Factory Card Narrows Q4 Loss

NAPERVILLE, IL-Greeting card and party supplies retailer Factory Card & Party Outlet Corp. on Tuesday reported its fourth-quarter and yearend results. During the fourth quarter, net sales were $58.3 million compared with $57.3 million a year ago. Year-over-year same-store sales for the quarter declined 0.7%, while the company posted a net loss of $1.2 million, or 38 cents per share, versus a loss of $3 million, or 98 cents per share for the same period last year.

For the 2005 fiscal year, net sales increased 1.3% to $233.1 million, compared with $230.1 million a year ago, and comparable store net sales decreased 1.1% from the prior year. The company reported a net loss for the 2005 of $1 million or 33 cents per share, versus a net loss of $200,000, or 7 cents per share for the same year-ago period. Notably, in 2004 the company took a $4.4-million pre-tax charge relating to the roll-out of its new greeting card program.

Despite the disappointing quarter, Gary W. Rada, president and chief executive officer, assured analysts that the company has made progress in enhancing merchandise margins, reducing inventory investment and improving store-level operations. “Management and the board of directors are committed to improving performance and are addressing the issues that penalized earnings during the recent year,” he further stated in a release announcing the company’s fourth-quarter and yearend results.

Although Rada did not detail what issues management would be addressing, the company did incur a $350,000-pre-tax charge relating to the separation of the Card Factory’s former chief financial officer and a $500,000-pre-tax charge relating to an employment practices claim.

Continuing his optimism, Rada reiterated that “several of the initiatives that were implemented in fiscal 2005, including our new greeting card program and the deployment of a new replenishment system, are starting to deliver anticipated results, thus helping us gain momentum towards improved operating performance.” Meanwhile, the company recently reached an agreement with Cramer Rosenthal McGlynn, LLC to add Mone Anathan to the Factory Card & Party Outlet board of directors.

Factory Card & Party Outlet currently operates 191 company-owned retail stores in 20 states. During the year, the company opened eight new locations and closed four.