Higher-than-expected cuts in costs helped Coldwater Creek Inc. shrink its third-quarter loss and beat analysts’ expectations despite sharp declines in sales.
The Sandpoint, Idaho-based retailer posted a net loss of $1.3 million, or 1 cent a diluted share, compared with a loss of $6.2 million, or 7 cents, in 2007. Revenue declined 15.8 percent to $228.5 million from $271.2 million. Analysts had projected a loss of 8 cents a diluted share on sales of $225.3 million.
Gross margin fell to 37.7 percent of sales from 39.8 percent in the prior-year period, driven by the deleveraging of occupancy costs due to same-store sales that fell 20.5 percent. Inventory decreased about 11.7 percent for the quarter, and selling, general and administrative costs were reduced by $28.8 million, or 24.5 percent.
“With compelling opening price points and strategic promotional and marketing initiatives, we believe we have taken all the right steps and are optimistic that our product offerings will resonate with consumers in today’s economic climate,” president and chief executive officer Daniel Griesemer said.
Griesemer said he was “confident” the company’s strong balance sheet would enable it to “weather a prolonged downturn in consumer spending.”
The company had $72 million in cash at the end of the quarter, in addition to full availability under a $60 million revolving credit facility that expires in 2012. Coldwater Creek said it does not anticipate borrowing under the facility and should end fiscal 2008 with more than $75 million in cash. It finished the quarter with $72.4 million in cash and cash equivalents.
The retailer opened 19 stores in the third quarter and has subsequently opened eight more, for a total of 349 “premium,” rather than spa or outlet, stores. Fifteen stores are planned for 2009.
For the nine months, Coldwater posted a loss of $7.4 million, or 8 cents a diluted share, compared with profits of $14.5 million, or 15 cents, last year. Net sales slid 8.1 percent to $741 million from $805.9 million.
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