Egghead Software Posts Another Loss, Will Close 20 Stores

Egghead Discount Software, the nation’s largest software retailer, announced its third consecutive quarterly loss on Tuesday and said it was closing about 10% of its outlets, about twice the number previously reported.

The chain, which had expanded rapidly in the past several years, has been suffering in recent months from a variety of problems, including slowing sales at existing outlets and rising expenses due to the company’s rapid expansion.

During its fiscal second quarter ended Oct. 14, the company lost $4.3 million, compared to a profit of $274,000 in the year-ago period. Sales were $98.5 million, up 38% from a year ago. For the first six months of the fiscal year, Egghead lost $9.5 million, compared to a profit of $113,000 the year before. Sales were $220.8 million, up 44% from the year-ago period.

Despite the rise in overall sales, the company said sales at stores open both last year and this declined nearly 5% during the second quarter, a figure that indicates that the company’s sales growth came from outlets it opened within the last year and from its strong direct corporate sales force.

Included in the latest quarterly loss was a reserve of $1.6 million to cover closing of 20 stores within the next 12 months. The stores to be closed are located in the eastern United States, where Egghead expanded most recently. None will be in Southern California where the chain operates its largest number of stores.