Coldwater Creek exceeds guidance with EPS of $0.03

28 Aug '08

5 min read

Coldwater Creek Inc reported financial results for the three month period ended August 2, 2008.

Second Quarter Operating Results
• Net sales were $241.4 million, compared to $253.5 million in the second quarter of 2007, primarily as a result of a decrease in retail store traffic and lower direct channel sales. Sales from the retail segment, which includes the Company's premium retail stores, outlet stores, and day spa locations, were $189.4 million versus $177.7 million in the fiscal 2007 second quarter. Comparable store sales declined 13.7 percent in the second quarter versus the second quarter of fiscal 2007. Direct sales (phone and internet) were $52.1 million, compared to $75.8 million in the same period last year.

• Gross profit for the fiscal 2008 second quarter was $95.6 million, or 39.6 percent of net sales, compared with $110.2 million, or 43.5 percent of net sales, for the fiscal 2007 second quarter. The decrease in gross profit rate was primarily a result of deleveraging of occupancy costs due to lower same store sales.

• Selling, general and administrative expenses for the fiscal 2008 second quarter were $88.5 million, or 36.6 percent of net sales, compared with $98.1 million, or 38.7 percent of net sales, for the fiscal 2007 second quarter. The decrease in selling, general and administrative expenses of approximately $9.6 million was driven by reduced marketing spend, and other cost savings initiatives.

• Coldwater Creek recorded a non-cash impairment charge of $0.9 million after-tax in the second quarter of fiscal 2008, related to the Coldwater Creek ~ The Spa concept. The impairment charge represents the excess of recorded carrying values of certain Coldwater Creek day spa locations over the estimated fair value of these assets. The Company continues to operate nine Coldwater Creek spa locations, focusing on the brand experience and opportunity to cross-market with Coldwater Creek retail stores.

• Net income for the three-month period was $3.1 million, or $0.03 per diluted share, compared with net income of $8.7 million, or $0.09 per diluted share, for the three-month period ended August 4, 2007. Second quarter fiscal 2008 results include a non-cash charge of $0.9 million after-tax, or $0.01 per diluted share, related to the impairment of certain Coldwater Creek day spa locations.

• Premium retail store inventory per square foot, including retail inventory in the distribution center, decreased approximately 24 percent compared with the second quarter of 2007. Total inventory decreased 17.3 percent to $127.1 million, compared to $153.6 million at the end of the second quarter of 2007. The Company's cash position increased $26.7 million to $89.2 million at the end of the second quarter compared to $62.5 million at the end of fiscal 2007.

Six Months Ended August 2, 2008 Operating Results
• Net sales were $512.5 million versus $534.8 million in the six months ended August 4, 2007. Sales from the retail segment were $376.2 million versus $362.5 million in the comparable period last year. Direct sales were $136.3 million, compared with $172.3 million in the comparable period last year.

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