Port delays hurt sales at Hancock Fabrics

A disruption in product flow because of the West Coast port dispute led to a drop in same store sales for Hancock Fabrics in the first quarter.

The company had net sales of $61.7 million for the first quarter ended May 2, compared to $63 million in the first quarter of the prior year. Same store sales declined by 1.9%.

“As with many retailers, it was a challenging quarter due to the dual headwinds of a lag in receipt of spring goods due to the west coast port delays and severe winter weather early on,” said Steve Morgan, president and CEO. “In addition there was more promotional activity and increased freight costs, which put downward pressure on gross profit. That being said, there was a very large positive in the quarter, in that we completed a debt refinance with Wells Fargo Capital Finance which extended our debt maturity out five years and increased availability. The new financing enhances our ability to achieve our inventory productivity goals which in turn helps in generating positive cash flow from operations. We will maintain our focus on cash management as we work to drive operating results.”

Gross profit for the first quarter was 43.6% compared to 45.1% for the first quarter of the prior year. Operating loss for the quarter was $ 1.3 million.

During the first quarter of 2015, the company opened two new stores, relocated two stores and closed three ending the quarter with 262 stores in 37 states.