House of Fabrics Posts 1st Loss in Its History

For the first time in its 39-year history, House of Fabrics, the nation’s biggest chain of fabric stores, posted a quarterly loss. The Sherman Oaks-based company attributed the loss mainly to an inventory shortage.

House of Fabrics lost $621,000, or 9 cents a share, during its second quarter ended July 31, compared with earnings of $912,000, or 14 cents a share, for the same period last year. Sales were off 2%, to $59.4 million.

“We ran short of goods in the second quarter,” President Gary Larkins said. He said an intentional effort to lower inventories “just went a little too far.”

Company officials also said House of Fabrics suffered from a generally sluggish retail environment and that the company’s addition of crafts and sewing machine departments to many of its 775 stores has made its business more Christmas-dependent, with better results expected later in the year.

Chairman David Sofro said House of Fabrics is also weeding out marginal stores in favor of bigger “super stores” and closed 24 smaller stores in the first half of this year.