadily improving consumer attitudes and the beginning of an economic recovery. We continue to control our expense structure while increasing our sales base. By reducing total indebtedness by $70.4 million in 1992, we further demonstrated the cash flow capability of Service Merchandise. We look forward to continued improvement in the coming year as the economic recovery progresses."
 Service Merchandise Company, Inc., "America's Leading Jeweler," operates 370 catalog stores and two Kids Central USA stores in 37 states.
 SERVICE MERCHANDISE COMPANY, INC. (N)
 (in thousands except per share data)
 Three Months Ended Twelve Months Ended
 1/2/93 12/28/91 1/2/93 12/28/91
 Net Sales $1,568,425 $1,387,811 $3,712,790 $3,399,752
 Net Earnings $89,570 $88,670 $84,495 $76,080
 Earnings Per Share(A) $0.88 $0.88 $0.83 $0.76
 Weighted Average
 Common Shares and
 Common Share Equivalents
 Outstanding(A) 101,887 101,012 101,602 100,476
 Comparable Store
 Sales Increase(B) 8.1pct. 5.2pct.
 (A) All per share data has been restated to reflect the three-for- two common stock split effected in the form of a 50 percent stock dividend in May 1992.
 (B) Adjusted to reflect a comparable 13 and 52 week basis, respectively.
 -0- 1/27/93
 /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

SB-CM -- CH009 -- 9860 01/27/93 16:17 EST
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Date:Jan 27, 1993
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