Fretter posts modest 3Q profit

Discount Store News, Jan 6, 1992

Fretter Posts Modest 3Q Profit

LIVONIA, Mich. - Fretter, which this fall acquired Denver-based Fred Schmid Appliance & TV, reported a modest profit of $565,000 for the third quarter ended Oct. 31. That compares favorably to a loss of nearly $1 million during the same quarter last year, but this year's profit also included a $98,000 credit for a tax loss carryforward.

Comparable store sales rose 4.7% in the quarter, and total sales leaped 26.1%, due in a large part to the Schmid acquisition, to $66.8 million.

For the nine months ended Oct. 31, results were even better, with a $1.2 million net profit (compared to a $12.7 million loss for the same period in 1990), a 32.2% sales increase and same store sales increases of 18.5%. Fretter now operates 82 stores, primarily in the Midwest, Northeast and now, in Schmid's trading territory of Colorado, Montana and Wyoming.

In an unrelated development, Fretter has been sued by Montgomery Ward, which charges false advertising in Fretter's Chicago-area TV ads, which promotes Fretter as the lowest price in town.

Ward charges that a Fretter employee attempted to purchase a television at a Ward store and "refused to pay a discounted price . . . and demanded to pay a higher price, thereby attempting to substantiate the Fretter claim for cost savings on the same item available at a Fretter store."

Fretter general counsel Stuart Garson responded that the company "welcomes the scrutiny of the court" in this or any other advertising matter. "We screen our ads carefully, and have rigid controls on content," he said. As for the alleged shopping incident, Garson said that the Fretter shopper simply purchased a product at the shelf-listed price, and Fretter only later became aware of a promotion in which consumers could bring in a scratch-off ad from a recent circular and get 10% to 50% off on selected merchandise. "We buy at the price that would be charged a consumer off the street," Garson said. Fretter is "preparing a countersuit" charging slander, libel and defamation, among other charges, he concluded.