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Coldwater Creek Announces Second Quarter 2012 Results

SANDPOINT, Idaho, Aug. 29, 2012 (GLOBE NEWSWIRE) -- Coldwater Creek Inc. (Nasdaq:CWTR) today reported financial results for the three-month period ended July 28, 2012.

Second Quarter 2012 Operating Results

  • Consolidated net sales were $163.7 million, compared with $181.4 million in the fiscal 2011 second quarter. Net sales from the retail segment, which includes the Company's premium retail stores, factory outlet stores and day spas, were $129.9 million versus $142.2 million in the same period last year, primarily reflecting a decrease in comparable premium retail store sales of 6.5 percent. Sales from the retail segment were also impacted by 12 net store closures since the end of the second quarter of fiscal 2011 as part of the Company's store optimization program. Second quarter net sales from the direct segment, which includes internet, phone and mail orders, were $33.8 million, compared with $39.2 million in the same period last year.
  • Consolidated gross profit increased $3.2 million to $48.5 million, or 29.6 percent of net sales, compared with $45.3 million, or 25.0 percent of net sales, for the fiscal 2011 second quarter. The 465 basis point increase in gross profit margin was primarily due to an increase in merchandise margin reflecting improved product performance and significantly lower markdowns as a result of overall lower inventory levels.
  • Selling, general and administrative expenses (SG&A) were $65.7 million, or 40.1 percent of net sales, compared with $70.0 million, or 38.6 percent of net sales, for the fiscal 2011 second quarter. The $4.3 million decline in SG&A was due primarily to lower expenses in all categories, with the largest decline from marketing expense versus the prior year.
  • Net loss was $17.6 million, or $0.14 per share on 121.8 million weighted average shares outstanding, and compares to a net loss of $27.7 million, or $0.30 per diluted share on 92.6 million weighted average shares outstanding for the fiscal 2011 second quarter. The increase in the number of shares versus the prior year reflects the sale of 28.9 million shares of common stock on October 24, 2011. Net loss for the three months ended July 28, 2012 included other net gain of $1.3 million, or $0.01 per share, due to the change in the fair value of the derivative liability net of issuance costs related to the Series A Preferred Stock. Net loss for the three months ended July 28, 2012 also included incremental interest expense of $1.1 million, or $0.01 per share, as a result of closing the Secured Term Loan financing transaction. Net loss for the three months ended July 30, 2011 included a non-cash asset impairment charge of $2.4 million, or $0.03 per share, primarily associated with eighteen under performing stores.

"During the second quarter we significantly narrowed our operating losses reflecting the ongoing success of our new merchandising, inventory management and real estate optimization strategies, leading to a 465 basis point improvement in merchandise margin and a $3.2 million improvement in our gross profit as compared to the second quarter last year. Our comparable store sales results were in line with our expectations as we made the strategic decision to significantly reduce our promotional activity primarily in the month of June," said Dennis Pence, Chairman and Chief Executive Officer. "As we look ahead, we believe that our upcoming collections build upon the foundation of differentiated, trend right assortments at a balance of price points, and position us well to generate improvements in our traffic trends and overall sales performance in the second half of the year. While the majority of the third quarter lies in front of us, we are encouraged by the initial response to our fall offering, which arrived in stores in early August."    

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