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Egghead Posts $4.6 Million Loss Software Company Sprucing Up Stores In Attempt To Boost Sales

Michael Murphey Staff writer

Amid growing losses, Egghead Software is fine-tuning its retail store format in preparation for the Christmas sales season.

“We are moving to reposition some key stores in time for the holiday season,” George P. Orban, Egghead’s board chairman, said in a news release Thursday.

“We are focusing our attention on our new format stores which may serve as the model for redeveloping the rest of the chain as the majority of the company’s leases come up for renewal in the next 18 months,” Orban added.

Orban’s statements were made in a Thursday announcement of the company’s second-quarter financial performance, which produced more losses.

The company reported losses of $4.66 million, or 27 cents per share, on sales of $80 million. That compares with losses of $3.5 million, or 20 cents per share, on sales of $100 million during the same quarter a year ago.

In an interview, Orban said the losses do not threaten Egghead’s long-term viability. He pointed out the company had a cash balance of $89.1 million at the close of the second quarter.

Last year, Spokane-based Egghead scaled its operations down by half as it sold its corporate, government and education sales division to Dallas-based Software Spectrum. Historically, the division, which sold products directly to government agencies and large corporations, had produced about half of Egghead’s revenues.

The sale strategy was to allow Egghead to focus solely on its retail operations, which have struggled in recent years.

Egghead has been saddled with an outmoded retail format. Most of its stores are small 2,000- to 3,000-square-foot nooks that are ill suited to compete with the superstore formats popular in retailing today.

The company has expanded several of its existing stores to a much larger format, and opened a number of the larger stores in new markets, including Spokane. The stores offer a range of upscale computer hardware products along with software.

During the past year, the results of those format changes have been mixed.

Orban said the company is now making further refinements of those new formats to make better use of the larger space.

“The objective is to open up all the stores to make the products more visible,” Orban said.

He said the company must optimize its sales production per square foot.

, DataTimes MEMO: This sidebar appeared with the story: FIRST-HALF LOSS NARROWS For the first six months of the fiscal year, Egghead lost $5.2 million, or 30 cents per share, on sales of $159 million. That compares with a loss of $6.7 million, or 39 cents per share, on sales of $185 million for the same period a year ago.

This sidebar appeared with the story: FIRST-HALF LOSS NARROWS For the first six months of the fiscal year, Egghead lost $5.2 million, or 30 cents per share, on sales of $159 million. That compares with a loss of $6.7 million, or 39 cents per share, on sales of $185 million for the same period a year ago.