Decline in gross profit margin at Coldwater Creek
Coldwater Creek Inc reported financial results for the three-month period ended April 30, 2011.
First Quarter 2011 Operating Results
• Consolidated net sales were $179.8 million, compared with $243.1 million in the fiscal 2010 first quarter. Net sales from the retail segment, which includes the Company's premium retail stores, outlet stores and day spa locations, were $135.3 million versus $176.0 million in the same period last year, primarily reflecting a decrease in comparable premium store sales of 27.5 percent. First quarter net sales from the direct segment, which includes internet, phone and mail orders, decreased 33.6 percent to $44.5 million from $67.1 million in the same period last year.
• Gross profit was $54.6 million, or 30.4 percent of net sales, compared with $90.9 million, or 37.4 percent of net sales, for the fiscal 2010 first quarter. The decline in gross profit margin was primarily due to deleveraging of our retail occupancy costs, and to a lesser extent, lower merchandise margins as a result of higher promotional activity.
• Selling, general and administrative expenses (SG&A) were $84.1 million, or 46.8 percent of net sales, compared with $86.5 million, or 35.6 percent of net sales, for the fiscal 2010 first quarter. The decrease in SG&A dollars was primarily due to lower employee related expenses, and lower other fixed and variable costs partially offset by slightly higher marketing expenses.
• Net loss was $30.0 million, or $0.32 per share, compared with a net income of $2.3 million, or $0.03 per diluted share, for the fiscal 2010 first quarter.
"Our first quarter results were in line with our revised expectations provided on May 17," stated Dennis Pence, Chairman and Chief Executive Officer of Coldwater Creek. "We remain intently focused on reinventing our brand to provide a broader and more balanced assortment that consistently offers our customer the versatility she is looking for and caters to all aspects of her lifestyle."
At April 30, 2011, cash totaled $24.0 million, as compared with $61.2 million at May 1, 2010. Subsequent to quarter end, the Company generated net cash proceeds of $14.4 million from a new term loan secured by its owned corporate headquarters building and certain other assets. Premium retail store inventory per square foot, including retail inventory in the distribution center, declined 7.9 percent as compared to the end of the first quarter last year. Total inventory decreased 8.0 percent to $158.2 million from $172.0 million at the end of the first quarter last year.
The Company closed two premium retail stores during the fiscal 2011 first quarter, ending the quarter with 371 premium retail stores. The Company plans to open approximately five new premium retail stores, which had previously been committed to, and close between 8 and 12 premium retail stores in fiscal 2011.
Coldwater Creek is a leading specialty retailer of women's apparel, gifts, jewelry, and accessories that was founded in 1984 and is headquartered in Sandpoint, Idaho.
Coldwater Creek Inc