Coldwater Creek Douses Shareholders' Hopes

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Shareholders of multichannel women's apparel retailer Coldwater Creek Inc. received a rude awakening in January, as the company's share price closed the month down 21.82 percent from December.

According to Bloomberg, the value of the DM News Portfolio of companies rose in January, gaining $106.88 from December, or 6.88 percent.

Coldwater Creek's shares closed Jan. 29 at $16.56, down from $21.18 on Dec. 31. The numbers resulted from a worse-than-expected holiday shopping season.

The shares dropped steadily through most of the month. They closed at $20.47 on Jan. 2, then lost 46 cents to close at $20.01 on Jan. 3. A close of $17.46 on Jan. 15 was followed by an 8-cent loss Jan. 16 to close at $17.38.

Coldwater Creek, Sandpoint, ID, said its disappointing holiday performance will lead to a fourth-quarter 2001 loss of $4.4 million to $4.9 million when it releases its quarter and full-year numbers March 2.

Customer demand failed to meet the company's expectations in the season, Coldwater Creek executives said. The company said it did not expect sales to rebound until September, when the fall catalog and retail season begins.

The fourth-quarter performance was softened by the company's efforts to reduce inventory. Coldwater Creek said it has inventory levels valued at $76 million to $78 million, millions lower than earlier projections that put inventory in the $90 million range by this time.

The company announced Jan. 19 that chief financial officer Donald Robson resigned. Coldwater Creek also said it would eliminate nearly 220 jobs, including about 120 positions from its Sandpoint distribution center, which it will close as part of cost-cutting measures.

In addition, Coldwater Creek said it will shut its Home Book catalog in fall 2002 and that the book's more popular merchandise will be integrated into the company's three remaining catalogs. The company also said it will close its specialty merchandise Web site.

"This is the right move, in our opinion, as the costs and efforts to create standalone businesses detract from the core apparel books," said Ellen Schlossberg, an analyst with William Blair & Co. LLC. "While eliminating the need to produce, print and mail a separate Home catalog and to design a separate Gallery Web site, the company will retain about 60 percent of the sales, or about $11 million."

Coldwater Creek noted in its latest quarterly filing with the Securities and Exchange Commission that its catalogs are its "most efficient and effective" means for building its brand and deploying its marketing initiatives.

"Each of our catalogs is carefully designed to promote our multiple-channel sales structure and to encourage each customer to place her order utilizing whichever sales channel she deems most convenient and pleasurable," the company noted in its filing.

The company also said its e-commerce business is its most profitable. Coldwater Creek sends weekly targeted e-mails to 1.5 million customers. It adds 500 to 1,000 new names to its e-mail list daily.

In other news, U.S. Office Products Co. changed its ticker symbol from OFIS to OFISQ.

Portfolio value: If $1,000 had been invested in each of the 100 companies in the DM News Portfolio at the start of the year, the value would be $106,884, up 6.88 percent.


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