NEW YORK, May 17 (Reuters) - Discount retailing chain Ames Department Stores Inc. (NASDAQ:AMES) on Thursday reported a
narrower first-quarter net loss as rainy and cold weather hurt sales, but its stock jumped by more than 12 percent as it projected a
further rebound in earnings in the months ahead.
Ames -- which operates 452 stores in the U.S. Northeast, Mid-Atlantic and Midwest regions -- posted a net loss of $27.7 million, or
94 cents per diluted share in the quarter ended May 5. In the same period a year earlier, Ames had a net loss of $29.1 million, or 99
cents.
Analysts polled by research firm Thomson Financial/First Call had projected Ames to register a loss of 90 cents per diluted share,
but Ames said its cost-cutting efforts had marked a significant improvement from a year ago.
"This was a direct result of the programs we have implemented to improve margins and reduce selling, general and administrative
expenses," Ames Chairman and Chief Executive Officer Joseph Ettore said in a statement.
Ames shares rose 9.31 percent or 23 cents to $2.70 on the Nasdaq market at noon. They had earlier climbed as high as $2.90 -- an
increase of 14 percent.
The Rocky Hill, Connecticut-based company said sales in the quarter declined to $793.7 million, compared with $830.7 million in the
same quarter a year earlier.
It said sales at stores open at least a year -- a key measure of retailing performance -- fell 6.8 percent to $721.7 million from $774.1
million in the prior year.
But looking ahead, Ames said it was upbeat about a continued turnaround in earnings growth.
"While current economic conditions remain challenging, we are confident that our strategy will continue to show improved results in
the coming quarters," Ettore said.
Ames said its selling and administrative expenses in the quarter decreased to $238.7 million from $247.4 million in the year-ago
quarter.
The company said it began its fiscal year with a newer and fresher inventory, below the levels of the prior year, thus helping minimize
markdowns and improve gross margin in the first quarter.
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