Venture projects modest growth for '96 - Venture Stores Inc

Discount Store News, May 6, 1996

O'FALLON, MO. -- The report of a 20.8% comp store sales decline by Venture Stores during the month of March left some retail observers shaking their heads, while those with more patience anticipated better results later this year.

Venture management offered several degrees of spin. The fiscal month began more than a week before the grand unveiling of the chain's overhaul, with stores still being reset. The fiscal month ended a week before the pre-Easter week surge. The weather was lousy. Better results in the Texas stores, the company said, indicated that warmer days ahead will lead to gains chainwide.

Sales for the five weeks ended March 30 were $142.0 million, 22.1% less than a year earlier. Sales for the first nine weeks of the quarter were $242.4 million, a 19.7% decline.

In the face of this steep revenue drop-off, the company said that it had never expected to post large immediate gains after the wrenching makeover.

Rather, chief merchandising officer Jim Ferstl told DSN that Venture should see steadily better sales over the coming months. Much is pegged to the Back-to-School season when newer merchandise will be flowing in, and apparel departments will be further along in the effort to upgrade assortments.

Venture chief financial officer Gene Caldwell acknowledged that sales are below expectations and are likely to remain at negative comp store levels for the remainder of the year. He said that by early 1997, Venture should regain quarterly comp sales levels equivalent to 1995, when the chain reported $1.9 billion in revenues, down from 1994's $2.0 billion.

Caldwell told DSN that margin and expense ratios are in line with expectations. "We expect to hold or beat margins from last year," he said, referring to Venture's 1995 gross margin rate as a percentage of sales of 23.4% (excluding non-recurring charges).

"Cash will not be an impediment. We're not going to have an issue on liquidity," Caldwell emphasized, adding that Venture has no plans to issue either equity or debt during 1996.

Venture's $175 million credit facility expires in September 1997.

Caldwell also said that the chain, which earlier this year announced the closing of 10 of its 115 stores, does not anticipate further reduction in store count.

During the first quarter, the stock climbed back from a depressed level of under $4 to the $6 ballpark. Venture stock earned $1.53 per share in '94 and took a loss in '95. In a conference call with financial analysts set for May 7, Caldwell will share his views, and analysts will build earnings projections.

Wall Street's recent estimates for the chain's 1996 performance range from 50 cents to 90 cents per share. Caldwell said that he is reasonably confident that Venture will make that target range.