Coldwater Creek Announces Fiscal 2004 Second Quarter Results
Wednesday August 25, 4:15 pm ET
SANDPOINT, Idaho, Aug. 25 /PRNewswire-FirstCall/ -- Coldwater Creek Inc. (Nasdaq: CWTR - News) today reported financial results for the three- and six-month periods ended July 31, 2004. All per share amounts below reflect a 50 percent stock dividend having the effect of a 3-for-2 stock split declared by the company's board of directors on June 14, 2004, and the company's previously announced May 2004 public stock offering.
ADVERTISEMENT
Consolidated Results
For the three-month period ended July 31, 2004, net income was $3.4 million, or $0.08 per diluted share, compared with a net loss of $1.4 million, or $0.04 loss per share, for the three-month period ended August 2, 2003. Net sales in the fiscal 2004 second quarter increased 15.1 percent to $111.2 million from $96.7 million in the fiscal 2003 second quarter.
For the six-month period ended July 31, 2004, net income was $8.9 million, or $0.23 per diluted share, compared with net income of $0.5 million, or $0.01 per diluted share, for the six-month period ended August 2, 2003. Net sales in the first six months of fiscal 2004 increased 11.2 percent to $235.7 million from $211.9 million in the same period last year.
"The improved net sales and net income results for the second quarter were primarily due to continued strong customer response to our merchandise," said Dennis Pence, chairman and chief executive officer. "We were especially pleased with the ongoing positive performance of our retail stores, which grew to represent half of the company's total business for the first six months of the fiscal year. Based on these results, we now plan to open a total of 49 stores in fiscal 2004, which will give us 115 locations across the country at the start of the holiday season."
"Strong full-price selling in our spring and summer assortments across all channels delivered higher merchandise margins and helped generate a 640-basis-point improvement in our gross profit rate," said Georgia Shonk-Simmons, president and chief merchandising officer. "Additionally, we are entering the fall selling season with a very clean and current inventory position. At the same time, higher response rates to our catalog mailings resulting from our focused catalog circulation strategy contributed to a 70-basis-point decrease in selling, general and administrative expenses expressed as a percentage of net sales."
Gross profit for the fiscal 2004 second quarter was $46.9 million, or 42.2 percent of net sales, compared with $34.7 million, or 35.8 percent of net sales, for the fiscal 2003 second quarter. The increase in gross profit dollars and rate was primarily attributable to improved merchandise margins on sales in all channels, reduced clearance activity and improved leveraging of the company's full-line retail store occupancy costs.
Selling, general and administrative expenses for the fiscal 2004 second quarter were $41.5 million, or 37.3 percent of net sales, compared with $36.8 million, or 38.0 percent of net sales, for the fiscal 2003 second quarter. Selling, general and administrative expenses expressed as a percentage of net sales decreased primarily due to improved response rates to catalogs mailed during the period partially offset by increased employee expenses, primarily associated with the company's retail expansion.
Income from operations for the fiscal 2004 second quarter was $5.4 million, or 4.9 percent of net sales, compared with a loss from operations of $2.1 million, or a negative 2.2 percent of net sales, for the fiscal 2003 second quarter.
Retail Segment Sales
Net sales from the Retail Segment, which includes the company's full-line retail stores, resort stores and outlet stores, increased 51.0 percent to $61.3 million in the fiscal 2004 second quarter, from $40.6 million in the fiscal 2003 second quarter. Retail Segment net sales represented 55.1 percent of the company's total net sales in the fiscal 2004 second quarter, compared with 42.0 percent in the fiscal 2003 second quarter.
Net sales from the Retail Segment increased 59.4 percent to $117.8 million in the first six months of fiscal 2004, from $73.9 million in the first six months of fiscal 2003. Retail Segment net sales represented 50.0 percent of the company's total net sales in the first six months of fiscal 2004, compared with 34.9 percent in the comparable prior year period.
The company opened 18 full-line retail stores during the fiscal 2004 second quarter for a total of 89 full-line retail stores in operation at the end of the fiscal 2004 second quarter, compared with 48 full-line retail stores at the end of the fiscal 2003 second quarter.
Direct Segment Sales
"In keeping with our strategic shift toward a retail store-based business model, we reduced catalog circulation by 32.3 percent in the second quarter, and catalog net sales fell 26.0 percent compared with the prior year," Pence said. "Meanwhile, our e-commerce net sales climbed by 9.8 percent during the period, due to effective e-mail promotions."
Net sales from the Direct Segment, which encompasses the company's catalog and e-commerce businesses, decreased 10.9 percent to $49.9 million in the fiscal 2004 second quarter from $56.1 million in the fiscal 2003 second quarter. Direct Segment net sales represented 44.9 percent of the company's total net sales in the fiscal 2004 second quarter, compared with 58.0 percent in the fiscal 2003 second quarter.
Net sales from the Direct Segment decreased 14.5 percent to $117.9 million in the first six months of fiscal 2004 from $138.0 million in the same period a year ago. Direct Segment net sales represented 50.0 percent of the company's total net sales in the first six months of fiscal 2004, compared with 65.1 percent in the comparable period last year.
Catalog Sales
Catalog net sales decreased 26.0 percent to $24.0 million in the fiscal 2004 second quarter from $32.4 million in the fiscal 2003 second quarter. Catalog net sales represented 48.0 percent of the Direct Segment's net sales in the fiscal 2004 second quarter, compared with 57.8 percent in the fiscal 2003 second quarter. Catalog net sales represented 21.6 percent of the company's total net sales in the fiscal 2004 second quarter, compared with 33.6 percent in the fiscal 2003 second quarter.
Catalog net sales decreased 27.3 percent to $57.0 million in the first six months of fiscal 2004 from $78.4 million in the same period last year. Catalog net sales represented 48.4 percent of the Direct Segment's net sales in the first six months of fiscal 2004, compared with 56.8 percent in the comparable period a year ago. Catalog net sales represented 24.2 percent of the company's total net sales in the first six months of fiscal 2004, compared with 37.0 percent in the same period last year.
E-commerce Sales
E-commerce net sales increased 9.8 percent to $26.0 million in the fiscal 2004 second quarter from $23.6 million in the fiscal 2003 second quarter. E-commerce net sales represented 52.0 percent of the Direct Segment's net sales in the fiscal 2004 second quarter, compared with 42.2 percent in the fiscal 2003 second quarter. E-commerce net sales represented 23.3 percent of the company's total net sales in the fiscal 2004 second quarter, compared with 24.5 percent in the fiscal 2003 second quarter.
E-commerce net sales increased 2.2 percent to $60.9 million in the first six months of fiscal 2004 from $59.6 million in the same period last year. E-commerce net sales represented 51.6 percent of the Direct Segment's net sales in the first six months of fiscal 2004, compared with 43.2 percent in the comparable period a year ago. E-commerce net sales represented 25.8 percent of the company's total net sales in the first six months of fiscal 2004, compared with 28.1 percent in the same period last year.
Liquidity
At the end of the fiscal 2004 first quarter, the company had no short or long-term debt and a cash position of $88.6 million compared with a cash position of $3.5 million at the end of the fiscal 2003 second quarter. The company's working capital increased to $101.9 million at the end of the fiscal 2004 second quarter from $37.3 million at the end the fiscal 2003 second quarter. These results include net proceeds of $42.1 million from the company's recent stock offering. Inventory decreased $10.2 million, or 15.1 percent, to $57.4 million at the end of the fiscal 2004 second quarter from $67.6 million at the end of the fiscal 2003 second quarter. This decrease occurred at the same time the company added 41 full-line retail stores since the end of the fiscal 2003 second quarter.
As previously announced, Coldwater Creek will host a conference call on Wednesday, August 25, 2004 at 4:45 p.m. (Eastern) to discuss fiscal 2004 second quarter results. To listen to the live Web cast, log on to phx.corporate-ir.net . Also, a link to the live Web cast of the call is provided in the company's Web site at www.coldwatercreek.com. The call will be archived from approximately one hour after the conference call until midnight on Wednesday, September 1, 2004. The replay can be accessed by dialing (719) 457-0820 and giving the passcode "601031". Any additional information provided during the call will be available by accessing the replay of the call.
Coldwater Creek is an integrated multi-sales channel retailer of women's apparel, jewelry, footwear, gift items and accessories through a growing number of full-line retail stores located in major metropolitan areas, an e-commerce web site at www.coldwatercreek.com and direct-mail catalogs. |
