Brookstone Announces $2.7 million Improvement in Adjusted EBITDA - Same store sales increase 11.6%

- e-Commerce sales increase 29.6%

- Alternative Distribution sales more than double

MERRIMACK, N.H., Aug. 9, 2012 /PRNewswire/ -- Innovative product development company and multi-channel lifestyle retailer Brookstone, Inc. announced today that, for the second quarter ended June 30, 2012, consolidated net sales increased 19.8% to $102.5 million and our Adjusted EBITDA loss improved 51.7% to $2.5 million as compared to the second quarter of 2011.  For the twenty-six week period ended June 30, 2012, consolidated net sales increased 15.6% to $191.5 million and our Adjusted EBITDA loss improved 32.7% to $11.5 million as compared to the twenty-six week period ended July 2, 2011.   

In our Retail channel, for the second quarter ended June 30, 2012, net sales increased $7.5 million, or 10.9%, to $76.3 million and same-store sales increased 11.6% as compared to the second quarter of 2011. For the twenty-six week period ended June 30, 2012, net sales in the Retail channel increased $11.3 million, or 8.5%, to $143.9 million and same-store sales increased 9.9% as compared to the twenty-six week period ended July 2, 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 294 to 281.

Net sales in our e-Commerce channel increased $3.8 million, or 29.6%, to $16.9 million for the second quarter ended June 30, 2012, as compared to the second quarter of 2011.  For the twenty-six week period ended June 30, 2012, net sales in the e-Commerce channel increased $7.0 million, or 27.9%, to $32.4 million as compared to the twenty-six week period ended July 2, 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 second quarter ended June 30, 2012, net sales in the Alternative Distribution channel, which includes our wholesale business, increased $5.6 million, or 151.8%, to $9.2 million as compared to the second quarter of 2011.  For the twenty-six week period ended June 30, 2012, net sales in the Alternative Distribution channel increased $7.5 million, or 97.8%, to $15.2 million as compared to the twenty-six week period ended July 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 second quarter of 2012. We realized improvements in all segments of our business, driven by an expansion of our product assortments in our e-Commerce and Retail segments, improved interactive selling efforts in our stores, and continued sales growth to our wholesale customers. We continue to see strong gains in our technology business including iPad® accessories and Bluetooth enabled audio." 

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


Twenty-six weeks ended


June 30, 2012


July 2, 2011


June 30, 2012


July 2, 2011









Net loss attributable to Brookstone

$   (12,632)


$   (13,616)


$   (29,336)


$   (32,751)

Interest expense

4,267


4,473


8,675


8,897

Income tax provision (benefit)

(97)


229


92


351

Depreciation and Amortization

2,306


2,295


4,715


5,045

EBITDA

(6,156)


(6,619)


(15,854)


(18,458)

Non-cash items

3,645


1,422


4,315


1,306

Adjusted EBITDA

$     (2,511)


$     (5,197)


$   (11,539)


$   (17,152)











 

Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that currently operates 281 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)

 








June 30, 2012


December 31, 2011


July 2, 2011







Assets












Current assets:






    Cash and cash equivalents

$             1,193


$               30,051


$             1,384

    Receivables, net

12,947


13,298


10,658

    Merchandise inventories

76,767


88,936


73,635

    Prepaid expenses

7,691


8,603


7,267

        Total current assets

98,598


140,888


92,944







Property, plant and equipment, net

43,081


45,441


45,923

Intangible assets, net

105,000


105,000


105,000

Goodwill

99,734


99,734


99,734

Other assets

2,442


2,661


4,580

Total assets

$         348,855


$            393,724


$         348,181







Liabilities and Shareholder's Equity












Current liabilities:






    Accounts payable

$           17,721


$              32,073


$           15,347

    Other current liabilities

31,222


49,141


30,714

    Short-term borrowings

11,550


---


12,069

    Current portion of long term debt

2,104


10,828


904

    Deferred income taxes

469


469


716

Total current liabilities

63,066


92,511


59,750







Long-term debt:






    Senior Notes, at face value net of discount

125,356


125,275


135,139

    Concession on 2010 Note Exchange, net

8,727


10,401


11,999

    Other long-term debt

15,551


2,503


2,889

        Total long-term debt

149,634


138,179


150,027







Other long-term liabilities

16,936


18,757


18,492

Deferred income taxes

38,066


38,066


37,819

Total liabilities

267,702


287,513


266,088







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


266,824

Accumulated other comprehensive loss

(2,621)


(2,717)


(1,399)

Retained deficit

(188,616)


(159,280)


(184,750)

         Total Brookstone Shareholder's equity

79,729


104,830


80,675

Noncontrolling interests

1,424


1,381


1,418

Total equity

81,153


106,211


82,093







Total liabilities and equity

$         348,855


$            393,724


$         348,181

 










BROOKSTONE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)    


















Thirteen weeks ended


Twenty-six weeks ended


June 30, 2012


July 2, 2011


June 30, 2012


July 2, 2011









Net sales

$        102,484


$         85,535


$       191,536


$       165,631









Cost of sales

75,416


64,088


144,270


128,359









Gross profit

27,068


21,447


47,266


37,272









Selling, general and administrative expenses

35,065


30,012


67,078


60,185









Loss from operations

(7,997)


(8,565)


(19,812)


(22,913)









Interest expense, net

4,267


4,471


8,675


8,896









Loss before income taxes

(12,264)


(13,036)


(28,487)


(31,809)









Income tax provision (benefit)

(97)


229


92


351









Consolidated net loss

(12,167)


(13,265)


(28,579)


(32,160)









Less: Net income attributable to non-controlling interests

465


351


757


591









Net loss attributable to Brookstone

$      (12,632)


$      (13,616)


$      (29,336)


$      (32,751)

















 

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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