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VALUE MERCHANTS, INC. NINE MONTHS' NET INCOME INCREASES 121 PERCENT WITH A 51 PERCENT INCREASE IN THIRD QUARTER NET INCOME

 VALUE MERCHANTS, INC. NINE MONTHS' NET INCOME INCREASES


121 PERCENT WITH A 51 PERCENT INCREASE IN THIRD QUARTER NET INCOME
 MILWAUKEE, Nov. 25 /PRNewswire/ -- Third quarter net income of Value Merchants, Inc. (NASDAQ: VLMR), a national retailer and wholesaler of close-out merchandise, for the 12-week period ended Nov. 9, 1991, was 51 percent ahead of the same period a year ago totaling $1,671,000 compared with $1,105,000.
 Income per share for the 12-week period increased to 23 cents, on 7,370,000 weighted average common shares outstanding, an increase of 28 percent from the 18 cents reported a year ago on 6,147,000 weighted average common shares outstanding. The increase in weighted average shares outstanding was due primarily to a public stock offering of 575,000 shares in May, 1991, and a private sale of 500,000 shares of common stock in September 1991.
 Net sales for the 12-week period this year totaled $53,264,000, a 62 percent increase over the $32,865,000 net sales reported in 1990.
 For the fiscal 9-month period (40 weeks) Value Merchants recorded a 121 percent increase in net income from the same period a year ago. For fiscal 1991, 9-month net income totaled $2,561,000 or 37 cents per share on 6,869,000 weighted average shares outstanding compared with $1,158,000, or 20 cents per share on 5,796,000 weighted average shares outstanding. Net sales for the 9-month period were 68 percent ahead of a year ago totaling $137,019,000 compared with $81,520,000.
 After accounting for the cumulative effect of the fiscal change in inventory valuation method to absorb certain direct warehouse expenses in inventory values for years prior to fiscal 1990, last year's 40-week net income totaled $1,879,000 or 32 cents per share.
 Value Merchants, Inc. is the Milwaukee-based operator of Toy Liquidators and Everything's A $1.00 (EAD) retail stores, which specialize in quality, close-out value retailing, and Wisconsin Toy Wholesale Company, the nation's largest wholesaler of close-out toys.
 "Net sales for each of the company's retail and wholesale operations were up substantially from a year ago," Steven J. Appel, president and chief executive officer stated. "Additionally, the increase in net income reflects the economies of scale we are achieving without successful store expansion."
 Everything's A $1.00 stores achieved a 115.1 percent sales increase for the 9-month period and total toy sales recorded an increase of 36.6 percent for the same period. Comparable store sales for the quarter and 9-month period respectively reported by Everything's A $1.00 (60 stores) were up 6.5 percent and 5.5 percent from a year ago while Toy Liquidators (70 stores) reported increases of 14.2 percent and 18.6 percent for those same respective periods from a year ago. (Comaprable stores are all stores operating for at least a full year prior to the start of this fiscal year on Feb. 3, 1991).
 At the close of the 9-month period, Everything's A $1.00 was operating 194 stores compared with 102 a year ago. Toy Liquidators had 114 stores operating at the end of the 9-month period compared with 100 a year ago. On Oct. 31, 1991, Toy Liquidators opened 39 temporary Christmas stores in four cities compared with 16 operating a year ago in two cities. These stores operated for 10 days during the third quarter periods.
 "During this 12-week period." Appel stated, "Forty-two Everything's A $1.00 stores and eight Toy Liquidators stores were opened in addition to our temporary Christmas stores, giving added strength to our net sales results. By Christmas, Everything's A $1.00 will be operating about 206 stores, nearly double the number in operation at the beginning of the year," he said.
 Average daily sales for non-comparable EAD stores (134 stores) for the third quarter and year-to-date respectively were 41.2 percent and 36.9 percent higher than the average daily sales of comparable stores. Average daily sales for non-comparable Toy Liquidators stores (44 stores) for the third quarter and year-to-date respectively were 2.0 percent and 8.9 percent higher than the average daily sales of comparable stores. "Generally, our new stores are located in better malls than our older stores," Appel said.
 "We continue to be pelased with our operating results and believe our performance reflects our positioning in the value segment of retailing. However, we are cautious in our outlook for the fourth quarter. Lack of consumer confidence in a sustained growing economy and a highly promotional retailing environment, coupled with six fewer days this year between Thanksgiving and Christmas, presents a real challenge to retailers regardless of market niche." Appel said.
 VALUE MERCHANTS, INC. AND SUBSIDIARY
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 FOR THE QUARTER AND THE TEN PERIODS ENDED
 NOV. 9, 1991 AND NOV. 10, 1990
 THIRD QUARTER
 1991 1990
 Net sales $53,264,000 $32,865,000
 Cost of sales, including
 warehouse expenses 30,481,000 19,114,000
 Gross profit 22,783,000 13,751,000
 Operating Expenses
 Selling and store expenses 15,210,000 9,185,000
 General and administrative
 expenses 3,986,000 2,275,000
 Total operating expenses 19,196,000 11,460,000
 Income from operations 3,587,000 2,291,000
 Interest expense, net 945,000 467,000
 Income (loss) before income tax
 provision (benefit) and
 cumulative effect of accounting
 change 2,642,000 1,624,000
 Income Tax Provision (Benefit) 971,000 719,000
 Income before cumulative effect
 of accounting change 1,071,000 1,105,000
 Cumulative effect on prior years
 of change in method of valuing
 inventories, less, related income
 tax effects --- ---
 Net income $ 1,671,000 $ 1,105,000
 Income per share:
 Income before cumulative effect
 of accounting change 0.23 0.18
 Cumulative effect on prior years
 of change in method of valuing
 inventories --- ---
 Net income per common share $ 0.23 $ 0.18
 YEAR-TO-DATE
 1991 1990
 Net sales $137,019,000 $81,520,000
 Cost of sales, including
 warehouse expenses 79,681,000 47,579,000
 Gross profit 57,338,000 33,941,000
 Operating Expenses
 Selling and store expenses 40,181,000 24,816,000
 General and administrative
 expenses 10,782,000 6,032,000
 Total operating expenses 50,963,000 30,848,000
 Income from operations 6,375,000 3,093,000
 Interest expense, net 2,299,000 1,293,000
 Income (loss) before income
 tax provision (benefit) and
 cumulative effect of
 accounting change 4,076,000 1,800,000
 Income Tax Provision (benefit) 1,515,000 642,000
 Income before cumulative effect
 of accounting change 2,561,000 1,158,000
 Cumulative effect on prior years of
 change in method of valuing
 inventories, less, related income
 tax effects --- 721,000
 Net income $ 2,561,000 $ 1,879,000
 Income per share:
 Income before cumulative effect of
 accounting change $ 0.37 $ 0.20
 Cumulative effect on prior years of
 change in method of valuing
 inventories --- 0.12
 Net income per common share $ 0.37 $ 0.32
 -0- 11/25/91
 /CONTACT: Gary Kastel of Value Merchants, Inc., 414-274-2976/
 (VLMR) CO: Value Merchants, Inc. ST: Wisconsin IN: REA SU: ERN


CG -- CL015 -- 6984 11/25/91 15:47 EST
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Date:Nov 25, 1991
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