Gottschalks Results Improve

The quarterly net income of $300,000, or 2 cents per share, surpassed last year's second quarter net income of $200,000, also 2 cents a share, and CEO Jim Famalette commented on the comparison in the company's conference call with financial analysts. This year's second quarter performance "exceeded bottom-line results last year that were the best for a second quarter in more than 15 years," Famalette said.

Comparable store sales grew 3.1% in the quarter as total sales increased 2.6% to $151.6 million versus last year's second quarter. Famalette said the company has made "steady progress in our initiative to appeal to a broader customer base through our focus on several important fashion categories such as better sportswear, accessories, shoes and junior apparel."

Gottschalk's opened its new lifestyle store at the River Park shopping center in Fresno, CA on Aug. 11 and Famalette said during the conference call that the new store "has already generated results that have exceeded our expectations." The store offers "a wider selection of better merchandise and more fashion-forward merchandise," he said.

A number of shopping center developers have either visited the new River Park store already or are planning to visit, according to Famalette, who said that some developers "have approached us about potentially looking at some future projects for this type of store," although it is too early to comment on anything specific, Famalette said. In addition to the lifestyle concept, Gottschalks is planning to introduce a 30,000-sf store in Pocatello, ID in the third quarter to test a new concept. The new format will offer home furnishings, housewares and gifts in half of the footprint, with furniture in the other half, all in a lifestyle-store environment, according to the Gottschalks president and CEO.

Famalette explained that the company "has been enjoying positive trends in our home store division and we see this test store as a way to leverage the strength of this segment. "We've had a very strong performance for quite some time now in our furniture and mattress division. We think this is a great opportunity to build upon what would be a traditional furniture and mattress location offering the other products that we have throughout our home division," he said.

Gottschalks still has no new plans to announce for store openings in 2006, but the company is among many that are evaluating possible sites that may become available because of the Federated-May Co. merger. "We are looking at some of those sites in California and the Western United States, and we have had some preliminary discussions, but nothing that we can comment on beyond that," Famalette said.

In addition to its openings, Gottschalks plans to close its Factoria Mall store in Seattle at the end of September. The chain operates 64 department stores and six specialty apparel stores in six western states, including California, Washington, Alaska, Oregon, Nevada and Idaho.