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Hancock Fabrics net income increases by $3.4 mn
03 Dec '09
4 min read
Selling, general and administrative expenses for the third quarter decreased to $28.2 million (38.8% of sales) from $28.3 million (40.1% of sales) in the prior year. Year-to-date, selling, general and administrative expenses have been reduced by $4.6 million to $82.3 million (41.9% of sales) from $86.9 million (43.9% of sales) year-to-date last year. Third quarter reductions were driven by increased labor efficiency, reductions in current quarter advertising expenses offset by certain incremental retail operating costs. Year-to-date reductions were driven by increased labor efficiency, reduced store operating expenses, and savings of professional fees.
Store Openings, Closings and Remodels
During the current fiscal year, the Company opened 3 stores, closed 1 store, remodeled 5 locations, and ended the quarter with 265 stores.
Rights Plan Amendment
The Board recently adopted an amendment to the Company's Rights Agreement designed to preserve substantial tax assets for future use. Hancock's ability to use the tax attributes would be substantially limited if there were an “ownership change” as defined under Section 382 of the Internal Revenue Code. The Amendment is designed to reduce the likelihood that Hancock will experience an ownership change by
(i) discouraging any person (together with such person's affiliates or associates) from acquiring 4.95% or more of the then outstanding Common Stock and
(ii) discouraging any person (together with such person's affiliates or associates) that currently beneficially owns at least 4.95% of the outstanding Common Stock from acquiring more than a specified percentage of additional shares of Common Stock. There is no guarantee, however, that the Rights Plan will prevent the Company from experiencing an ownership change. As a result of this amendment, the Company's Rights Agreement is now similar to tax benefit preservation plans adopted by many other public companies with significant tax attributes.
Store Openings, Closings and Remodels
During the current fiscal year, the Company opened 3 stores, closed 1 store, remodeled 5 locations, and ended the quarter with 265 stores.
Rights Plan Amendment
The Board recently adopted an amendment to the Company's Rights Agreement designed to preserve substantial tax assets for future use. Hancock's ability to use the tax attributes would be substantially limited if there were an “ownership change” as defined under Section 382 of the Internal Revenue Code. The Amendment is designed to reduce the likelihood that Hancock will experience an ownership change by
(i) discouraging any person (together with such person's affiliates or associates) from acquiring 4.95% or more of the then outstanding Common Stock and
(ii) discouraging any person (together with such person's affiliates or associates) that currently beneficially owns at least 4.95% of the outstanding Common Stock from acquiring more than a specified percentage of additional shares of Common Stock. There is no guarantee, however, that the Rights Plan will prevent the Company from experiencing an ownership change. As a result of this amendment, the Company's Rights Agreement is now similar to tax benefit preservation plans adopted by many other public companies with significant tax attributes.
Hancock Fabrics Inc
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