NEW YORK — Virtually flat sales stemming from a calendar change and higher cost of goods equaled a second-quarter loss for Coldwater Creek Inc.
For the three months ended Aug. 31, the Sandpoint, Idaho-based multichannel retailer recorded a net loss of $650,000, or 6 cents a diluted share. That compares with last year’s profits of $1.3 million, or 12 cents. However, earnings per share did beat Wall Street forecasts by 1 cent.
Sales for the quarter nicked down 0.1 percent to $92.79 million from $92.85 million a year ago, while the cost of sales grew 5.7 percent to $56.7 million from $53.7 million last year. The company accounts for store occupancy costs as a component of those expenses.
"As we previously announced, we moved the timing of our fall catalog circulation closer to the end of the 2002 second quarter, as compared with the same period last year, as part of the continued implementation of our ‘buy now, wear now’ merchandising strategy," chief executive officer Georgia Shonk-Simmons said. "Although this had a negative impact on the results for the second quarter, we believe our decision to present fall merchandise closer to the time our customers are actually shopping for these items represents a sound strategic decision."
By channel, the company’s direct segment, which includes outlet stores as well as the catalog and e-commerce businesses, saw sales fall 14.9 percent to $68.6 million from $80.5 million in the year-ago period. Of that, e-commerce sales decreased 2.3 percent to $27.9 million from $28.6 million. This year, the direct segment accounted for 73.9 percent of total sales, as opposed to last year when it contributed 86.7 percent of net revenues.
Net sales from the company’s retail operations grew 96.9 percent to $24.2 million from $12.3 million a year ago. Retail sales represented 26.1 percent of total sales, compared with 13.3 percent in 2001.
Looking at other performance indicators, gross profit for the quarter was $36.1 million, or 38.9 percent of net sales. That compares with last year when gross profit was $39.9 million, or 42.2 percent of sales. Selling, general and administrative expenses remained almost unchanged at $37.1 million, or 40 percent of sales, compared with last year’s $37.2 million, also 40 percent.Overall, for the first half of the fiscal year, net earnings regressed 20.6 percent to $2.1 million, or 20 cents a diluted share. That compares with $2.7 million, or 25 cents in the prior-year period. Sales for the half ticked down 0.4 percent to $204.8 million from $205.7 million a year ago.
In guidance, Shonk-Simmons said on a conference call with analysts: "Given the continuing difficulties in the macroeconomic situation, we see no significant upside potential in the second half of the fiscal year."
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