Carter Hawley, Penney Profits Up
Carter Hawley Hale Stores, parent of the Broadway, reported on Thursday a strong improvement in second-quarter earnings as operating expenses fell sharply. Retailer J. C. Penney also reported a big increase in earnings.
Los Angeles-based Carter Hawley’s net earnings for the 13-week period ending Jan. 30 came to $20.4 million, contrasted with a $24.2-million loss in 1987.
But the retailer, which also owns Emporium Capwell, Thalhimers and Weinstock’s department store chains, said that such a year-to-year comparison is not the best measure of its financial condition following a corporate overhaul last year that involved spinning off the company’s specialty stores.
The company said it prefers that its long-term health be measured by earnings from continuing operations before interest and taxes. Those earnings rose a meaty 45% to $70.1 million on sales of $866.0 million.
“No surprises whatsoever,” said David Jackson, an analyst with H. J. Meyers & Co., a Los Angeles-based brokerage. Carter Hawley Hale has been very successful in cutting costs while sales remain flat, he said.
Sales rose just 1.7% from the second quarter of 1987 in those stores open for more than a year. But selling and administrative expenses fell to 19.3% of sales from 20.5% in the second quarter of 1987, and the cost of goods sold shrank to 72.6% from 73.8%.
Further reductions in overhead and costs remain possible, Jackson said. “They still have the ability to significantly improve (profit) margins beyond that.”
Interest expenses nearly doubled, to $36.1 million from $19.9 million, a reflection of the increased debt Carter Hawley Hale assumed in spinning off its specialty stores last year. But Philip M. Hawley, chairman and chief executive, said this was less than planned.
“It’s a couple million less than we thought,” said Jackson, adding that savings in overhead and costs are more important in the long run.
J. C. Penney, the nation’s fourth-largest retailer, also reported earnings on Thursday. The company said its 1987 net income rose 27.1% to $608 million. Earnings for the fourth quarter, ended Jan. 30, were up 10.3% to $280 million.
The fourth-quarter results included a $16-million loss the company incurred in selling its Belgian operations.
Carter Hawley Hale jumped 62.5 cents a share to $10.375 on Thursday, while Penney’s stock closed up 50 cents at $46.125. Both stocksare traded on the Big Board.
