Coldwater Creek Inc. reported financial results for the three- and nine-month periods ended October 31, 2009.
Third quarter net loss was $34.0 million, or $0.37 per share, which includes the following items:
• $3.8 million after-tax charge, or $0.04 per share, relating to the separation from our former CEO. This charge was comprised of the following items o $1.2 million cash severance charge o $1.4 million non-cash stock-based compensation charge o $1.2 million non-cash pension related charge • $26.3 million non-cash income tax charge, or $0.29 per share, related to a valuation allowance against net deferred tax assets as required under U.S. generally accepted accounting principles (GAAP). The recording of an income tax valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from utilizing its deferred tax assets in future profitable periods.
Excluding these additional items, the Company's third quarter adjusted net loss on a non-GAAP basis was $3.9 million, or $0.04 per share. A reconciliation between our results reported in accordance with GAAP and adjusted net loss is included at the end of this press release.
Third Quarter Operating Results
• Net sales were $266.7 million, compared with $228.5 million in the fiscal 2008 third quarter. Sales from the retail segment, which includes the Company's premium retail stores, outlet stores, and day spa locations, were $207.3 million versus $175.4 million in the fiscal 2008 third quarter. Comparable premium store sales increased 14.4 percent in the third quarter versus the third quarter of fiscal 2008. Direct sales (phone and internet) were $59.4 million, compared with $53.0 million in the same period last year. • Gross profit for the fiscal 2009 third quarter was $97.1 million, or 36.4 percent of net sales, compared with $86.1 million, or 37.7 percent of net sales, for the fiscal 2008 third quarter. The decline in gross profit was primarily due to lower merchandise margins resulting from increased promotional activity and lower initial markups, partially offset by improved occupancy leverage. • Selling, general and administrative expenses for the fiscal 2009 third quarter were $108.2 million, or 40.6 percent of net sales, compared with $88.8 million, or 38.9 percent of net sales, for the fiscal 2008 third quarter. The increase in selling, general and administrative expenses of approximately $19.4 million included a $6.0 million pre-tax charge referred to above associated with the separation from our former CEO. In addition, higher marketing expenses, increased wages associated with higher retail sales, and other variable costs drove the increase in selling, general and administrative expenses, as compared with the third quarter last year. • Operating loss for the third quarter was $11.1 million, which includes the $6.0 million pre-tax charge related to the separation from our former CEO.
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