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True value reports strong earnings growth but flat sales.

True Value Company reported net margin of $270 million for the second quarter ended June 30, a 12.5 percent increase from $24.0 million reported last year The company attributed the improved profitability to lower labor expenses, better recovery on inventory liquidations and a favorable mix of warehouse versus direct shipments.

Sales were essentially flat, coming in at $594.4 million for the quarter compared to $597 million for the same period in 2006. If one subtracts the $63 million the company posted for a one-time gain in 2006, then the co-op's net margin actually increased 17 percent for the quarter.

Comp-store sales to core hardware stores increased 1.5 percent for the first six months of the year compared to last year For the six months ending June 30, 2007, True Value reported revenue of $1.08 billion, a decrease of 0.9 percent of $10.8 million from $1.09 billion for the same period a year ago

The 2007 year-to-date net margin was $35.7 million, down 3.0 percent of $1.1 million from $36.8 million one year ago. The prior year's net margin included a $6.3 million one-time benefit from reversals of previously established reserves for two legal matters. Excluding last year's nonrecurring gain, year-to-date net margin was up 17.0 percent.

"Strong sales in lawn and garden were a key contributor in the comp-store sales increase," said President and CEO Lyle Heidemann "With an increased focus on incorporating retail best practices into our stores and evolving to better meet consumers' needs, True Value is on the right path to expand our customer base and help our retailers experience steady, profitable growth."

The Chicago-based co-op will be introducing a new retail store prototype next month at its fall market in Atlanta. True Value hopes the female-friendly format--called Destination True Value--will enable its members to boost business by delivering a better shopping experience to customers.

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Title Annotation:NewsMakers: reporting on the industry; TruServ Corp.
Publication:Hardware Retailing
Article Type:Financial report
Date:Sep 1, 2007
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