Brookstone Announces $2.1 million EBITDA Improvement For First Quarter 2012 Financial Results -- Same Store Sales increase 7.9%

-- Total Revenue increases 11.2% to $89.1 million

-- 2012 Senior Notes retired before maturation

MERRIMACK, N.H., May 10, 2012 /PRNewswire/ -- Innovative product development company and multi-channel lifestyle retailer Brookstone, Inc. announced today that, for the first quarter ended March 31, 2012, consolidated net sales increased 11.2% to $89.1 million and EBITDA improved 18.1% to $(9.7) million from the first quarter of 2011. 

Net sales in the Retail channel increased $3.7 million, or 5.9%, to $67.5 million and same-store sales increased 7.9% as compared to the first quarter of 2011. These increases were due in part to improved selling efforts at our retail stores, offset by a net decrease in the number of stores from 300 to 284. For the same period, net sales in our e-Commerce channel increased $3.2 million, or 26.1%, to $15.5 million, 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. Net sales in the Alternative Distribution channel, which includes our wholesale business, increased $2.0 million, or 48.7%, to $6.0 million, as we continue to focus on expanding our revenue streams through alternative channels.  

Jim Speltz, Brookstone's Chief Operating Officer, said:  "We are encouraged with both the top and bottom line results for the first quarter of 2012 as we were able to realize improvements in our business, including an expansion of our product assortment in our e-Commerce segment, improved interactive selling efforts in our retail stores, and increased sales to our wholesale and corporate partners. We are especially pleased with the performance of our proprietary Bluetooth enabled assortment featuring Big Blue Audio speakers and premium tablet keyboards.  Our Wellness business including Sleep and Massage also performed well and provides us with optimism for 2012 as we continue to grow each of our primary channels of business."

Non-GAAP Financial Information
EBITDA is a measure 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. 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. We have provided a reconciliation of EBITDA to GAAP net income below:

 

Brookstone, Inc.

Reconciliation of Net Income (Loss) to Earnings Before Interest, Taxes, and Depreciation and
Amortization (EBITDA)

(In thousands)

(Unaudited)




For the first quarter ended



March 31,
2012


April 2,
2011

Net loss


$    (16,704)


$   (19,135)

Interest expense


4,408


4,424

Income tax provision


188


121

Depreciation and Amortization


2,409


2,750

EBITDA


$      (9,699)


$   (11,840)

Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that currently operates 284 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)














March 31, 2012


December 31, 2011


April 2, 2011







Assets












Current assets:






    Cash and cash equivalents

$               1,280


$               30,051


$                  1,520

    Receivables, net

8,411


13,298


8,428

    Merchandise inventories

83,336


88,936


83,724

    Prepaid expenses

8,458


8,603


8,004







        Total current assets

101,485


140,888


101,676







Property, plant and equipment, net

43,661


45,441


46,451

Intangible assets, net

105,000


105,000


105,000

Goodwill

99,734


99,734


99,734

Other assets

2,639


2,661


4,982







Total assets

$           352,519


$           393,724


$              357,843







Liabilities and Shareholder's Equity












Current liabilities:






    Accounts payable

$             14,879


$              32,073


$                13,977

    Other current liabilities

27,231


49,141


26,974

    Short-term borrowings

10,860


---


12,585

    Current portion of long term debt

2,104


10,828


904

    Deferred income taxes

469


469


716







Total current liabilities

55,543


92,511


55,156







Long-term debt:






    Senior Notes, at face value net of discount

125,328


125,275


135,110

    Concession on 2010 Note Exchange, net

9,567


10,401


12,764

    Other long-term debt

16,077


2,503


3,115

        Total long-term debt

150,972


138,179


150,989







Other long-term liabilities

17,759


18,757


19,318

Deferred income taxes

38,066


38,066


37,819

Total liabilities

262,340


287,513


263,282







Commitments and contingencies

---


---


---







Equity:






Brookstone Shareholder's equity:






Additional paid-in capital

267,416


266,827


265,500

Accumulated other comprehensive loss

(2,710)


(2,717)


(1,419)

Retained deficit

(175,984)


(159,280)


(171,134)

         Total Brookstone Shareholder's equity

88,722


104,830


92,947

Noncontrolling interests

1,457


1,381


1,614

Total equity

90,179


106,211


94,561







Total liabilities and equity

$           352,519


$             393,724


$              357,843


 

 

BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)
|(Unaudited)





Thirteen weeks ended


March 31, 2012


April 2, 2011





Net sales

$              89,052


$              80,095





Cost of sales

68,854


64,271





Gross profit

20,198


15,824





Selling, general and administrative expenses

32,014


30,174





Loss from operations

(11,816)


(14,350)





Interest expense, net

4,408


4,424





Loss before income taxes

(16,224)


(18,774)





Income tax provision

188


121





Consolidated net loss

(16,412)


(18,895)





Less: Net income attributable to noncontrolling interests

292


240





Net loss attributable to Brookstone

$           (16,704)


$           (19,135)





 

Contact:

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

 

 

 

 

SOURCE Brookstone, Inc.



RELATED LINKS
http://www.brookstone.com

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