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Holiday Markdowns Take Toll on Talbots

BY CSA STAFF

Hingham, Mass., Talbots said its profit for the fourth quarter, ended Jan. 29, dropped due to markdowns taken to clear merchandise after the holidays. The chain posted a 27% decline in net income to $16 million, or 29? a share, compared with profit of $22 million, or 38? a share, a year ago. The results were in line with the company’s own estimates, as well as those of analysts.

Similar to other retailers, Talbots said it is changing the way it accounts for leases due to new regulatory guidelines. The retailer said it believes the impact to earnings in any given period from the restatement of some results will not be significant.

Sales for the quarter rose 11% to $470.7 million from $433.7 million a year ago. Same-store sales were up 4.4%. Net sales fell short of analysts’ average expectation of $479.3 million.

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Frank’s Nursery & Crafts Files Reorganization Plan

BY CSA STAFF

Troy, Mich., Frank’s Nursery & Crafts announced the filing of its proposed plan of reorganization in the Bankruptcy Court for the Southern District of New York. The company filed for Chapter 11 bankruptcy protection in September 2004. Frank’s has concluded the wind-down of its store operations by completing going-out-of-business sales at its locations and has also sold or rejected substantially all of its leasehold interests.

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Kroger Reported to Consider Winn-Dixie Buy

BY CSA STAFF

Cincinnati, Kroger Co. may be considering making a play for a large chunk of Winn-Dixie, according to a report in the South Florida Business Journal. Kroger would serve as a supplier to a portion of the bankrupt supermarket operator’s 900-plus supermarkets at first. Eventually, it would take over Winn-Dixie’s operations in northern Florida and other states, the report said, with Winn-Dixie retaining a core group of stores in southern and central Florida.

In other news, Kroger reported wider fourth-quarter losses due to a hefty impairment charge related to the company’s Ralph’s and Food 4 Les chains. Quarterly losses totaled $675.9 million, or 93? per share, including a goodwill impairment charge of $884 million, or $1.21 per share. In the year-ago period, Kroger reported a loss of $337.4 million, or 45? per share, including charges of $663.1 million, or 89? per share. Total sales increased 5.1% to $13.7 billion from $13.03 billion last year.

Looking ahead, Kroger expects 2005 net income to exceed $1.16 per share, excluding the effect of the goodwill impairment charge. Kroger expects its earnings growth to be fueled by improved results in Southern California and lower interest expense.

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