By Cynthia Yeldell, The Knoxville News-Sentinel, Tenn. Knight Ridder/Tribune Business News
Mar. 18--Shares of Goody's Family Clothing rose 14.4 percent Wednesday on a strong fourth-quarter earnings report that also included plans to add up to 25 stores as well as new products.
'I really feel good about the future prospects of our company, especially the momentum we are building coming from a net loss of $20.2 million in fiscal 2001 to a net profit of $7.6 million in fiscal 2002 to the current year's $17.7 million net profit,' said Robert Goodfriend, the Knoxville-based retailer's chairman and CEO.
For the quarter ended Jan. 31, the company earned $7 million, or 21 cents a share. That's 79 percent more than the $3.9 million earned in the year-earlier quarter.
The company cited 'higher sales and careful expense management' for the improvement. Sales climbed to $369.2 million from $357.5 million, and same-store sales -- or sales at stores open at least a year -- increased 0.4 percent.
'Fundamental momentum appears to be accelerating,' said Dennis Van Zelfden, an analyst at SunTrust Robinson Humphrey, who expected Goody's earnings to increase only slightly, to 13 cents a share.
Shares closed at $11.28 on the Nasdaq stock market, up $1.42 in heavy trading.
Goodfriend also released financial results for a 'very productive' fiscal 2003, with total sales for the year ended Jan. 31 exceeding $1.2 billion, a 2.8-percent increase above the previous year.
Same-store sales -- considered the best indicator of a retailer's health -- increased 1.6 percent for the year.
This year, Goody's will begin offering cosmetics in test markets, expand its big-and-tall men's line and continue to promote its Duck Head brand, which has seen strong early sales since entering stores this month.
Goodfriend said the company's real estate expansion program had been significantly scaled back with the company adding only 12 new stores in the past two years for a total of 335 locations to date.
But in fiscal 2004, the company expects to open 20 to 25 new stores and relocate or remodel 15 existing stores.
'Beyond fiscal 2004 our expectations are to grow new stores by approximately 10 percent a year, which is our historical growth rate target,' he said. 'This is of course dependent on us achieving our planned operating and financial results.'
Goodfriend also announced Wednesday that the company will test launch cosmetics in May in 38 stores. Goody's will partner with Revlon, L'Oreal, Almay, Max Factor and Cover Girl.
Goody's spokeswoman Kristin Macht said the store is testing cosmetics sales as a customer convenience. Macht said the company believes Goody's customers already are buying these cosmetics brands and wants to save them a trip by selling them at Goody's.
Cosmetics sales will be tested in large and small markets including Goody's location at Foothill's Mall in Maryville, Macht said.
Cosmetics could be rolled out to all stores in two years.
Goodfriend also told analysts that the retailer's special sizes division was one of the best performing merchandise categories for the quarter.
With the success in women's plus sizes, the company plans to expand its big-and-tall men's offerings in Dockers, Ivy Crew and Munsingwear this year.
The junior's division as a whole was down for the quarter, but Goodfriend said he expects to see solid improvement in the junior area under leadership of a team led by his son, Jeff Goodfriend, who was recently selected to run the junior's division.
Goodfriend also noted that sales from the company's exclusive Duck Head brand are expected to be $75 million this year.
Goody's purchased Duck Head last year for $4 million and officially launched the brand in its stores with an advertising campaign this week.
Goodfriend said he has been pleased with the roll out of Duck Head. On the first three days since the company's Sunday advertising, Duck Head sales were a 'tad' over 8 percent of the total store business, he said.
'As the product rolled out over the last two weeks into the stores without any advertising, without any promotion, we've had very good response,' he said.
The Associated Press contributed to this report.
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(c) 2004, The Knoxville News-Sentinel, Tenn. Distributed by Knight Ridder/Tribune Business News.
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