Net income up at Hancock Fabrics

12 Mar '10

4 min read

For the year, gross margin improved by 110 basis points to 44.4%. This improvement was driven by a 120 basis point reduction in merchandise cost, a 50 basis point reduction in freight costs, offset by a 60 basis point increase in sourcing and warehousing costs. Gross margin for the fourth quarter of 40.8% was a 130 basis point decrease compared to the 42.1% of the prior year. This decrease reflects a 30 basis point reduction in merchandise cost, a 50 basis point reduction in freight costs, offset by a 210 basis point increase in sourcing and warehousing.

For the full year, selling, general and administrative expenses have been reduced by $2.4 million to $109.7 million (40.0% of sales) from $112.1 million (40.6% of sales) last year. Selling, general and administrative expenses for the fourth quarter increased to $27.4 million (35.2% of sales) from $25.2 million (32.2% of sales) in the prior year. The expense of the fourth quarter of the prior year included a retirement plan curtailment gain of $6.2 million. Excluding this curtailment gain, selling, general and administrative expenses for the fourth quarter decreased $4.0 million and for the year decreased $8.6 million. Reductions for the year have been led by store labor savings, the elimination of a significant amount of professional fees, and the elimination of an impairment charge incurred in the prior year.

Store Openings, Closings and Remodels

During the current fiscal year, the Company opened 3 stores, closed 1 store, remodeled 9 locations, and ended the year with 265 stores.

Hancock Fabrics Inc

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