House of Fabrics’ Earnings Slide 74% in 4th Quarter

House of Fabrics Inc., its profit margins eroded by aggressive price cutting because of the weak economy, said its fiscal fourth-quarter earnings tumbled 74% from a year earlier despite a 3% sales gain.

The Sherman Oaks-based fabric retailer said net income in the quarter ending Jan. 31 dropped to $2.21 million from $8.35 million a year earlier, and sales edged up to $157.7 million from $153.3 million.

“Our aggressive promotions helped drive sales but also reduced gross margin,” or pretax profit, President Gary L. Larkins said. He added that “it would be unrealistic to anticipate a turnaround overnight,” even though the company is “optimistic about prospects for steady improvement in the coming year.”

For its full fiscal year, House of Fabrics’ profit fell 74%, to $5.2 million from $19.7 million in fiscal 1992, and its annual sales rose 13%, to $557.5 million from $493.1 million.