Shares of Coldwater Creek Inc. gained 24 percent Thursday after the company cut its fourth-quarter loss in half and issued first-quarter projections well above analysts’ expectations.
This story first appeared in the March 5, 2010 issue of WWD. Subscribe Today.
For the period ended Jan. 30, the Sandpoint, Idaho-based firm said it posted a loss of $9.7 million, or 11 cents a diluted share, compared with $18.6 million, or 20 cents a share, in the year-ago period. Excluding a $600,000, or 1 cent a share, noncash charge, the loss was 10 cents, 1 cent below the 9 cent loss expected by analysts polled by Yahoo Finance.
Revenues increased 12.4 percent to $318.4 million from $283.2 million a year earlier, as comparable-store sales for the quarter rose 8.9 percent. Selling, general and administrative expenses shrank 4.6 percent to $105.2 million, but gross margin contracted to 32.2 percent of sales from 34.2 percent a year ago.
For the year, the firm recorded a net loss of $56.1 million, or 61 cents a share, versus a loss of $26 million, or 29 cents a share, in 2009. Sales were up 1 percent to $1.02 billion.
On a conference call, chairman and chief executive officer Dennis Pence said while the company was able to “tightly control expenses” and provide “unique items in the collections” during its quarterly sales event, it faltered during holiday.
“Our holiday assortment was too basic and did not offer the level of fashion and differentiation our customers expect from us,” he said, adding the retailer, having been forced to compete on price, now was placing an emphasis on “refining” and “differentiating” its products.
Coldwater will selectively raise price points, adjust its sales strategy and continue to improve upon its direct business.
“We believe that the turnaround is well under way, and that we will continue to see improvements in our performance as we move through,” the ceo said.
Coldwater expects to report earnings per share of between 8 cents and 12 cents for the year. The retailer also anticipates an improvement over its 2009 first-quarter net loss of 8 cents. Analysts expected a first-quarter loss of 3 cents, and an annual loss of 27 cents a share.
On Thursday, the first trading day following disclosure of the results, shares closed at $6.71, up $1.30.