Retailer Hancock Ships Faster, Raises Freight Spending

Tradeoff comes in fixing ‘inventory issues,’ but fabrics sales lag
Hancock Fabrics says higher freight shipping costs from the company’s attempts to adjust inventory levels helped push the retailer into a steeper loss in its fiscal first quarter.

The Mississippi-based fabrics seller did not detail the freight charges, but its overall costs of goods sold edged up slightly in the quarter ending May 1 while Hancock reduced inventories 7.6 percent to $93 million.

With same-store sales down 2 percent from the same quarter a year ago, Hancock reported a $1.3 million loss, up from a $900,000 net loss a year ago.

Hancock President and CEO Jane Aggers said the loss came as the company pushed to get goods more rapidly to its stores, “remedying merchandising and inventory issues carried forward from last year.”

The company traded those inventory costs for higher shipping expenses. Hancock said freight costs took four-tenths of a percentage point more from the company’s gross margin while sourcing and warehousing declined eight-tenths of a percentage point.

“As inventory levels have risen since year-end, additional shipments were made to our locations from our distribution center, which has raised freight costs,” the company said.

(Source:www.joc.com)