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Earl Scheib's Loss Doubles in 3rd Quarter

Harsh weather and higher insurance costs could continue to weigh on the company's sales in its fiscal fourth quarter, the CEO says.

March 14, 2003|Hanah Cho | Times Staff Writer

Earl Scheib Inc., whose late founder proclaimed in late-night 1960s TV ads, "I'll paint any car, any color, for $29.95," said Thursday that its net loss doubled in its fiscal third quarter because harsh weather in the East and Midwest kept customers out of its auto paint and body shops.

The Sherman Oaks-based company's net loss climbed to $1.58 million, or 36 cents a share, from $778,000, or 18 cents, a year earlier.

The company also said its operating loss grew to $2.19 million in the third quarter from $1.57 million in the year-earlier period.

Sales slipped 8.9% to $9.29 million as the company operated about 10 fewer stores in the quarter ended Jan. 31 compared with the year-earlier period.

Scheib said overall same-store sales -- a key measure of a retailer's financial health -- fell 3.1%. Yet, at its shops in California and other Western states, same-store sales rose 2%.

Andrew Shapiro, president of Lawndale Capital Management, a San Francisco investment firm that owns about 12% of Scheib stock, said the company's business was affected by the weather.

"People in the Midwest and the East don't choose to go out in an ice storm to get their cars painted," he said. Indeed, same-store sales in those regions fell 13.5%.

In a statement, Scheib President and Chief Executive Chris Bement said weather factors would continue to weigh on sales into the fourth quarter. He also said higher insurance and other costs, "particularly in California, appear to be ongoing."

Founded in 1937, the company has had trouble standing out in the highly fragmented auto aftermarket.

In an effort to boost its stock, Scheib opened its first shop for painting large trucks, tractors and buses a few years ago. But it closed about 35 auto paint and body stores last year as part of its restructuring. The company now operates 126 shops in more than 100 U.S. cities.

Scheib shares have languished around $3 for the last year. The shares closed unchanged Thursday at $2.10 on the American Stock Exchange.

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