May 29, 2008 in Business

Coldwater reports net loss

By The Spokesman-Review
 

Falling profits

Coldwater Creek reported a net quarterly loss of $9.2 million, compared with net income of $12 million for the same quarter last year.

Fewer customers visited Coldwater Creek Inc. stores during the first quarter this year, contributing to a multi-million dollar net loss.

But the Sandpoint-based women’s clothing retailer beat its expectations for the three-month period ending May 3, and company executives attributed its success in a tough economy to its program to reduce inventory and advertising expenses and cut expenses. The company in December laid off 65 employees, and it recently announced it would put on hold part of a planned 100,000-square-foot expansion at its north Coeur d’Alene call center.

Coldwater posted net sales of $271.1 million, a 4 percent decrease from the same time last year – a result of a 9.4 percent decrease in retail traffic.

The company reported a net quarterly loss of $9.2 million, or 10 cents per share, compared with net income of $12 million, or 13 cents per share, for the same quarter last year. It had forecast a loss of 14 cents to 17 cents per share.

Shares of Coldwater stock rose 15 cents, to $6.37, in after-hours trading following the news.

In a conference call with analysts, President and Chief Executive Officer Daniel Griesemer noted the first quarter last year was the best in company history, and Coldwater “will face easier comparisons going forward in 2008.”

“The opportunity for Coldwater Creek remains large and lucrative, and I’m confident we’re on the right track to achieve both our short-term and long-term goals,” he said. “Although the challenging economic environment continues to affect our customers’ willingness to shop and spend, we are encouraged with our progress with recent operational and strategic changes and are pleased to be delivering results that are slightly ahead of expectations.”

Coldwater has scaled back the variety of clothing it offers, and Griesemer expects a further drop by summer. Yet the company’s “product is not yet where we need it to be,” and the benefit of its streamlining efforts won’t be reflected until later in the year and in 2009, he said.

The company also revised its yearlong forecasts, predicting sales of $1.1 billion to $1.2 billion, and on a per-share basis, a range from losses of 13 cents to earnings of 4 cents.

Store sales declined 19 percent during the quarter, while Internet sales grew as a percentage of sales. Retail-store inventory per square foot dropped 16 percent, even while the company opened nine new stores, for a total of 315.

The company has cut the percentage of sales made with promotional discounts, from nearly half of sales last year to about 20 percent, Griesemer said.

Coldwater plans to open 40 to 45 stores this year, compared with 72 last year.

The four-story Coeur d’Alene building, at 745 W. Hanley Ave., is partially completed, but Coldwater stopped work.

Starting this fall, Coldwater will set up “lifestyle shops” within stores, aiming to make it easier for women to find products that suit their lifestyles and creating more organized outlets, said Georgia Shonk-Simmons, president and chief merchandising officer.

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