Woodward & Lothrop, the Washington area's largest independent department store chain, suffered a 53 percent drop in first quarter profits, the largest quarterly percentage decline in the company's history.
Edwin K. Hoffman, chairman of 14-store chain, blamed the earnings result on less consumer spending and a drop in credit sales since the Federal Reserve Board imposed credit restraints in March to curb inflation and higher expenses.
"While sales for the month of February were good, March was only fair and April was seriously affected by the early Easter and a decline in consumer spending," Hoffman said in a statement. "Expenses for the quarter have increased at a rate greater than sales while gross margin has not shown any improvement."
Sales for the quarter were $65.4 million compared to $61.3 million last year. But while sales increased 6.6 percent, net income declined from $1.1 million (21 cents a share) to $537,000 (47 cents).
One cost that has overtaken sales was payroll expenses which rose by about 8 percent, said company vice chairman Robert J. Mulligan. Fixed expenses such as utility costs also increased, he said.
In addition, credit sales were about even with those of last year while overall sales increased, Mulligan added.
Hoffman said the company is trying to control expenses without hampering sales, to provide good customer service, and to change "merchandise mix" to improve profits.
"While the first quarter traditionally contributes the smallest percentage of the year's total profits, we view the balance of the year with extreme caution," Hoffman continued.
At the company's annual stockholders meeting last week, Hoffman said that $7 million in expenditures will be cut this year, including funds for the revamping of the Landmark store.
Washington Gas Light Company, in its monthly earnings statement, reported earnings for the 12 months ending April 30 of $13.4 million ($3.05) compared with $12.7 million ($2.25). "A major factor in the improvement is earnings this year over the decidedly low earnings of a year ago was higher retail rates," the company said in a statement.