From Home Furnishing Business
Cost Plus Reports Fiscal 2006 4Q, Year-End Results
By Home Furnishings Business in Furniture Retailing on May 2007
Casual home products retailer Cost Plus Inc., Oakland, Calif., announced fiscal 2006 fourth-quarter and year-end revenue of $396.7 million and $1.04 billion, respectively. Those numbers represent an 8.1 percent increase over fourth quarter 2005, and 7.2 percent more than year-end 2006.
Fourth quarter 2006, ended Feb. 3, included 14 weeks (13 weeks in 2005), while both 2005 and 2006 reported on 53 weeks of operations.
Net income for the quarter fell from $18.3 million in 2005 to $7.5 million in 2006. Year-end 2006 income of $22.5 million, though, was up from $16.6 million in fiscal 2005.
Same store sales for the quarter decreased 3.9 percent compared to a 2.1 percent decrease last year. For the full year, same store sales fell 3.3 percent, compared to a decrease of 2.6 percent in fiscal 2005.
We are making considerable progress in our turnaround effort, although the full impact of our operational and strategic initiatives will not be evident until fiscal 2008, said Barry Feld, president and CEO. In fiscal 2006, we strengthened our management team, improved sales in underperforming stores and continued to clear out and replace non-productive merchandise with lower-priced, high volume products. We believe in our brand identity and World Market stores as a destination for unique, authentic and affordable products, but recognize that a key component of our turnaround is increasing store and brand awareness. In fiscal 2007, we will focus on driving higher transaction volume, while maintaining careful control of costs, in order to position Cost Plus for future profitability.
The company opened four net new stores during the fourth quarter and ended the year with 287 stores in 34 states, versus 267 stores in 34 states at the end of fiscal 2005. As of Thursday, Cost Plus operated 291 stores in 34 states.
As previously announced, during the year end close process, the Cost Plus discovered inventory reconciliation and accounts payable issues related to the way it records purchases, and makes certain accruals and adjustments to inventory. A restatement of its financial statements for fiscal 2004, 2005, and the first three quarters of fiscal 2006 reduced net income by $2 million and $3.6 million for fiscal 2004 and fiscal 2005, respectively. The restatements reduced the net loss in the first quarter of 2006 by $1.2 million and increased the net loss by $2.9 million and $0.5 million for the second and third quarters of 2006, respectively.
Looking ahead, Cost Plus anticipates a net loss in first quarter 2007 in the range of $12 million to $13 million; total first quarter fiscal 2007 revenue of approximately $207 million.
For fiscal 2007, a fifty-two-week year, the company is projecting a net loss in the range of $13 million to $17 million; and total fiscal 2007 revenue in the range of $1.04 billion to $1.06 billion.