Bombay 4Q profit tumbles
By Furniture Today Staff -- Furniture Today, March 27, 2005
Fort Worth, Texas — Softer sales led to lower fourth-quarter profits at specialty retailer The Bombay Company, which reported it earned $7.1 million in the quarter ended Jan. 29, down 41.8% from the same quarter a year earlier.
For the year, the Top 100 chain posted a loss of $12.8 million, compared with a profit of $9.3 million the previous year.
Sales of $203.4 million in the fourth quarter were down 3.9% from a year earlier, with revenue from new stores and online sales partly offsetting a 7% decline in same-store sales.
For the year, sales of $576.1 million were down 3.4% as same-store performance fell 12%.
Fourth-quarter earnings of 20 cents per share were down from 34 cents a year earlier, but beat the consensus Wall Street estimate by a penny, according to Reuters Estimates.
For the current fiscal year, Bombay said it expects to rebound to a profit of 2 cents to 8 cents per share. It plans to open about 45 to 50 stores and close about 42, for a net gain of three to eight.
Earnings in the year just ended and the previous year were each reduced by about $700,000 because of a change in the company's lease accounting, an adjustment that most publicly held U.S. retailers have had to make since the Securities and Exchange Commission issued a new rule interpretation in February. Earnings per share were reduced by 2 cents in each year.
In a conference call with analysts, Bombay Chief Financial Officer Elaine Crowley said the average ticket size in the fourth quarter was $57, down 4% from year-ago results. During the quarter, large furniture represented 23% of sales; occasional, 16%; wall décor, 10%; and accessories, 50%.
For the year, Crowley said the number of transactions was up 1%, although the average ticket size fell 4%. In the year, large furniture accounted for 29% of sales; occasional, 18%; wall décor, 12%; and accessories, 40%.
"Our earnings were in line with expectations for the quarter," said Chairman and CEO James Carreker. "While we are disappointed with the financial results for the year, we made good progress towards many of our long-term goals. We've spent the last two years investing in our infrastructure, including upgrading our stores, improving our systems and enhancing our distribution network."
He said more of the company's stores are now in off-mall locations — almost 40%, compared with 12% two years ago — which have lower fixed operating costs per square foot.
"All of these investments position us well for future profit flow-through on sales," Carreker said. "We began 2005 with a fresh and much improved inventory mix, including an upgraded assortment in terms of design, quality and price. We plan to continue this trend throughout the year."
But he said the company is still "concerned about the softness in consumer demand. We have taken steps to reduce our expenses during 2004 and will continue to manage spending levels aggressively for 2005.
"At the same time, we plan to increase our spending on consumer and market research, Internet, marketing and visual presentation in our stores. We remain committed to our long-term strategy and believe that it will allow us to deliver increased shareholder value," Carreker said.
Bombay ended the fiscal year with no debt and $9.2 million in cash.
| The Bombay Company | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 1/29 | 2005 | (a)2004 | Change |
| (a) Restated. (b) Based on average shares outstanding of 36.5 million in the 2005 quarter, 36.6 million in the 2004 quarter, 35.7 million in the 2005 year and 35 million in the 2004 year. (c) Includes a $6.8 million income tax benefit. |
|||
| Revenues | $203,358,000 | $211,564,000 | (3.9%) |
| Operating income | 11,319,000 | 20,232,000 | (44.1%) |
| Net income | 7,132,000 | 12,255,000 | (41.8%) |
| Earnings per share (b) | 0.20 | 0.34 | (41.2%) |
| Year ended 1/29 | 2005 | (a)2004 | Change |
| Revenues | $576,087,000 | $596,435,000 | (3.4%) |
| Operating income | (19,128,000) | 15,588,000 | — |
| Net income | (c)(12,826,000) | 9,278,000 | — |
| Earnings per share (b) | (0.36) | 0.27 | — |
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