GOT Gott Chalks

FRESNO, Calif., May 29 /PRNewswire-FirstCall/ -- Gottschalks Inc. (NYSE:GOT) today reported unaudited financial results for the first quarter. Net loss for the first quarter was $5.1 million, or $0.38 per diluted share, compared to net loss of $4.7 million or $0.34 per diluted share, for the first quarter of fiscal 2007. As previously reported, total sales for the 13-week fiscal first quarter decreased 11.8% to $125.1 million from $141.8 million for the first fiscal quarter last year. Same store sales decreased 10.3% for the first quarter of 2008. The Company operated one fewer store in the first quarter of 2007 compared to the same period of the prior year. Jim Famalette, Chairman and Chief Executive Officer of Gottschalks, stated, "Gottschalks, like many other retailers, continued to be affected by the difficult macroeconomic environment during the first quarter. Despite the challenging retail sales climate, our team effectively executed on our plan to reduce costs and was able to achieve significant reduction in SG&A expense dollars for the quarter. We also maintained a disciplined approach to managing our inventory levels and promotional activity, resulting in 10% less comp store inventory at the end of the quarter and a gross margin rate improvement over last year's first quarter." Commenting on the Company's outlook, Mr. Famalette stated, "We will continue to take a conservative, yet proactive approach to managing our organization throughout the remainder of 2008. We believe that we have the right strategies in place as well as a secure financial structure to position our business in the current challenging environment. We continue to make progress with our expense management program. We recently completed a headcount reduction at our corporate headquarters, which we expect will generate approximately $1 million in annualized cost savings. Further, we are encouraged by the sales increase in our River Park store, which demonstrates that our new store prototype and greater focus on soft goods are resonating with our customers. We remain focused on implementing the initiatives of our Value Improvement Program and positioning the Company to fully realize the benefits of our efforts as broader economic trends begin to improve." Earnings Teleconference and Webcast Gottschalks will host a conference call today at 1:30 p.m. Pacific Time to review its results for the first quarter fiscal 2008. To access the call, dial 800-894-5910 to listen to the call on the day of the event. The Conference ID is GOTT. If you are unable to participate in the call, a replay will be made available through June 5, 2008. To access this service, please dial 800-388-9064. No passcode is required for replay. The live conference call and replay can also be accessed via audio web cast at the Investor Relations section of the Company's web site, located at http://www.gottschalks.com/. About Gottschalks Gottschalks is a regional department store chain, currently operating 59 department stores and three specialty apparel stores in six western states, including California (39), Washington (7), Alaska (5), Oregon (4), Nevada (2) and Idaho (2). Gottschalks offers better to moderate brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise. Gottschalks offers corporate information and selected merchandise on its website located at http://www.gottschalks.com/. Business Risks and Forward Looking Statements This release contains forward-looking statements (within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. In some instances, such statements may be identified by the use of forward-looking terminology such as "may," "will," "expects," "believes," "intends," "projects," "forecasts," "plans," "estimates," "anticipates," "continues," "targets," or similar terms, variations of such terms or the negative of such terms. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements, including, without limitation, the Company's ability to meet debt obligations and adhere to the restrictions and covenants imposed under its various debt agreements; the timely receipt of merchandise and the Company's ability to obtain adequate trade credit from its key factors and vendors; risks arising from general economic and market conditions (including uncertainties arising from acts of terrorism or war); the ability to improve the profitability and cash flows of its stores or to sell, sublease or close underperforming stores; the ability to modify operations in order to minimize the adverse impact of rising costs, including but not limited to health care, workers' compensation, property and casualty insurance and utilities costs; the effects of seasonality and weather conditions, changing consumer trends and preferences, competition, consumer credit, the Company's dependence on its key personnel and general labor conditions, all of which are described in more detail in Gottschalks' Annual Report on Form 10-K and other reports filed by Gottschalks with the Securities and Exchange Commission. GOTTSCHALKS DOES NOT PRESENTLY INTEND TO UPDATE THESE STATEMENTS AND UNDERTAKES NO DUTY TO ANY PERSON TO EFFECT ANY SUCH UPDATE UNDER ANY CIRCUMSTANCES. (Tables Follow) GOTTSCHALKS INC. STATEMENTS OF OPERATIONS (In thousands, except share data) (unaudited) Thirteen Weeks Ended May 3, May 5, 2008 2007 Net sales $125,128 $141,788 Net credit revenues 1,762 1,106 Net leased department revenues 550 650 Total revenues 127,440 143,544 Costs and expenses: Cost of sales 83,700 95,204 Selling, general and administrative expenses 46,304 49,236 Depreciation and amortization 3,950 3,909 Gain on disposal of assets (14) (79) New store opening costs 74 - Total costs and expenses 134,014 148,270 Operating loss (6,574) (4,726) Other (income) expense: Interest expense 2,058 2,585 Miscellaneous income (56) (47) 2,002 2,538 Loss before income tax benefit (8,576) (7,264) Income tax benefit (3,480) (2,596) Net loss ($5,096) ($4,668) Net loss per common share: Basic and diluted ($0.38) ($0.34) Weighted average # of common shares outstanding: Basic and diluted 13,283 13,606 GOTTSCHALKS INC. CONDENSED BALANCE SHEETS (In thousands) (unaudited) May 3, February 2, May 5, 2008 2008 2007 ASSETS CURRENT ASSETS: Cash $6,021 $4,032 $6,080 Receivables - net 2,713 7,049 2,750 Merchandise inventories 168,174 149,310 184,013 Other 18,896 18,984 20,031 Total current assets 195,804 179,375 212,874 PROPERTY AND EQUIPMENT - net 138,156 137,931 132,401 OTHER LONG-TERM ASSETS 14,827 14,688 13,564 $348,787 $331,994 $358,839 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable and other current liabilities $80,950 $72,559 $87,270 Current portion of long-term obligations 3,541 1,525 1,583 Total current liabilities 84,491 74,084 88,853 REVOLVING LINE OF CREDIT 114,507 93,899 90,893 LONG-TERM OBLIGATIONS (less current portion) 11,662 12,049 13,193 DEFERRED INCOME TAXES AND OTHER 17,002 21,837 26,903 SUBORDINATED NOTE PAYABLE TO AFFILIATE 14,180 18,180 18,180 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY 106,945 111,945 120,817 $348,787 $331,994 $358,839 DATASOURCE: Gottschalks Inc. CONTACT: Greg Ambro, Executive Vice President, Chief Operating Officer of Gottschalks Inc., +1-559-434-4800; or Leigh Parrish, +1-212-850-5651, or Stephanie Rich, +1-212-850-5706, both of Financial Dynamics, for Gottschalks Inc. Web site: http://www.gottschalks.com/

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