Carter Hawley Hale Reports $3.2-Million Quarterly Loss
Carter Hawley Hale Stores, the Los Angeles-based owner of the Broadway and other department stores, on Thursday reported a $3.2-million loss for its third quarter due to sharply higher interest costs.
Nonetheless, Chairman and Chief Executive Philip M. Hawley declared it “a good quarter” because sales and operating profit increased. Retail industry analysts said the company’s sales growth appeared to keep pace with the rest of the retail industry.
Carter Hawley said it had sales of $595.4 million in the quarter ended April 29, a 9% increase over the same period a year ago. The department store company lost $4.4 million in the third quarter a year ago.
Carter Hawley, which also owns the Emporium Capwell, Thalhimers and Weinstock’s chains, said operating profit for the third quarter soared 26.8% to $35.9 million from $28.3 million in the third quarter of 1988. The company said operating profit improved because of increased sales, tighter expense control and increased finance-charge income from the company’s credit operations. The increased amount the company took in from its credit card users wasn’t available.
The improvement on the operating side was overshadowed by a 16% increase in interest costs. Carter Hawley said it paid $41.3 million in interest in the third quarter, compared to $35.6 million in the same quarter a year ago.
Much of Carter Hawley’s debt expense stems from its costly 1986 restructuring to avoid a takeover threat from real estate magnate Edward J. DeBartolo and the Limited. Also contributing to interest costs was a change in the company’s credit card policy that forced it to borrow more money, said spokesman Bill Dombrowski.
To spur use of its credit cards, the company lowered monthly minimum payments. As a result, Carter Hawley had to borrow larger amounts during the quarter to pay its vendors for goods purchased but not yet paid for by charge customers. Dombrowski said the change in credit card policy resulted in a $270-million increase in receivables.
