See more news releases in: Fashion, Household, Consumer & Cosmetics, Retail, Earnings, Earnings Forecasts & Projections
Coldwater Creek Announces Third Quarter 2009 Results
SANDPOINT, Idaho, Nov. 24 /PRNewswire-FirstCall/ -- Coldwater Creek Inc. (Nasdaq: CWTR) today reported financial results for the three- and nine-month periods ended October 31, 2009.
Third quarter net loss was $34.0 million, or $0.37 per share, which includes the following items:
- $3.8 million after-tax charge, or $0.04 per share, relating to the separation from our former CEO. This charge was comprised of the following items
- $1.2 million cash severance charge
- $1.4 million non-cash stock-based compensation charge
- $1.2 million non-cash pension related charge
- $26.3 million non-cash income tax charge, or $0.29 per share, related to a valuation allowance against net deferred tax assets as required under U.S. generally accepted accounting principles (GAAP). The recording of an income tax valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from utilizing its deferred tax assets in future profitable periods.
Excluding these additional items, the Company's third quarter adjusted net loss on a non-GAAP basis was $3.9 million, or $0.04 per share. A reconciliation between our results reported in accordance with GAAP and adjusted net loss is included at the end of this press release.
Third Quarter Operating Results
- Net sales were $266.7 million, compared with $228.5 million in the fiscal 2008 third quarter. Sales from the retail segment, which includes the Company's premium retail stores, outlet stores, and day spa locations, were $207.3 million versus $175.4 million in the fiscal 2008 third quarter. Comparable premium store sales increased 14.4 percent in the third quarter versus the third quarter of fiscal 2008. Direct sales (phone and internet) were $59.4 million, compared with $53.0 million in the same period last year.
- Gross profit for the fiscal 2009 third quarter was $97.1 million, or 36.4 percent of net sales, compared with $86.1 million, or 37.7 percent of net sales, for the fiscal 2008 third quarter. The decline in gross profit was primarily due to lower merchandise margins resulting from increased promotional activity and lower initial markups, partially offset by improved occupancy leverage.
- Selling, general and administrative expenses for the fiscal 2009 third quarter were $108.2 million, or 40.6 percent of net sales, compared with $88.8 million, or 38.9 percent of net sales, for the fiscal 2008 third quarter. The increase in selling, general and administrative expenses of approximately $19.4 million included a $6.0 million pre-tax charge referred to above associated with the separation from our former CEO. In addition, higher marketing expenses, increased wages associated with higher retail sales, and other variable costs drove the increase in selling, general and administrative expenses, as compared with the third quarter last year.
- Operating loss for the third quarter was $11.1 million, which includes the $6.0 million pre-tax charge related to the separation from our former CEO.
- Net loss for the three-month period was $34.0 million, or $0.37 per share, compared with net loss of $1.3 million, or $0.01 per share, for the three-month period ended November 1, 2008.
- Adjusted net loss on a non-GAAP basis for the third quarter was $3.9 million, or $0.04 per share and excludes the non-cash charge to income taxes of $26.3 million, or $0.29 per share, related to a valuation allowance against net deferred tax assets, and a $3.8 million after-tax charge, or $0.04 per share, related to the separation from our former CEO.
Dennis Pence, Chairman and Chief Executive Officer of Coldwater Creek, commented, "While we are pleased with the strength of our merchandise assortments and our increased same store sales, our strong top line performance came at the expense of margin and increased promotional costs. We are taking steps to improve merchandise margins through changes in pricing and sourcing, while improving the effectiveness and efficiency of our advertising and promotional strategies. We believe that these changes will result in improvements in our long-term financial performance, while continuing our success in providing a strong and compelling assortment of product to our customers."
First Nine Months Operating Results
- Net sales were $720.2 million, compared with $741.0 million in the first nine months of fiscal 2008. Sales from the retail segment, which includes the Company's premium retail stores, outlet stores, and day spa locations, were $561.4 million versus $551.7 million in the first nine months of fiscal 2008. Direct sales (phone and internet) were $158.8 million, compared with $189.3 million in the same period last year.
- Gross profit for the first nine months of fiscal 2009 was $244.0 million, or 33.9 percent of net sales, compared with $274.6 million, or 37.1 percent of net sales, for the first nine months of fiscal 2008. The decline in gross profit was primarily due to lower merchandise margins resulting from increased promotional activity, and lower initial markups, as well as deleveraging of fixed occupancy expenses.
- Selling, general and administrative expenses for the first nine months of fiscal 2009 were $273.7 million, or 38.0 percent of net sales, compared with $285.0 million, or 38.5 percent of net sales, for the first nine months of fiscal 2008. The decrease in selling, general and administrative expenses of approximately $11.4 million was primarily related to lower employee costs and reduced marketing expenses as well as other related costs. These decreases were partially offset by former CEO separation costs, increased marketing expenses, and higher retail wages in the third quarter of 2009.
- Net loss for the nine-month period was $46.5 million, or $0.51 per share, compared with a net loss of $7.4 million, or $0.08 per share, for the first nine months of fiscal 2008.
- Adjusted net loss on a non-GAAP basis for the nine-month period was $16.3 million, or $0.18 per share, and excludes the non-cash charge to income taxes of $26.3 million, or $0.29 per share, related to a valuation allowance against net deferred tax assets, and a $3.8 million after-tax charge, or $0.04 per share, related to the separation from our former CEO.
Income Tax Valuation Allowance
U.S. GAAP requires that we assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard. In making such judgments, significant weight is given to evidence that can be objectively verified. A company's current or previous losses are given more weight than its projected future performance. Consequently, based on available evidence, in particular our three-year historical cumulative losses, we recorded a valuation allowance against our net deferred tax asset. The recording of a valuation allowance has no impact on cash and does not preclude the company from utilizing the full amount of the deferred tax asset in future profitable periods.
Balance Sheet Highlights:
- Cash totaled $69.6 million, compared to $72.4 million at the end of the third quarter of fiscal 2008
- Total inventory increased to $193.0 million, compared to $171.4 million at the end of the third quarter of 2008
- Working capital was $89.9 million, compared to $100.8 million at the end of the third quarter of fiscal 2008.
Store Openings
The Company opened one new premium retail store during the three-month period ended October 31, 2009, bringing its premium retail store count at the end of the third quarter to 356 stores. During the third quarter, the Company completed its 2009 store expansion program with 10 new stores opened since the beginning of the fiscal year.
Conference Call Information
Coldwater Creek will host a conference call on Tuesday, November 24, 2009, at 5:00 p.m. (Eastern) to discuss fiscal 2009 third quarter results. To listen to the live Web cast, log on to http://phx.corporate-ir.net/playerlink.zhtml?c=92631&s=wm&e=2546926. Also, a link to the live Web cast of the call is provided in the Investor Relations section of the Company's Web site at http://www.coldwatercreek.com/. The call will be archived from approximately one hour after the conference call until Tuesday, December 8, 2009. The replay can be accessed by dialing (877) 660-6853 and giving account number 3055 and the passcode 337327. A replay and transcript of the call will also be available in the investor relations section of the Company's Web site.
Non-GAAP Financial Measures
Coldwater Creek Inc. reports its financial results in accordance with GAAP. However, we have presented in this press release an adjusted net loss amount that is a non-GAAP financial measure. A reconciliation of this non-GAAP measure to the most comparable GAAP results is included at the end of this press release and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Management believes that this non-GAAP financial measure, which excludes the charges related to the separation from our former CEO and the charge related to the income tax valuation allowance, provides meaningful supplemental information to investors regarding the Company's operating performance. This non-GAAP financial measure also facilitates comparisons of the Company's performance to prior periods.
Founded in 1984, and headquartered in Sandpoint, Idaho, Coldwater Creek is a leading specialty retailer of women's apparel, gifts, jewelry, and accessories. The company sells its merchandise through premium retail stores across the country, online at coldwatercreek.com and through its catalogs.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release contains "forward-looking statements" within the meaning of the securities laws, including statements relating to our expected financial results. These statements are based on management's current expectations and are subject to a number of uncertainties, risks and assumptions that may not fully materialize or may prove incorrect. As a result, our actual results may differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to:
- the inherent difficulty in predicting the effectiveness of promotional discounting, as well as the difficulty in forecasting consumer buying and retail traffic patterns and trends, which continue to be erratic and are affected by factors beyond our control, such as the current macroeconomic conditions and the global credit crisis, continuing heavy promotional activity in the specialty retail marketplace, and competitive conditions and the possibility that because of lower than expected customer response, or because of competitive pricing pressures, we may be required to sell merchandise at lower than expected margins, or at a loss;
- our potential inability to recover the substantial fixed costs of our retail store base due to sluggish sales;
- our potential inability to continue to fund our operations solely with operating cash as a result of either lower sales or higher than anticipated costs, or both;
- delays we may encounter in sourcing merchandise from our foreign and domestic vendors, including the potential inability of our vendors to finance production of the goods we order; risks related to our foreign sourcing strategy; and the possibility that foreign sourcing may not lead to any reduction of our sourcing costs or improvement in our margins;
- the effect of volatile energy costs on various aspects of our business, including shipping, transportation, merchandise acquisition and consumer spending;
- increasing competition from discount retailers and companies that have introduced concepts or products similar to ours;
- difficulties encountered in anticipating and managing customer returns and the possibility that customer returns will be greater than expected;
- the inherent difficulties in catalog management, for which we incur substantial costs prior to mailing that we may not be able to recover, and the possibility of unanticipated increases in mailing and printing costs;
- unexpected costs or problems associated with our efforts to manage our expanding and increasingly complex business, including our current efforts to improve key management information systems and controls;
and such other factors as are discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission ("SEC"). We believe that these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. We do not assume any obligation to publicly release any revisions to forward-looking statements to reflect events or changes in our expectations occurring after the date of this release.
Contact:
Lyn Walther, Divisional Vice President, Investor Relations
Phone: 208-265-7005
Web site: www.coldwatercreek.com
COLDWATER CREEK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND SUPPLEMENTAL DATA
(unaudited, in thousands except for per share data and store counts)
Three Months Ended Nine Months Ended
------------------ -----------------
October 31, November 1, October 31, November 1,
Statements of
Operations: 2009 2008 2009 2008
---- ---- ---- ----
Net sales $266,658 $228,453 $720,217 $740,992
Cost of sales 169,529 142,339 476,260 466,430
------- ------- ------- -------
Gross profit 97,129 86,114 243,957 274,562
Selling,
general and
administrative
expenses 108,192 88,765 273,665 285,021
Loss on asset
impairments - - - 1,452
--- --- --- -----
Loss from
operations (11,063) (2,651) (29,708) (11,911)
Interest, net,
and other (248) 353 (558) 1,443
---- --- ---- -----
Loss before
income taxes (11,311) (2,298) (30,266) (10,468)
Income tax
provision
(benefit) 22,659 (988) 16,188 (3,058)
------ ---- ------ ------
Net loss $(33,970) $(1,310) $(46,454) $(7,410)
======== ======= ======== =======
Net loss per
share -Basic
and Diluted $(0.37) $(0.01) $(0.51) $(0.08)
====== ====== ====== ======
Weighted
average shares
outstanding -
Basic and
Diluted 91,644 91,115 91,436 90,979
Supplemental Data:
Three Months Ended Nine Months Ended
------------------ -----------------
October 31, November 1, October 31, November 1,
Operating Statistics: 2009 2008 2009 2008
---- ---- ---- ----
Catalogs mailed 26,588 17,143 57,376 58,867
Premium retail store
count 356 341
Spa store count 9 9
Outlet store count 36 35
Premium retail store
square footage 2,108 2,010
Three Months Ended Nine Months Ended
------------------ -----------------
October 31, November 1, October 31, November 1,
Segment Net Sales: 2009 2008 2009 2008
---- ---- ---- ----
Retail $207,298 $175,421 $561,402 $551,650
Direct 59,360 53,032 158,815 189,342
------ ------ ------- -------
Total $266,658 $228,453 $720,217 $740,992
======== ======== ======== ========
COLDWATER CREEK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except for share data)
ASSETS
October 31, January 31, November 1,
2009 2009 2008
---- ---- ----
CURRENT ASSETS:
Cash and cash
equivalents $69,640 $81,230 $72,350
Receivables 14,098 15,991 25,204
Inventories 192,995 135,376 171,368
Prepaid and other 14,108 11,086 19,452
Income taxes
recoverable 5,322 14,895 4,078
Prepaid and deferred
marketing costs 11,554 5,361 11,798
Deferred income taxes 15 9,792 8,113
--- ----- -----
Total current assets 307,732 273,731 312,363
Property and
equipment, net 308,834 337,766 348,285
Deferred income taxes 79 14,147 12,566
Restricted cash 1,776 1,776 2,664
Other 1,305 1,207 810
----- ----- ---
Total assets $619,726 $628,627 $676,688
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $140,598 $93,355 $134,528
Accrued liabilities 71,849 82,469 71,900
Current deferred marketing fees
and revenue sharing 5,380 4,918 5,098
----- ----- -----
Total current liabilities 217,827 180,742 211,526
Deferred rents 129,748 137,216 136,604
Capital leases and other
financing obligations 11,936 13,316 13,410
Supplemental Employee
Retirement Plan 9,229 7,807 8,330
Deferred marketing fees and
revenue sharing 7,440 5,823 6,599
Other 646 1,227 998
--- ----- ---
Total liabilities 376,826 346,131 377,467
------- ------- -------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par
value, 1,000,000 shares
authorized,
none issued and outstanding - - -
Common stock, $.01 par value,
300,000,000 shares authorized,
91,969,205, 91,264,527 and
91,186,600 shares issued,
respectively 920 913 912
Additional paid-in capital 122,010 115,921 114,548
Accumulated other comprehensive
loss (572) (1,334) (1,788)
Retained earnings 120,542 166,996 185,549
------- ------- -------
Total stockholders' equity 242,900 282,496 299,221
------- ------- -------
Total liabilities and
stockholders' equity $619,726 $628,627 $676,688
======== ======== ========
COLDWATER CREEK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
-----------------
October 31, November 1,
2009 2008
---- ----
OPERATING ACTIVITIES:
Net loss $(46,454) $(7,410)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 47,478 44,282
Stock-based compensation expense 5,908 3,583
Supplemental Employee Retirement Plan
expense 2,835 969
Deferred income taxes 23,069 (5,379)
Excess tax benefit from exercises of
stock options - (84)
Net loss on asset dispositions 468 181
Loss on asset impairments - 1,452
Other 207 314
Net change in current assets and
liabilities:
Receivables 1,893 3,316
Inventories (57,619) (31,375)
Prepaid and other and income taxes
recoverable 5,070 8,142
Prepaid and deferred marketing costs (6,193) 1,864
Accounts payable 47,949 57,846
Accrued liabilities (10,855) (18,057)
Change in deferred marketing fees and
revenue sharing 2,079 (619)
Change in deferred rents (6,955) 16,008
Other changes in non-current assets
and liabilities (801) (784)
---- ----
Net cash provided by operating
activities 8,079 74,249
----- ------
INVESTING ACTIVITIES:
Purchase of property and equipment (18,511) (67,962)
Proceeds from asset dispositions 38 3,086
--- -----
Net cash used in investing activities (18,473) (64,876)
------- -------
FINANCING ACTIVITIES:
Net proceeds from exercises of stock
options and ESPP purchases 699 1,107
Credit facility financing costs (618) -
Payments on capital lease and other
financing obligations (1,277) (693)
Excess tax benefit from exercises of
stock options - 84
--- ---
Net cash (used in) provided by
financing activities (1,196) 498
------ ---
Net (decrease) increase in cash and
cash equivalents (11,590) 9,871
Cash and cash equivalents, beginning 81,230 62,479
------ ------
Cash and cash equivalents, ending $69,640 $72,350
======= =======
Reconciliation of GAAP presentation net loss to non-GAAP net loss
(amounts in thousands except for per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
---- ---- ---- ----
Net loss (GAAP
basis) $(33,970) $(1,310) $(46,454) $(7,410)
Impact of CEO
resignation
Cash severance
charge, net of
tax 1,231 - 1,231 -
Non-cash stock-
based
compensation
charge, net of
tax 1,359 - 1,359 -
Non-cash pension
related charge,
net of tax 1,171 - 1,171 -
Impact of income
tax valuation
allowance 26,348 - 26,348 -
------ --- ------ ---
Adjusted net loss
(non-GAAP
basis) $(3,861) $(1,310) $(16,345) $(7,410)
======= ======= ======== =======
Adjusted net loss
(non-GAAP
basis), per
share - basic
and diluted $(0.04) $(0.01) $(0.18) $(0.08)
====== ====== ====== ======
SOURCE Coldwater Creek Inc.
Back to top
RELATED LINKS
http://www.coldwatercreek.com
Custom Packages
Browse our custom packages or build your own to meet your unique communications needs.
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.
Featured Video
More in These Categories
Journalists and Bloggers
Visit PR Newswire for Journalists for releases, photos, ProfNet experts, and customized feeds just for Media.
View and download archived video content distributed by MultiVu on The Digital Center.
Free Investing Newsletter from Investor Uprising!
Learn to navigate the world's financial system and profit from leading companies.
Register for Investor Uprising, the people's investment site, for a free weekly newsletter, information, education and premium research including our latest IU Confidential Report - "All The Glitters: The Ultimate Gold Report".
- Site Preview
-
Close Site Preview
-
View FullScreen
