Decreased store traffic and lower direct channel sales shrunk Coldwater Creek Inc.’s second-quarter profits by 63.9 percent, but the women’s clothing retailer still managed to beat analysts’ earnings estimates.
This story first appeared in the September 3, 2008 issue of WWD. Subscribe Today.
For the quarter ended Aug. 2, the Sandpoint, Idaho-based company reported net income of $3.1 million, or 3 cents a share, compared with earnings of $8.7 million, or 9 cents a share, for the 2007 period. Analysts anticipated earnings per share of 1 cent on revenues of $242.5 million.
Net sales fell 4.8 percent to $241.4 million from $253.5 million a year ago as direct sales dropped to $52.1 million from $75.8 million. Comparable-store sales dropped 13.7 percent for the quarter.
Gross margin declined to 39.6 percent of sales from 43.5 percent in the year-ago quarter.
“We continue to effectively focus on improving our product and our customer experience and achieving significant cost savings,” said president and chief executive officer Daniel Griesemer. “With strong inventory management and a refined product focus, we believe that we are well positioned as we enter the important fall and holiday seasons.
“We remain keenly focused on our strategic initiatives, yet cautious about the outlook for the remainder of fiscal 2008, given the increasingly challenging macroenvironment,” he said.
For the six-month period, the retailer reported a net loss of $6.1 million, or 7 cents a share, compared with a profit of $20.7 million, or 22 cents a share, in last year’s first half. Net sales dipped 4.2 percent to $512.5 million from $534.8 million.
The company maintained its guidance for the third and fourth quarters, but revised full-year estimates upward because of the relative strength of its second-quarter performance. Year-end earnings are projected to range from a loss of 1 cent a share to a profit of 10 cents a share, and revenues are expected within a range of $1.11 billion to $1.15 billion.
For the full year, analysts are looking for a profit of 2 cents a share on sales of $1.15 billion.
The company concluded the second quarter with 322 stores. Another 33 to 38 store openings are planned for the fiscal year.