Harold's records first quarterly profit in years

Journal Record, The (Oklahoma City), Dec 3, 2003 by Journal Record staff

Harold's Stores on Tuesday reported its first quarterly profit in nearly four years.

The chain of clothing stores reported net income for the third fiscal quarter ended Nov. 1 of $1 million, or 10 cents per share, compared with a net loss of $2.1 million, or 39 cents per share, for the third quarter of the previous fiscal year.

Harold's last reported profitability during first fiscal quarter of 2000, when net income was $44,000, said Clark Hinkley, CEO.

Harold's was founded in 1948 in Norman. Hinkley was named CEO in February 2001 and the company's corporate offices moved from Norman to Dallas later that year. Harold's finance and credit offices and catalog operations are still based in Norman.

Hinkley's appointment in 2001 marked the first time an individual outside the founding Powell family had headed the company.

Sales for the third fiscal quarter totaled $23.9 million, up 11.7 percent from $21.4 million a year earlier despite the closing of eight stores during the first half of 2003.

Harold's operates 39 ladies' and men's clothing stores and three outlets in 19 states. Harold's has five stores in Oklahoma including both a regular and an outlet store on Campus Corner in Norman and regular stores at 50 Penn Place in Oklahoma City and at The Farm Shopping Center and Utica Square Shopping Center in Tulsa.

Strong regular price selling in the Harold's full-line retail stores led to increased comparable-store sales for the quarter of 27.2 percent, while outlet comparable-store sales increased 2.7 percent. Comparable-store sales increased 25.6 percent for the quarter.

We are very pleased with our third quarter results, Hinkley said. To achieve meaningful profitability for the first time in four years is a tribute to the hard work that all our associates have invested in this great brand, producing strong comparable-store sales increases of 25.6 percent.

Gross margins increased to 38.1 percent of sales during the quarter from 31.4 percent a year earlier.

Our efforts to restructure and turn Harold's business are clearly visible at this juncture, said Hinkley. Customer response to our fall and early holiday merchandise was very strong and has remained strong into the fourth quarter. We continue to be very encouraged by this response and feel that our inventory levels, which are in line with our plans and current sales trends, are appropriate for the important month of December.

Harold's reported a net loss for the first nine months of the fiscal year of $3.3 million, or 72 cents per share, compared to a net loss of $9.1 million, or $1.58 per share, for the first nine months of the previous fiscal year.

Comparable-store sales for the first nine months of the fiscal year increased 15.5 percent in the full-line retail stores, while outlet sales declined 8.5 percent. Total company comparable store sales were up 13.5 percent for the first nine months of the fiscal year.

Sales for the first nine months of the fiscal year totaled $68.1 million, up 4.8 percent from $65 million a year earlier.

Included in the results for the first nine months of the fiscal year were costs from closing eight unprofitable stores and to liquidate excess inventory. Nearly one-half of the reported loss in the current for the first nine months of the fiscal year was from $1.6 million in store closing expenses.

Hinkley said renovations have been completed in two key Midwestern locations - Omaha, Neb., and St. Louis. The Omaha location has been open since 1993 and the St Louis store since 1995.