BALDWYN – Hancock Fabrics will no longer be publicly traded, allowing it to focus on improving its business, the company announced Friday.
The move, approved by the company’s board of directors, must also get approval at Hancock’s shareholders’ meeting in August.
“We believe that the proposed transaction would significantly reduce the expenses associated with being a public company, and allow our management team to focus more on maintaining and growing our operational improvements as well as providing liquidity to our smaller stockholders,” said company President and CEO Steve Morgan.
The company, founded in Tupelo in 1957, also announced its fourth-quarter and fiscal year results Friday.
Hancock Fabrics recorded a $1.7 million profit for the fourth quarter, reversing a $600,000 loss from a year ago. For the fiscal year, sales dropped slightly to $276 million from $278 million. The company also posted a loss of $1.9 million for the year, and improvement from the $8.5 million loss for FY2012.
The company, which entered bankruptcy protection in 2007 and emerged in 2008, has made an annual profit only once since, in FY2009.
But James Brown, the company’s chief financial officer, said the key figure for the most recent year was that Hancock had operating income of $4 million, its best showing since 2009.
“That’s a result of margin improvement and expense control,” Morgan said.
The company last year launched an initiative to reformat its stores. Hancock has developed two store formats – one focusing primarily on fabrics and the other on the “crafts and more” segment while still providing fabrics.
There are fewer than a dozen of the reformatted stores in the company’s 262-store portfolio, but Morgan and Brown said the company has to take its time, given that they are capital-intensive projects.
“They’re doing well; we’d like to do 100 stores today if we could,” Brown said.
During the fourth quarter of 2013, Hancock opened one new store and relocated two stores. For the 2013 fiscal year, three new stores opened, two closed, six stores were relocated and nine remodeled.
By going private, Brown said the company will be able to accelerate its plans to reformat stores.
Management will be able to spend less time – and money – on filing financial reports once its shares are no longer publicly traded.
Brown also said going private will provide the company more flexibility and allow it to better use its resources.
The company trades over the counter under the symbol HKFI, and shares closed at 96 cents each on Friday.
“Being traded over the counter really isn’t that beneficial, and the costs outweigh the benefits,” Brown said.
The company’s shares have ranged from a 52-week low of 62 cents a share to a high of $1.33 a share. Hancock Fabrics’ market capitalization is $20.5 million.