Retail Ventures Loses $41M

The Columbus, OH-based retailer, which operates more than 300 off-brand shoe, clothing and department stores throughout the country, lost $40.7 million, or $1.03 per diluted share during the quarter ending Jan. 28, 2006 compared to a net loss of $16.9 million, or 50 cents per diluted share for the same period a year earlier.

Company officials said most of the losses were from its Value City operation, which saw gross profits decline by $5.2 million as a result of the company's shift in strategy to offering brand name items and better assortments. Bigger markdowns during the quarter also contributed to the decline.

If adjusted for the warrants, Value City actually had an operating profit of $6.1 million, with DSW showing a $16.7 million profit and Filenes reporting a $1.3 million profit for the quarter, company execs said.

Despite mounting losses, sales for the off-price retailer increased by $58.6 million, or 7.7%, rising to $820.5 million from $761.9 million in the previous quarter. Comparable store sales for the period were also up 4.1%.

For the year, Retail Ventures reported a net loss of $113.5 million, or $2.94 per diluted share compared to a net loss of $19.4 million, or 57 cents per diluted share in the prior year. That yearly loss includes $74.3 million in non-cash expenses representing the change in fair value of warrants.

The company operates 113 Value City Department Stores in the Midwest, Mid-Atlantic and Southeastern United States, 27 Filenes Basement Stores in the Northeast and 199 DSW Shoe Warehouse Stores in major metropolitan areas throughout the country. DSW also supplies shoes to 213 outlets for other retailers.