Mar. 9--Gottschalks stores will carry more jeans and fewer blenders in the coming months as the company works to boost profits.

Fresno Bee (CA) (KRT) via NewsEdge Corporation :

Mar. 9--Gottschalks stores will carry more jeans and fewer blenders in the coming months as the company works to boost profits.

The Fresno-based department store chain reported a 3.5% increase in fourth-quarter 2006 earnings Thursday -- up to $8.9 million, or 64 cents a share, compared with $8.6 million, or 62 cents per share, during the fourth quarter of 2005.

But earnings for the fiscal year ending Feb. 3 fell by half, to $2.6 million, or 19 cents per share, compared with $5.2 million, or 38 cents per share for fiscal year 2005.

Gottschalks President and Chief Executive Jim Famalette said the company will cut the amount of floor space devoted to home furnishings and increase display of clothing, accessories, shoes and cosmetics.

"What we want to do is focus on the strengths of the company," he said.

Mark Montagna, a senior analyst with C.L. King Associates in New York, called the change a "huge opportunity" for the retailer.

"It sounds like they learned a lot over Christmas," he said.

Remodels of the accessories, shoes and cosmetics departments at many of Gottschalks 65 stores will continue.

Sales in those departments increased about 15% after the remodels, compared with 6% growth in stores that remained the same, Famalette said.

A committee of Gottschalks board members charged with exploring "strategic alternatives," including selling the company to investors or another retailer, cost the company about $400,000, said Chief Financial Officer Greg Ambro. He called the cost "higher than expected" and said it included hiring an investment bank.

Executives declined to comment on the committee's progress.

Total sales for the 53-week fiscal year increased 1% to $683.9 million, compared with $676.9 million in the 52-week 2005 fiscal year.

Excluding the extra week, total sales decreased 0.3% to $675.2 million.

Earnings per share were better than Wall Street analysts expected, Montagna said.

Analysts had forecast 61 cents per share, versus the 64 cents per share announced Thursday.

As for 2007, Gottschalks expects an increase of same-store sales of between 1% and 1.5%.

The Clovis and Hanford stores will undergo major remodeling later this year, Famalette said.

Gottschalks is working with an outside company on a new marketing campaign that could debut in the second half of the year.

"What we're talking about here is a major look at how we do all our advertising and working on the branding of the store," Famalette said.

Gottschalks stock fell 17 cents Thursday to close at $11.13 a share on the New York Stock Exchange.