Bombay 4Q profits drop; year's results strong
By Clint Engel -- Furniture Today, March 21, 2004
FORT WORTH, Texas — FORT WORTH, Texas— The Bombay Company reported a 12.3% drop in fourth-quarter profits and said its first-quarter loss will be larger than analysts projected as infrastructure investments and marketing and expansion costs put pressure on the bottom line.
Net income for the 471-store home furnishings specialty retailer declined from $13.8 million to $12.1 million in the quarter ended Jan. 31. Sales grew nearly 12% to $211.6 million, while same-store sales grew 1%.
Nevertheless, it was a turnaround year for Bombay, with net income for the full year increasing 37.9% to nearly $10 million on a 20.7% sales gain to $596.4 million. Same-store sales jumped 13%.
Fourth-quarter gross margins declined to 31.7% from 34.5% of revenues because of promotional selling, particularly during the holiday season. Soft sales during the quarter led to higher-than-anticipated inventories.
Bombay's non-store business — Internet, catalog and wholesale — saw revenues grow to 8% of total revenues for the quarter, up from 6% a year ago, with particularly strong online results.
For the current first quarter, Bombay projects revenue of $125 million to $130 million, with same-store sales in the negative to mid-single-digit range, compared to a 25% increase in the first quarter of the previous year. It expects a first-quarter loss of 8 to 11 cents per share, compared to 4 cents a year ago.
Bombay Chairman and CEO Jim Carreker said the retailer is in the midst of a "multi-phase turnaround, with the first phase completed in the third quarter and characterized by double-digit same-store sales increases."
During the fourth quarter and particularly during the holiday season, same-store sales were in line with sector growth, he said, although the company resorted to more promotional selling than it had planned.
"As we enter the second phase of the turnaround, we expect our focus to be on driving profitable sales and improving profit flow-through," Carreker said.
The company doesn't plan to repeat certain promotions that drove business but didn't deliver acceptable profits. Bombay intends to migrate to more-profitable off-mall stores and grow its store count by about 5% a year.
Bombay will continue growing through the Internet, its successful BombayKids stores and its Bailey Street Trading wholesale division.
For the year, the company expects same-store sale in the flat to low single-digits range, and overall sales of $685 million to $700 million. It will add a net 20 to 25 core stores, as well as 15 BombayKids units, bringing the Kids count to 50 stores.
| The Bombay Company | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 1/31 | 2004 | 2003 | Change |
| Revenues | $211,564,000 | $189,264,000 | 11.8% |
| Operating income | 20,048,000 | 23,160,000 | (13.4%) |
| Net income | 12,140,000 | 13,841,000 | (12.3%) |
| Earnings per share (a) | 0.33 | 0.41 | (19.5%) |
| Year ended 1/31 | 2004 | 2003 | Change |
| Revenues | $596,435,000 | $494,000,000 | 20.7% |
| Operating income | 16,667,000 | 12,096,000 | 37.8% |
| Net income | 9,951,000 | 7,217,000 | 37.9% |
| Earnings per share (a) | 0.28 | 0.22 | 27.3% |
| (a) Based on average shares outstanding of 36.6 million in the 2004 quarter, 34.1 million in the 2003 quarter, 35 million in the 2004 year and 33.3 million in the 2003 year. |
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