House of Fabrics Trims Loss as Sales Decline

House of Fabrics Inc. narrowed its losses in its second quarter, just before the company emerged from Chapter 11 bankruptcy.

The Sherman Oaks-based retailer posted a second-quarter loss of $5 million, compared to an $11-million loss in the same period a year earlier. In the latest quarter, the company’s sales fell to $54.8 million, down 24% from $71.9 million last year.

The sales decline is largely due to the closing of 86 stores, which House of Fabrics said were either unprofitable or laggard performers. The firm now operates 269 stores in 34 states.

House of Fabrics emerged from Chapter 11 last month. Chief Executive Gary Larkins said the firm has a new $65-million credit line, and that has allowed the company to trim its bank debt from $126 million when House of Fabrics filed for bankruptcy protection to $47.3 million.

For the six-month period, the company posted an $11-million loss, compared to a $19-million loss a year earlier. Six-month sales fell 23% to $111.4 million, compared to $145.7 million a year earlier.