Payless predicts profit in 2000 - Statistical Data Included

Home Channel News, Oct 25, 1999

Third-quarter results bode well for future gains, says CEO

KANSAS CITY, Mo. -- Payless Cashways' CEO Millard Barron expects the building materials supplier to return to profitability in the year 2000.

That prediction came with the company's third-quarter results; Payless earned $1.7 million for the quarter ended Aug. 28, compared with $1 million for the same quarter of 1998.

The improved bottom line was tempered, however, by a 2.5 percent slide in same-store sales for the quarter, marking a disappointing reversal from the 1.6 percent increase in same-store sales for the second quarter.

Overall, the company's quarterly sales declined 6 percent to $492.2 million. However, Payless said business to its target audience - professional contractors - increased 4.1 percent while sales to do-it-yourselfers sank 9.5 percent.

Through nine months, Payless' revenue fell 3.3 percent to $1.377 billion, and reported a $5.4 million loss in net income, compared to a $23.2 million loss in the same period a year ago.

As reported earlier in NHCN, Payless has signed an agreement with Household Retail Services to oversee the retailer's private label credit card program. The company expects to process about $800 million in annual sales and save more than $8 million a year under the new accord, which took effect after its pact with GE Capital expired.

"Credit is an important part of our value proposition for our target customers, and with this new partnership, we will continue to provide a unique service at a significantly reduced level of cost to the company," Barron said in a statement. "While much work remains, the positive impact of efforts made this year will be significant in the coming year. We expect to return to profitability in the year 2000."