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Egghead Blames Loss On Weaker Institutional Sales

Egghead Software’s losses continued in the second quarter of fiscal 1996 as the company Thursday reported a net loss of $3.5 million, or 20 cents per share, on sales of $191.2 million.

That compares to a net loss of $1 million, or 6 cents per share, on sales of $194.3 million during the same period a year ago.

The loss for the quarter, ended Sept. 30, included an after-tax charge of $1.65 million associated with the company’s relocation of its corporate headquarters and other operations from the Seattle area to Spokane. Company officials said an additional $430,000 in charges related to the move will be charged to earnings in the second half of the fiscal year.

Setbacks in sales to the company’s corporate, government and education customers are continuing to drive Egghead’s losses. In contrast, its retail division maintained a strong performance during the second quarter.

The institutional corporate, government and education sales were $90.6 million for the quarter, down $11 million from those sales during the second quarter last year.

But retail sales of $100.6 million were up $7.9 million for the quarter over last year, despite 16 fewer retail outlets nationwide than Egghead operated a year ago. The company said comparable store sales were up 20 percent for the quarter.

Egghead opened one store and closed four during the quarter, leaving 163 in operation. The new store format in Beaverton, Ore., is twice the size of its predecessor and represents a new merchandising format.

Company officials said the response to the new format has been strong. Second-quarter sales in Beaverton gained 61 percent over year-ago levels.

The company plans to convert 10 existing stores to the Beaverton format, and open 10 more new stores using the format by March 1996.

One of those new stores will be in north Spokane.

Brian Bender, Egghead’s vice president and chief financial officer, said the continuing difficulties in Egghead’s institutional sales division are due to price reductions and a decrease in overall sales.

“The business continues to be very competitive and that’s reflected in our margins,” Bender said.

Egghead Software is a leading personal computer software and hardware reseller based in Spokane. It had sales of $862 million in its most recently completed fiscal year ended March 31.

, DataTimes