Allied Stores Corp. reported yesterday that its second-quarter profits dropped by more than $2 million, and it blamed part of the decline on its acquisition last year of Garfinckel, Brooks Brothers, Miller & Rhoads Inc.
Allied's earnings fell to $5.1 million (25 cents a share) from $7.3 million (36 cents) for the quarter ended July 31 and plunged to $7.5 million (37 cents) from $19.8 million (98 cents) for the first half of the fiscal year.
Largely because of the sales of the stores acquired from Garfinckel, Allied's volume for the quarter climbed 18.7 percent to $685 million from $535 million, and first-half sales were up 29 percent to $1.4 billion from $1.1 billion. The Garfinckel operations had total sales of more than $250 million for the first half, Allied said. Without the Garfinckel volume, Allied's sales would have grown 3.9 percent for the quarter and 4.1 percent for the half.
"The Garfinckel acquisition had a negative impact on earnings" because of interest paid on money borrowed to buy the Washington-based retailer, the company said.
Chairman Thomas Macioce predicted that "some improvement in the climate for retailing will become evident during the second half."