Carter Hawley Bucks Trend, Posts Modest Gain

Unlike many other retailers that have been reporting plummeting profits, Carter Hawley Hale Stores said Wednesday that its results generally improved during the second quarter, compared to the same period last year.

For the quarter ended Aug. 3, the Los Angeles-based parent of the Broadway and Neiman-Marcus had income from continuing operations of $7.7 million, compared to a loss from continuing operations of $21.8 million in the second quarter of 1984. Sales rose 8.7% to $858.7 million.

Last year’s loss from continuing operations included pretax charges of $30 million from the company’s inventory currency program in which merchandise is updated more quickly, from $7.1 million in costs incurred in fighting a hostile takeover attempt by the Limited and from $5.1 million of extra interest expenses from a stock buy-back used to thwart that takeover bid.

Net income for the second quarter was $7.7 million, down 80.5% from $39.6 million in the same quarter last year. Net income from the 1984 quarter included a $63-million gain from selling Waldenbooks, another tactic used to fend off the Limited’s takeover bid last year.

Excluding the non-recurring charges and gains from the previous year, pretax earnings rose to $12.9 million, up 94% from the second quarter of 1984.

“The second quarter produced another quarter of solid progress in sales and operating earnings for Carter Hawley Hale,” Chairman and Chief Executive Philip M. Hawley said in a statement. “This was particularly gratifying in view of the difficult overall retail environment and reflects the substantial investments we have made since 1980 in improving our operations and merchandise selections.

“Despite the sluggish retail environment we foresee for the remainder of the year, we are confident that we will continue to perform well relative to our competition,” Hawley said.

Retail analyst David Jackson of Morgan, Olmstead, Kennedy & Gardner noted that Carter Hawley Hale’s gross profit margin improved by 1.2 percentage points to 1.5% but said that margin “is well below (that of) all the major department store chains.”

“They are indeed making progress,” he said, “but their financial ratios are still way below the field.”

Carter Hawley Hale operates 124 department stores and 159 specialty stores, including the Broadway, Emporium Capwell, Thalhimers, John Wanamaker, Weinstock’s, Neiman-Marcus, Bergdorf Goodman, Contempo Casuals and Holt Renfrew.