Coldwater shares up after high earnings
NEW YORK – Shares of Coldwater Creek Inc. rose sharply Thursday after spring sales drove better-than-expected earnings and the upscale classic-clothing company raised its forecast for the end of the year.
The shares closed up $4.77, or 18 percent, at $30.92 on the Nasdaq Stock Market.
Marketing efforts, including four-page magazine ads, helped drive a 55 percent sales increase at stores and a 49 percent rise in online revenue during the second quarter ended July 31.
“The merchandise looks extremely strong,” CIBC analyst Roxanne Meyer said. “They really present something that’s different in the mall, with unique patterns and prints and color.”
Coldwater’s operating margin rose to 6.9 percent, an increase of 2.1 percentage points, partly because the Sandpoint company sold more full-price merchandise.
Analysts also praised the company’s inventory control. Inventory for all of its three channels – Internet, catalog, and store – is now kept in the same place, according to spokesman David Gunter, so Coldwater can easily transfer merchandise between channels.
The company’s greater focus on brick-and-mortar stores has also helped margins, by increasing purchasing power, decreasing shipping costs and lowering return rates, Gunter said.
Coldwater was catalog-only until 1999, when it added a Web site and started opening stores.
The company currently has 140 stores and is opening an average of about 60 more every year, with a goal of reaching 450 to 500 stores, Gunter said.
Coldwater earned $7 million, or 11 cents a share, in the second quarter ended July 31, compared with $3.3 million, or 6 cents a share, a year earlier.
Analysts were on average expecting 8 cents for the quarter, according to Thomson Financial.