Coldwater Creek clocks 5.5% dip in Q1 FY'12 sales

31 May '12

4 min read

Coldwater Creek Inc. reported financial results for the three-month period ended April 28, 2012.

First Quarter 2012 Operating Results
• Consolidated net sales were $169.9 million, compared with $179.8 million in the fiscal 2011 first quarter.
• Net sales from the retail segment, which includes the Company's premium retail stores, outlet stores and day spa locations, were $131.2 million versus $135.3 million in the same period last year, primarily reflecting the impact of 13 net store closures since the end of the first quarter of fiscal 2011 as part of our store optimization program.
• Comparable store sales for the quarter declined 0.6 percent. First quarter net sales from the direct segment, which includes internet, phone and mail orders, decreased 13.1 percent to $38.7 million from $44.5 million in the same period last year.
• Consolidated gross profit was $54.4 million, or 32.0 percent of net sales, compared with $54.6 million, or 30.4 percent of net sales, for the fiscal 2011 first quarter. The 160 basis point increase in gross profit margin was primarily due to a 215 basis point increase in merchandise margin reflecting improved product performance and lower overall inventory levels.
• Selling, general and administrative expenses (SG&A) were $77.5 million, or 45.6 percent of net sales, compared with $83.9 million, or 46.7 percent of net sales, for the fiscal 2011 first quarter. The $6.4 million decline in SG&A expenses was due primarily to lower expenses in all categories, with the largest decline from marketing expense versus the prior year.
• Net loss was $23.8 million, or $0.20 per share on 121.7 million weighted average shares outstanding, compared with a net loss of $30.0 million, or $0.32 per diluted share on 92.5 million weighted average shares outstanding for the fiscal 2011 first quarter. The increase in the number of shares versus the prior year period reflects the sale of 28.9 million shares of common stock on October 24, 2011.

"Our first quarter results reflect meaningful progress in our operating performance as evidenced by an improvement in our comparable sales trend, an increase in our gross margin rate, and a reduction in SG&A expense, all of which led to a narrowing of our net loss," stated Dennis Pence, Chairman and Chief Executive Officer of Coldwater Creek.

"Customers responded favorably to our spring and early summer collections, which offered an increased emphasis on color, print, and pattern. While traffic remained challenging, we believe that our ongoing cross channel marketing efforts, combined with the improvements we have made to our merchandise, will enable us to see an upturn in this metric over time. We are encouraged to see that we gained traction in several key categories in the first quarter and we believe that we can build upon these successes as we move through the year."

Balance Sheet
At April 28, 2012, cash totaled $23.0 million, as compared with $24.0 million at April 30, 2011. The Company had $15.0 million of outstanding borrowings under its revolving line of credit as of April 28, 2012. Premium retail store inventory per square foot, including retail inventory in the distribution center, declined 31.4 percent compared to the end of the first quarter last year. Total inventory decreased 19.3 percent to $127.7 million from $158.2 million at the end of the first quarter last year.

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