NEW YORK — Cost savings partially offset clearance-related margin erosion to allow Coldwater Creek Inc. to narrow its net loss in the second quarter.

For the three months ended Aug. 3, the Sandpoint, Idaho-based multichannel retailer posted a net loss of $1.4 million, or 6 cents a diluted share. By comparison, last year the firm recorded a wider loss of $2.1 million, or 9 cents.

Sales for the period grew 4.9 percent to $96.7 million from $92.1 million a year ago, but increased clearance sales lopped 260 basis points of gross margins to 35.8 percent off sales. As such, gross profit declined 2 percent to $34.7 million, which negated any benefit from the added sales.

“Our better-than-anticipated results were due to a combination of continued solid performance in retail stores and ongoing improvements in our cost structure,” said chief executive Dennis Pence in a statement. “The strategic decision to mail fewer catalogs in the second quarter, which traditionally has been our slowest selling period, resulted in a decrease in selling, general and administrative expenses compared with the prior year.”

In the direct segment, which comprises the firm’s catalog and e-commerce divisions, sales fell 12.3 percent to $56.1 million from $64 million a year ago, but by cutting down on printing and postage for catalogs, Coldwater Creek was able to reduce SG&A costs by a hefty 410 basis points to 38 percent of sales, or $36.8 million.

Retail sales fared much better, registering a 40.9 percent gain to $40.6 million from $28.2 million a year ago. Retail also is becoming a bigger part of Coldwater Creek’s top line, accounting for 42 percent of total revenues in the quarter, as opposed to 30.6 percent in the prior year.

Overall, for the first half of the fiscal year, Coldwater Creek swung back to reporting profits, with net income of $491,000, or 2 cents a share. Last year the company incurred a net loss of $721,000, or 3 cents.

Net sales for the six months rose 6.8 percent to $211.9 million from $198.4 million a year ago.

To continue reading this article...

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus