Rankin Automotive Group Reports Third Quarter Results
13 January 1998
Rankin Automotive Group Reports Third Quarter Results
ALEXANDRIA, La., Jan. 13 -- Randall B. Rankin, President of
Rankin Automotive Group, Inc. (Nasdq: RAVE) announced sales and earnings for
its third quarter ended November 25, 1997 compared to the same period of the
previous year.
Three Months Ended Nine Months Ended
November 25, November 25,
1997 1996 1997 1996
($000's omitted except
in per share earnings)
Net Sales $ 9,720 $7,191 $30,292 $21,535
Net Income ($40) $ 105 $ 93 $ 512
Earnings Per Share ($ 0.01) $ 0.03 $ 0.02 $ 0.17
Results of the third quarter of the fiscal year reflected the continued
evidence of the Company's growth strategy. Sales for the three months ended
November 25, 1997 approximated $9.7 million compared to the $7.2 million for
the same period of the prior year. Likewise, sales for the nine months ended
November 25, 1997 approximated $30.3 million compared to the $21.5 million for
the same period ended November 25, 1996. The sales gains for the three month
comparative period approximated 35% while the sales gains for the nine month
period were 41% compared to the same period of the prior year.
Two new traditional stores were opened during the period, one in Ruston,
LA and the other in Livingston, TX. It was felt that these two locations fit
very well with the Company's market penetration strategies and filled a void
in our overall geographic coverage. This brings the total store count to
43 locations as of the end of the quarter.
Much of the increase in OSG&A as a percentage of Net Sales for the three
months and nine months comparisons in directly attributable to two areas. The
first is that in both the three month and nine month periods which ended
November 25, 1996 the Company had been publicly traded for only seven
(7) days. Much of the increased costs were related to the IPO process and
activities required of a public company which are not required of a privately
hold company. A few of these are Directors & Officers liability insurance
coverage, higher limits on the liability insurance coverages for the
corporation, and increased personnel to handle the added reporting
requirements. In addition to this was the 12-store Mississippi group which
was acquired on October 21, 1996. The OSG&A costs of these stores were higher
as a percentage of Net Sales than the remaining stores. Only one month of
activity for these newly acquired stores was included in the three months
ended November 25, 1996 while a full three months was included in the three
month period ended November 25, 1997.
During 1997, management determined that an increase in its reserve for
inventory shrinkage was appropriate as inventories continue to increase with
the rapid growth of the number of locations within the Company. During this
fiscal quarter, management continued to consolidate the duties of many of the
divisional activities into the corporate offices to gain operating
efficiencies.
In May, the Company developed a program to solidify the management staff
by hiring highly qualified individuals in key positions to assist with the
continued growth. Some of the costs of this program have been experienced
during the six months ended November 25, 1997. Management believes the
benefits from this decision will be felt in improved efficiencies and
profitability for the years to come. During the month of November, management
embarked upon a program to identify areas within the company where cost
efficiencies could be gained. It was determined that a selective reduction in
personnel could be made without having a detrimental effect on productivity.
A 10.7% personnel reduction was implemented in mid-November to assist in
bringing OSG&A costs back to historical levels. It is expected that the full
effect of this will not be noticed until the fourth quarter of this year.
SOURCE Rankin Automotive Group