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Coldwater Creek Earnings Show Shift Toward Retail

With Coldwater Creek Inc. chairman/CEO Dennis Pence citing a “strategic shift from catalogs to a retail store model,” the Sandpoint, ID, company said yesterday that net income for the three months ended May 1 rose 185 percent to $5.5 million, up from $1.9 million for the comparable period last year.

Also, net sales in the fiscal 2004 first quarter increased 8 percent to $124.5 million from $115.2 million in the fiscal 2003 first quarter.

Net sales from the Retail segment, which includes full-line retail stores, resort stores and outlet stores, climbed 69.5 percent to $56.5 million from $33.3 million. The company operated 71 full-line retail stores at the end of the quarter compared with 44 at the end of last year’s first quarter.

Net sales from the direct segment, which encompasses catalog and e-commerce operations, fell 17 percent to $68 million in the fiscal 2004 first quarter from $81.9 million. Catalog net sales plunged 28.1 percent to $33 million from $45.9 million as the number of catalogs mailed fell to under 26 million from below 30 million.

E-commerce net sales dropped 2.8 percent to $34.9 million. E-commerce net sales represented 51.4 percent of the direct segment's net sales in the quarter, compared with 43.9 percent in the fiscal 2003 first quarter. E-commerce net sales represented 28.1 percent of the company's total net sales, down from 31.2 percent.

Gross profit for the quarter was $54.4 million, or 43.7 percent of net sales, compared with $45.1 million, or 39.2 percent of net sales, for the fiscal 2003 first quarter.

Other DMers reporting results included:

· The Talbots Inc., Hingham, MA, said net sales increased 6 percent to $419 million for the quarter ended May 1 compared with $395 million in the 13 weeks ended May 3, 2003. Retail store sales improved 7 percent to $353.4 million. Retail store sales included an increase in comparable-store sales of 1.7 percent. Catalog sales remained about even at $65.6 million compared with $65.8 million in the prior-year period. Also, net income in the first quarter was $33.3 million, up from $29.4 million.

· Brookstone Inc., Nashua, NH, said same-store sales in the quarter ended May 1 jumped 20.1 percent, and total sales rose 27.1 percent to $77.5 million compared with $61 million for first-quarter 2003. Direct marketing sales climbed 16.4 percent to $11.8 million. In the first quarter, Brookstone narrowed its net loss to $4.6 million versus the $6.4 million loss in first-quarter 2003. The company said that given the seasonal nature of specialty retailing, Brookstone generally carries a loss through the first three quarters and makes its profit in the fourth.

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