Brookstone Announces 15.8% Improvement in Adjusted EBITDA -- Same store sales increase 6.1%

-- e-Commerce sales increase 33.0%

-- Alternative Distribution sales more than double

MERRIMACK, N.H., Nov. 13, 2012 /PRNewswire/ -- Innovative product development company and multi-channel lifestyle retailer Brookstone, Inc. announced today that, for the third quarter ended September 29, 2012, consolidated net sales increased 21.9% to $95.3 million and our Adjusted EBITDA loss improved 15.8% to $5.5 million as compared to the third quarter of 2011.  For the thirty-nine week period ended September 29, 2012, consolidated net sales increased 17.6% to $286.8 million and our Adjusted EBITDA loss improved 28.1% to $17.0 million as compared to the thirty-nine week period ended October 1, 2011.   

In our Retail channel, for the third quarter ended September 29, 2012, net sales increased $3.8 million, or 6.1%, to $66.6 million and same-store sales increased 6.1% as compared to the third quarter of 2011. For the thirty-nine week period ended September 29, 2012, net sales in the Retail channel increased $15.1 million, or 7.8%, to $210.5 million and same-store sales increased 8.7% as compared to the thirty-nine week period ended October 1, 2011.  These increases were the result of a strong product offering and continued improvements in our selling culture, offset by a net decrease in the number of stores from 293 to 282.

Net sales in our e-Commerce channel increased $3.2 million, or 33.0%, to $12.9 million for the third quarter ended September 29, 2012, as compared to the third quarter of 2011.  For the thirty-nine week period ended September 29, 2012, net sales in the e-Commerce channel increased $10.3 million, or 29.3%, to $45.3 million as compared to the thirty-nine week period ended October 1, 2011.  These increases were primarily due to revenue growth in our on-line marketplace initiative under which we have significantly increased the selection of quality third party marketplace products on our website, www.brookstone.com.

For the third quarter ended September 29, 2012, net sales in the Alternative Distribution channel, which includes our wholesale business, increased $10.1 million, or 177.4%, to $15.7 million as compared to the third quarter of 2011.  For the thirty-nine week period ended September 29, 2012, net sales in the Alternative Distribution channel increased $17.6 million, or 131.6%, to $30.9 million as compared to the thirty-nine week period ended October 1, 2011, as we continue to focus on expanding our revenue streams through alternative channels.  

Stephen Bebis, Brookstone's President and CEO, said:  "We are encouraged with both the top and bottom line results for the third quarter of 2012. Our improving net sales results provide us with optimism for the remainder of 2012 as we approach the winter holiday selling season.  We continue to invest in strategic growth initiatives to drive our long-term success in each of our business segments and have realized particularly strong gains in our audio and mobile technology product categories." 

Non-GAAP Financial Information

EBITDA and Adjusted EBITDA are measures used by management to evaluate the Company's ongoing operations and as a general indicator of the Company's operating cash flow. The Company defines EBITDA as net income, plus interest expense, provision for income taxes, and depreciation and amortization. The Company's definition of Adjusted EBITDA is consistent with the definition of "Consolidated EBITDA" as noted in our Credit Agreement for purposes of certain financial covenant calculations, which is EBITDA plus certain non-cash items (i.e. – restricted stock awards) that reduce consolidated net income during the period.    Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the comparative evaluation of companies. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to either net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management's discretionary use as it does not reflect certain cash requirements such as interest payments, tax payments and debt service requirements.  The Company excludes certain non-cash items from Adjusted EBITDA as noted above, as the Company believes this provides an enhanced indicator of operating cash flow.  We have provided a reconciliation of Adjusted EBITDA to GAAP net income below:

 

Brookstone, Inc. 

Reconciliation of Net Loss to

Adjusted EBITDA

(In thousands)

(Unaudited)



Thirteen weeks ended


Thirty-nine weeks ended


September 29, 2012


October 1, 2011


September 29, 2012


October 1, 2011









Net loss attributable to Brookstone

$   (12,182)


$   (13,785)


$   (41,518)


$   (46,537)

Interest expense

4,283


4,524


12,958


13,422

Income tax provision (benefit)

108


170


200


520

Depreciation and Amortization

2,270


2,501


6,985


7,546

EBITDA

(5,521)


(6,590)


(21,375)


(25,049)

Non-cash items

69


116


4,384


1,422

Adjusted EBITDA

$     (5,452)


$     (6,474)


$   (16,991)


$   (23,627)











 

Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that operates approximately 280 Brookstone branded stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates an e-Commerce channel that includes the Brookstone catalog and the Brookstone website at http://www.brookstone.com as well as an alternative distribution channel that includes sales to select resellers and corporate partners. 

Brookstone is principally owned by three sponsors, Osim International, J.W. Childs, and Temasek Holdings.  In accordance with the terms governing its publicly-held debt, the Company issues quarterly and annual reports under SEC guidelines.

Statements in this release which are not historical facts, including statements about the Company's confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company's operational outlook are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act") and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products, and other factors detailed from time to time in the Company's annual and other reports posted to the Company's website. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.

 

BROOKSTONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)



September 29,

2012


December 31,

2011


October 1,

2011







Assets












Current assets:






    Cash and cash equivalents

$             1,255


$               30,051


$             1,222

    Receivables, net

20,225


13,298


11,147

    Merchandise inventories

87,134


88,936


85,099

    Prepaid expenses

8,230


8,603


9,152

        Total current assets

116,844


140,888


106,620







Property, plant and equipment, net

43,675


45,441


45,917

Intangible assets, net

105,000


105,000


105,000

Goodwill

99,734


99,734


99,734

Other assets

2,239


2,661


4,203

Total assets

$         367,492


$            393,724


$         361,474







Liabilities and Shareholder's Equity












Current liabilities:






    Accounts payable

$           28,008


$              32,073


$           30,579

    Other current liabilities

28,167


49,141


26,856

    Short-term borrowings

36,279


---


29,548

    Current portion of long term debt

2,104


10,828


904

    Deferred income taxes

469


469


716

Total current liabilities

95,027


92,511


88,603







Long-term debt:






    Senior Notes, at face value net of discount

125,383


125,275


135,169

    Concession on 2010 Note Exchange, net

7,853


10,401


11,203

    Other long-term debt

15,025


2,503


2,662

        Total long-term debt

148,261


138,179


149,034







Other long-term liabilities

16,919


18,757


17,912

Deferred income taxes

38,066


38,066


37,819

Total liabilities

298,273


287,513


293,368







Commitments and contingencies

---


---


---







Equity:






Brookstone Shareholder's equity:






Common Stock – $0.01 par value, 1,000 shares

        authorized, one share issued and outstanding

 

---


 

---


 

---

Additional paid-in capital

270,966


266,827


266,842

Accumulated other comprehensive loss

(2,574)


(2,717)


(1,391)

Retained deficit

(200,798)


(159,280)


(198,536)

         Total Brookstone Shareholder's equity

67,594


104,830


66,915

Noncontrolling interests

1,625


1,381


1,191

Total equity

69,219


106,211


68,106







Total liabilities and equity

$         367,492


$            393,724


$         361,474

 

BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)
(Unaudited)










Thirteen weeks ended


Thirty-nine weeks ended


September 29,
2012


October 1,
2011


September 29,
2012


October 1,
2011

Net sales

$ 95,262


$ 78,171


$ 286,798


$ 243,801









Cost of sales

73,031


60,107


217,301


188,466









Gross profit

22,231


18,064


69,497


55,335









Selling, general and administrative expenses

29,686


26,851


96,764


87,037









Loss from operations

(7,455)


(8,787)


(27,267)


(31,702)









Interest expense, net

4,283


4,524


12,958


13,420









Loss before income taxes

(11,738)


(13,311)


(40,225)


(45,122)









Income tax provision

108


170


200


520









Consolidated net loss

(11,846)


(13,481)


(40,425)


(45,642)









Less: Net income attributable to non-controlling interests

336


304


1,093


895









Net loss attributable to Brookstone

$ (12,182)


$ (13,785)


$ (41,518)


$ (46,537)

 

Contact:

Thomas F. Moynihan
Vice President, Chief Financial Officer
(603) 880-9500  

 

SOURCE Brookstone, Inc.



RELATED LINKS
http://www.brookstone.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.