Woodward & Lothrop Inc., the Washington department store firm, yesterday reported flat earnings for the early months of 1977 and detailed a capital expansion program for the next five years that could involve spending of up to $58 million.
Speaking to more than 100 stockholders at the annual meeting of Woodies, president Edwin K. Hoffman said this year "to date has been a struggle," and he forecast that profitability won't match the gains of recent years.
In the February-April quarter, profits were unchaged from the same period last year at $1.46 million (60 cents a share), while sales increased by a modest 5 per cent to $54.73 million - a rate of gain that is lower than overall Washington area department store sales increases in the early part of 1977.
The quarterly sales gain was considered sluggish because Woodies has one more store opened this year than it did during most of the 1976 period - Montgomery Mall, opened on March 25, 1976. The fashionoriented Montgomery Mall branch has been highly successful, accounting for up to 10 per cent of Woodies' annual volume, according to industry analysts.
Hoffman said yesterday that Montgomery Mall sales last year exceeded expectations by 20 per cent but "greatly impacted" sales at existing Wheaton Plaza and Chevy Chase branches "due to the overlapping of trading areas."
Overall, Woodies sales in the year ended last Jan. 29 were up 10.5 per cent to a record $241 million, and profits mushroomed by 20 per cent to a record $11.7 million ($4.89 a share).
Over the last five years, sales at Woodies have increased by more than 40 per cent and profits have more than doubled. But Hoffman said, "I no longer see future 'dramatically' large increases in profits now that have reached the 5 per cent earnings level, " reference to Woodies' record last year of profits equal to 4.9 per cent of sales, the tops in the retail industry and compared with 3.4 per cent five years earlier.
Hoffman told the stockholders that profitability could be enhanced by reducing what he described as a high level of inventory shortage (internal theft and shoplifting make Woodies a "high inventory-shortage company," he said and by new merchandise mixes and strategies.
As for 1977, Hoffman said "predictions of continued inflation plus the impact on industry and the consumer of ever increasing energy costs cloud the future. If the economy improves, we will reap the rewards. The year we're in should be a good year - but it won't be an easy year."
Looking ahead to the 1980s. hoffman said Woodies is planning to spend up to $58 million for expansion and modernization over the next five years, including:
$20 million for construction of "two or maybe three new stores." One, at a new mall under construction at Montgomery Village, near Gaithersburg, will open in the fall of 1978. Hoffman said after the meeting his firm is looking at a mall proposed for the Fairfax City area for another of the branches and at various sites for the third; he did not rule out a new store in the Baltimore area, and industry sources said Woodies has looked at proposals for a new mall near Glen Burnie.
$21 million for remodeling and adding new fixtures to existing stores, revealed earlier.
$11 million for day-to-day up-keep, maintenance and delivery-fleet replacement.
$6 million for a "total facelifting" of the downtown Washington store, provided a civic and convention center is constructed nearby.
On May 5, the D.C. City Council approved 9.4 an outlay of $2.7 million for design and land acquisition for the proposed center on 9.7 acres at Mt. Vernon Square. Approval of Congress is required for the complex, scheduled to cost $110 million.
Hoffman saidyesterday the Woodies management believes the center "would be a catalyst required for a revitalized downtown," and hinted that the $6 million facelift for the main store might be pulled back "if plans to build ... fell through,"
Inaugruration of the areo's subway system, including an entrance in the basement of Woodies, "has helped, but more is needed," he asserted.
Hoffman also said the arrivat of Bloomingdale's at Tysons Corner Center last fall expanded that mall's trading area, with Woodies' sales gains there outpaced only by the Anapolis store.
The Hecht Co., chief department store competitor for Woodies in the D.C. area recently detailed a five-year expansion program involving five new stores at a cost of about $40 million. One new Hecht Co., store will be in the Baltimore ara.