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Retail segment sales decline 7.1% at Coldwater Creek
Mar '12
Coldwater Creek Inc reported financial results for the quarter and fiscal year ended January 28, 2012.

Fourth Quarter 2011 Operating Results
Consolidated net sales were $224.4 million, compared with $252.1 million in the fiscal 2010 fourth quarter. During the fourth quarter of fiscal 2011, the Company recorded net sales of $11.8 million as a result of a favorable cumulative one-time adjustment reflecting an updated estimate of gift card breakage.

Net sales from the retail segment, which includes the Company's premium retail stores, outlet stores and day spa locations, declined 7.1 percent to $173.5 million, from $186.7 million in the same period last year, primarily reflecting a decrease in comparable premium retail store sales of 11.4 percent. The segment's 2011 results benefited from a $10.7 million cumulative one-time adjustment to net sales representing the retail segment's portion of the gift card breakage income.

Fourth quarter net sales from the direct segment, which includes internet, phone and mail orders, were $50.8 million versus $65.4 million in the same period last year, representing a 22.3 percent decline in net sales primarily due to lower on-line clearance activity. Direct segment net sales included $1.1 million of the cumulative one-time adjustment for gift card breakage income.

Consolidated gross profit was $73.1 million, or 32.6 percent of net sales, compared with $60.7 million, or 24.1 percent of net sales, for the fiscal 2010 fourth quarter. Gross profit margin increased 850 basis points, which included a 370 basis point benefit resulting from the cumulative one-time adjustment for gift card breakage income. The remaining 480 basis point improvement is primarily due to higher merchandise margins reflecting improved product performance and lower overall inventory levels throughout the holiday season, which was partially offset by deleveraging of buying and occupancy expense.

Selling, general and administrative expenses ("SG&A") were $81.9 million, or 36.5 percent of net sales, compared with $92.3 million, or 36.6 percent of net sales, for the fiscal 2010 fourth quarter. The decline in SG&A expenses was due to reductions across several categories including employee-related, marketing, and variable and fixed operating expenses, compared to a year ago.

Net loss was $12.8 million, or $0.11 per share, on 121.6 million weighted average shares outstanding, compared with a net loss of $37.0 million, or $0.40 per share on 92.4 million weighted average shares outstanding for the fourth quarter of fiscal 2010. The increase in the number of shares versus the prior year period reflects the sale of 28.9 million shares of our common stock on October 24, 2011.

The cumulative one-time adjustment related to gift card breakage income reduced the net loss for the fiscal 2011 fourth quarter by $11.8 million, or $0.10 per share. Net loss for the fourth quarter of 2011 included a non-cash asset impairment charge of $2.3 million, or $0.02 per share, related primarily to 25 underperforming stores. 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.

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Coldwater Creek Inc

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