Cost Plus Reports on Third Quarter

November 20, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on November 2008 Cost Plus Inc., Oakland, Calif., announced Thursday that third-quarter 2008 sales slipped 0.8 percent to $213 million from the same period in 2007. The specialty retailer recorded a net loss of $25.7 million in the period, compared with a net loss of $13.3 million in third-quarter 2007.

Same-store sales fell 3.4 percent in the quarter due to reduced average tickets. Included in the third quarter of fiscal 2008 results was a $1.1 million asset impairment charge for five underperforming stores.

“Our intense liquidity management and value-driven merchandise assortments that include gourmet food and wine have positioned the company to weather this challenging economic environment,” Barry Feld, president and CEO, said in an announcement of results. “We have continued to reduce per-store inventory and peak on our borrowings at a level well below our available credit limit. At the same time, we have increased customer count levels, while managing costs in the face of a reduced ticket in order to achieve our bottom-line earnings guidance. We anticipate that our everyday low pricing strategy combined with a unique assortment of affordable gifts and consumables for holiday entertaining will attract increasingly cost-conscious consumers.”

Year-to-date net sales were $645.6 million, a 3.1 percent increase compared to the same period last year. Same-store sales declined 0.6 percent, which was entirely the result of a reduction in the average ticket. Year-to-date net loss from continuing operations was $72.9 million compared to $41 million in fiscal 2007, which included a $27.4 million income tax benefit.

Cost Plus’ credit line borrowings peak at $125 million in November, well under the limit of the $200 million credit facility, versus a peak last year of $120 million. Inventory levels declined $14 million at the end of the third quarter compared to a year ago and are estimated to decline by a total of $25 million year-over-year at fiscal year-end.

In the fourth quarter, Cost Plus expects same-store sales to decline in the range of negative 1 percent to negative 6 percent, and anticipates net sales in the range of $356 million to $374 million. 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.

Cost Plus Inc. sells casual home living and entertaining products. At the end of the third quarter, the company operated 296 stores in 33 states versus 284 stores (after adjusting for the 13 stores now included in discontinued operations) in 33 states at the end of third-quarter 2007.