Brookstone Announces 15.8% Improvement in Adjusted EBITDA

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. 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.

Contact:

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

SOURCE Brookstone, Inc.