Knobias Clip Report (11-24-2008) CPWM
Submitted By Knobias ClipReport
CPWM: CEO Discusses Q3 Results and Progress of Turnaround Plan
By Fain Hughes, fhughes@knobias.com
Cost Plus, Inc. (CPWM) announced its financial results last week for its third quarter ended November 1, 2008. Net sales for the third quarter were $213.0 million, a 0.8% decrease from the $214.6 million for the third quarter ended November 3, 2007. Same store sales decreased 3.4%.
Net loss from continuing operations for the third quarter of fiscal 2008 was $25.7 million compared to a net loss of $13.3 million for the third quarter of fiscal 2007, an increase in the net loss of $12.3 million.
The Company expects same store sales to decline in the range of negative 1% to negative 6% for the fourth quarter of fiscal 2008. This is expected to result in net sales in the range of $356 million to $374 million. For the fourth quarter of fiscal 2008, the Company is projecting a profit from continuing operations before interest and taxes in the range of $10 million to $18 million versus a $20 million profit last year.
Barry Feld, President and CEO, commented in a conference call, “We are one of the few retailers to achieve its bottom line guidance. Our traffic was steady and we did not experience a sharp fall-off as the quarter progressed. However, our comp sales declined 3.4% due to a reduction in the average ticket. Consumers have become more cautious with their purchases. They are clearly buying less, as evidenced by the drop in units per transaction and lower average tickets that we are currently experiencing.”
He continued, “We will continue our intense focus on inventory management and cost cuts. Average inventory per store was down 4% at the end of Q3 and is projected to decrease further by year end. We are now realizing the benfits of the productivity improvements that we began in the supply chain last year.”
Mr. Feld explained, “One of the distinct advantages from our competition is the consumables side of our business. The Company delivered a positive comp in consumables during Q3. This illustrates customers’ willingness to spend on impulse and holiday items when offered at affordable prices. Additionally, we have continued to expand our assortment of world market branded products. These products are designed togenerate incremental sales from repeat customers. Consumables will represent approximately 45% of our sales in Q4. We are uniquely positioned to meet the needs of cost conscious consumers, as well as attract new customers that might have historically shopped at higher-end and other specialty retailers.”
He concluded, “We are highly committed to our turnaround initiatives which will return the Company to profitability in the long term. We believe that we are making significant progress toward that goal. We have recaptured our loyal customer base through marketing and re-merchandising efforts. We have increase our conversion rates, and we will continue intense efforts to drive up the average spend-per-customer. While we anticipate ongoing margin pressure in a highly promotional market, out merchants continue to work diligently with our suppliers to restore our historical profit margins. I also want to assure you that this Company is able to maintain ample liquidity and flexibility to complete our turnaround.”
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