(Corrects last paragraph to change the day to Thursday from
* Q3 loss $0.98/shr vs loss est $1.01/shr
* Q3 rev down 15 pct, in with street view
* Cuts upper end of FY10 profit view range by 6 cents
* Shares down as much as 5 pct
(Adds details, analyst comment, updates share activity)
By Shobhana Chadha
BANGALORE, Feb 18 School Specialty Inc SCHS.O
posted a narrower-than-expected quarterly loss, helped by cost
cuts, but lowered the upper end of its 2010 profit outlook
range, sending its shares down as much as 5 percent.
It now sees earnings of $1.40 a share to $1.54 a share,
compared with its prior range of $1.40 a share to $1.60 a
The school-products supplier also cut its revenue outlook
to a range of $895 million to $910 million compared with its
prior forecast of $915 million to $940 million.
"They did reduce their guidance but I think that is clearly
an indication that the market conditions in school spending
continue to be very challenging," analyst Trace Urdan of Signal
Hill Group said.
However the results are encouraging, it is evident that
they are making terrific progress on the cost cutting side,
The company saw a 15 percent fall in revenue to $103.1
million and said the decrease was due to a difficult school
spending environment, particularly in its furniture segment.
"The furniture segment is a derivative of new school
construction and all new school construction has really stopped
due to recession. You won't see schools spending on furniture
until they would see tax receipts improve at the state level,"
analyst Urdan said.
The company said net loss for the third quarter ended Jan.
23, was $18.5 million, or 98 cents a share, compared with net
loss of $23.4 million, or $1.25 a share, a year ago.
Analysts on average were expecting a loss of $1.01 per
share, on revenue of $103.6 million, according to Thomson
Gross margins at the company, which distributes school
supplies to pre-kindergarten through 12th grade, improved 550
basis points to 41 percent, the company said.
Selling, general and administrative expenses fell 11
percent to $65 million.
Shares of the Greenville, Wisconsin-based were down 42
cents in the morning trade to $21.83 Thursday on Nasdaq. They
had earlier touched a low of $21.02.
(Reporting by Shobhana Chadha in Bangalore; Editing by