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Overall traffic to remain challenging in holiday season - Coldwater
18
Oct '11
Coldwater Creek Inc. announced its outlook for the fiscal third and fourth quarters ending October 29, 2011 and January 28, 2012, respectively.

Fiscal Third Quarter 2011
For the thirteen-week period ending October 29, 2011, the Company currently expects:

• Consolidated net sales in the range of $180.0 to $190.0 million reflecting a decline in comparable premium retail store sales of 17% to 21% as compared to the fiscal third quarter of 2010. The decline in comparable premium retail store sales reflects soft traffic, partially offset by improvements in conversion rates and average unit retail versus the prior year period.
• Gross margin flat to down slightly compared to the prior year period as modest improvements in merchandise margins are offset by deleveraging of occupancy and buying expenses versus the third quarter of 2010.
• Net loss in the range of $0.30 to $0.36 per share, as compared to a net loss of $0.12 per share in the third quarter of fiscal 2010.
• Total inventory at the end of the fiscal third quarter to be down in the low-to-mid teens on a percentage basis as compared to the end of the third quarter 2010.

"During September we experienced a meaningful improvement in our conversion trends as customers responded to elements of our new design aesthetic. As a result of these trends and our inventory management initiatives, we expect modest improvements in merchandise margin rates for the third quarter.

"Although we are encouraged by these developments, quarter-to-date traffic trends have been challenging," stated Dennis Pence, Chairman and Chief Executive Officer. "Additionally, we launched our first-ever nationwide television campaign and while this campaign increased our expense in the quarter, we remain confident that this is an essential investment to support a return to profitable levels of traffic and to encourage trial purchases by new customers."

The Company will provide further commentary on its fiscal third quarter as part of its third quarter earnings release and conference call which is scheduled for December 1, 2011 after the market closes.

Fiscal Fourth Quarter 2011
For the thirteen-week period ending January 28, 2012, the Company expects:

• Net loss in the range of $0.17 to $0.26 per share, as compared to a net loss of $0.40 per share in the fourth quarter of fiscal 2010. Net loss for the fiscal 2010 fourth quarter included a non-cash charge of $2.9 million, or $0.03 per share, related to certain retail store asset impairments.
• Continued improvements in conversion rates and average unit retail, offset by expected soft year-over-year traffic levels.
• Gross margin to improve 200 to 400 basis points compared to the same period in 2010 due to reductions in markdown selling as a result of tighter inventory buys, partially offset by deleveraging of occupancy and buying expenses and higher product input costs ascompared to the fourth quarter of 2010.

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