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Coldwater Creek Announces Fourth Quarter And Fiscal Year 2012 Results

Stocks in this article: CWTR

  • Fourth quarter 2012 comparable premium retail store sales increased 2.7 percent, on a 13-week basis
  • Fourth quarter 2012 direct sales increased 7.7 percent
  • Fourth quarter 2012 adjusted net loss per share of $0.65, excluding gain on derivative liability and CEO transition costs

SANDPOINT, Idaho, March 13, 2013 (GLOBE NEWSWIRE) -- Coldwater Creek Inc. (Nasdaq:CWTR) today reported financial results for the quarter and fiscal year ended February 2, 2013. The Company noted that the following non-comparable items impacted the fourth quarter and fiscal year:

  • The Company's fiscal 2012 is a 53-week year with the additional week falling in the fourth quarter compared to the traditional 52 weeks in fiscal 2011. Comparable premium retail store sales for the fourth quarter and full year of fiscal 2012 are presented on a 13-week and 52-week basis and exclude the additional week. The additional week in fourth quarter fiscal 2012 represented a loss of $0.13 per share;
  • The fourth quarter of fiscal 2012 included a charge, net of tax, of $0.06 per share associated with the Company's CEO transition;
  • Due to the change in the fair value of the derivative liability related to the Series A Preferred Stock, the Company recorded a gain of $0.05 per share in the fourth quarter of fiscal 2012, and a loss of $0.10 per share for the full year fiscal 2012;
  • During the fourth quarter of fiscal 2011, the Company recorded a favorable cumulative one-time adjustment for gift card breakage that represented $11.8 million, or $0.39 per share, in the fourth quarter 2011 and $0.47 per share in fiscal year 2011. In addition, the Company recorded a non-cash store impairment charge of $0.08 per share in the fourth quarter of fiscal 2011 and $0.21 per share in fiscal year 2011.

Fourth Quarter of Fiscal 2012 Operating Results

  • Consolidated net sales were $220.8 million, compared with $224.4 million in fourth quarter 2011, which included net sales of $11.8 million as a result of a favorable cumulative one-time adjustment for gift card breakage income. Net sales from the retail segment were $166.0 million, compared with $173.5 million in the same period last year. Comparable premium retail store sales increased 2.7 percent. Net sales decreased due to store closures as a result of our store optimization program and the impact of $10.7 million in net sales from the cumulative one-time gift card breakage recorded in the fourth quarter 2011. Net sales from the direct segment were $54.7 million compared with $50.8 million in the same period last year, which included $1.1 million from the cumulative one-time adjustment for gift card breakage.
  • Consolidated gross profit was $64.1 million, or 29.1 percent of net sales, compared with $73.1 million, or 32.6 percent of net sales, for fourth quarter 2011. The 350 basis point decline in gross profit margin was primarily due to the 370 basis point benefit in the fourth quarter of fiscal 2011 resulting from the cumulative one-time adjustment for gift card breakage. Adjusting for this benefit, gross margin increased 20 basis points driven by leverage of buying and occupancy costs offset by lower merchandise margins.
  • Selling, general and administrative expenses (SG&A) were $82.5 million, or 37.4 percent of net sales, compared with $81.8 million, or 36.5 percent of net sales, for fourth quarter 2011. The increase in SG&A expense was driven by a $2.1 million pre-tax charge related to the CEO transition in the 2012 period offset by lower marketing expenses.
  • Net loss was $20.0 million, or $0.66 per share, and included: (i) other gain, net, of $1.5 million, or $0.05 per share, due to the change in the fair value of the derivative liability related to the Series A Preferred Stock issued in July 2012; (ii) net loss of $4.0 million, or $0.13 per share, incurred in the additional week in the fourth quarter fiscal 2012; and (iii) a charge, net of tax, of $1.7 million, or $0.06 per share associated with the Company's CEO transition. This compares to a net loss of $12.8 million, or $0.42 per share, for fourth quarter 2011 and included: (i) $11.8 million, or $0.39 per share, benefit due to the cumulative one-time adjustment related to gift card breakage; and (ii) a non-cash asset impairment charge of $2.3 million, or $0.08 per share, related primarily to under-performing stores.
  • Adjusted net loss, which excludes the gain on the derivative liability and the CEO transition expense for fourth quarter 2012, was $19.8 million, or $0.65 per share. This compares to adjusted net loss of $22.3 million, or $0.73 per share, excluding the cumulative one-time adjustment related to gift card breakage income and the non-cash store impairment charge for fourth quarter 2011. (Please see the table entitled "GAAP to Non-GAAP Reconciliation of Selected Measures" at the end of this press release.)

"Fiscal 2012 was a pivotal year for Coldwater Creek as we began to see the positive impact of the significant changes we have made throughout our organization. Importantly, our product offering is resonating with our customers. In addition, we have created a compelling loyalty program, improved our inventory management, built talent within our organization and continued to execute on our store optimization program. This was particularly apparent in our financial performance in the second half of the year as we achieved two consecutive quarters of comparable premium store sales growth. Overall for the year, we achieved a one percent increase in our comparable premium store sales, gross margin improvement of 170 basis points, and an $18.0 million reduction in SG&A. We ended the year with a clean inventory position and total inventory down five percent," said Jill Dean, President and Chief Executive Officer. "As we move into fiscal 2013, we are focused on building our brand and enhancing our customer experience across all of our channels, consistently delivering trend-right apparel and accessories, driving traffic, and rigorously managing our inventory, which we believe will enable us to continue to generate improvements in our financial performance."

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